The Role of Digital Marketplaces in Web3
Since entering the financial landscape in 2009, Bitcoin and cryptocurrencies have transformed the global outlook on money. Among crypto enthusiasts, digital coins offer superior benefits (largely due to their decentralized nature) compared to traditional currencies.
Of course, concerns around volatility still exist with cryptocurrencies. For instance, taking a look on Binance the Bitcoin price now in US dollars hovers around $62,000 at the time of writing; the coin has experienced spells where it rose as high as $70,000 within the first three months of 2024 alone.
Nonetheless, fluctuations in prices have done little to affect the popularity of cryptocurrencies. Interestingly, the impact of these coins seems to have stretched beyond the financial landscape. Conversations now revolve around subjects like Web3 – the redesigned version of the Internet built around blockchain, the technology behind Bitcoin.
For readers unfamiliar with the term, Web3 takes control of the World Wide Web from private tech companies and gives it back to internet users. Essentially, it solves problems around the ownership of digital assets and the use of consumer data by big tech firms.
Without a doubt, Web3 will affect every aspect of online interaction, including digital commerce. Read on to uncover the impact of this new Internet infrastructure on digital marketplaces.
Web3 and the Evolution of the Internet
Before diving into the effect of Web3 on digital commerce, it’s crucial to explore how this internet redesign functions. First, let’s understand how the World Wide Web began.
The first model of the Internet was called Web 1.0. This version didn’t involve any form of online interaction. Instead, the Internet largely revolved around websites with static text or graphic-based content that users could only consume.
Everyday folk couldn’t create their own content. As such, this version was dubbed read-only. Web 2.0 (read/write) entered the scene in the early 2000s and has been around to date. Social media platforms heralded this new brand of the World Wide Web, and users could now create and interact with web content.
However, the evolution of Web 2.0 gave birth to some significant issues. First, a small selection of big tech companies controlled the majority of internet data and traffic. Also, the rise of ad-based marketing saw these tech firms exploit consumer data for advertising and profit-making purposes.
These problems led to conversations around Web3 (read/write/own) – a decentralized version of the Internet built with blockchain technology to give users more control over internet data and how the World Wide Web works. Essentially, internet users will have increased influence over the operating protocols of the online landscape.
What Does Web3 Mean for Digital Marketplaces?
The digital marketplace largely revolves around e-commerce websites that serve as intermediaries between buyers and sellers. Brands typically list products on these platforms for customers to access and purchase.
Beyond serving as listing websites, e-commerce companies also handle other aspects of the transaction process, including payments and logistics. Unfortunately, today’s centralized internet landscape gives these e-commerce brands too much control over how the online marketplace works.
For instance, there have been reports about Amazon influencing search results to favor its products over other brands on the platform. Aside from these claims, there’s also the disproportionately pricey take rates (often as high as 25%) that big e-commerce companies charge per transaction.
These issues are non-existent with Web3 marketplaces. Built using decentralized blockchain technology, these marketplaces remove the need for centralized intermediaries and give users complete control over transactions via peer-to-peer interactions.
Blockchain’s immutable ledger also guarantees heightened security and significantly lesser probabilities of manipulation. Smart contracts are another capability that enhances the appeal of Web3 marketplaces.
These computer programs automatically execute transaction terms when specific criteria have been completed. For instance, sellers can create smart contracts that transfer products to buyers immediately after payment.
Web3 Marketplaces: Benefits to Digital Commerce
Web3 marketplaces provide solutions to numerous concerns plaguing today’s e-commerce landscape. Here are some notable benefits that come with the evolution of digital commerce thanks to the development of Web3:
- Increased Security and Trust
Web3 relies on the decentralized blockchain network. As such, control of the network is shared among users rather than a particular entity. This distribution eliminates the possibility of breaches and hacks since data is spread across the network rather than located on a central server.
- User-focused Engagement
Since participants control the data and digital assets on Web3 marketplaces, they also influence how these digital commerce platforms operate. Users get to vote on the operating protocols of these marketplaces, thereby creating platforms tailored to fit their needs.
- Eliminating Intermediaries and Costly Transaction Fees
Web3 marketplace transactions are based on peer-to-peer interactions and smart contracts that reduce the need for intermediaries like banks and payment processing software. These features also cut down on the transaction costs involved in traditional e-commerce.
- Flexible Interoperability
One vital capability of Web3 marketplaces is that they can effortlessly connect with other decentralized platforms. As a result, users can transfer and use assets across multiple blockchain applications with incredible ease.
Web3 and Digital Marketplaces: Preparing for a Transformative Future
The Internet and digital commerce have evolved through the years. However, the current model of online interaction isn’t without challenges. Web3 seeks to address these issues and create a digital space that gives more control to internet users rather than big tech companies.
The ripple effects of this evolution will spill into the e-commerce industry, with blockchain technology redefining how people buy and sell online. With Web3 becoming more mainstream, internet users can look forward to a digital marketplace with increased security, heightened control over data and digital assets, and enhanced trust among participants.
