Introduction
The foundation of human civilization is “trust” that helps human to evolve, create relationships, build societies and communities, and generate values. Trust plays a critical role not only in nurturing societal balances but also in shaping the businesses. The digitization has affected all of us and has blurred the physical boundaries. People need not to travel for the business, and with the digital infrastructure, it has became possible to conduct business, establish partnership, and collaborate seamlessly with people from different geographical locations and time zones.
Web transformation
Web x.0 | Description |
|---|---|
Web 1.0 | Primarily focus on the information showcase which allows people to view and search for the information, known as the “read-only” Web |
Web 2.0 | The focus shift on sharing, collaborating, communicating, and coordinating landscape. The inclusion of “read–write” by incorporating “user-generated content” Web was transformational |
Web 3.0 | The focus is on “read–write–perform” driven by decentralization and transfer of “values” |
Long before the money was introduced to the world, people adopted multiple systems to execute the transaction in place of the fruitful business exchanges between the involved parties. “Barter system,” first adopted by Phoenicians and introduced by the Mesopotamian tribes, is one of the most widely used business systems whose roots could be traced way back to 6000 BC. People could exchange services and goods for other services and products in return. But it was not easy to perform such exchanges, first, due to the inherent complexity of the trust uncertainty between the people and secondly, because of the deviation in the assessment of the value of the goods and the services. Nonetheless, it is also imperative that if many people want something—“service,” “goods,” or any “object”—then it is bound to become “valuable” at least in terms of perception. There was no common market place where people could understand the value for their goods and services and thus were sometimes got cheated by other parties by getting no/less benefit. To avoid such complexities and to reduce the “cognitive load” by which people could agree on the similar terms to get involved in the exchanges/trading, coinage system was introduced.
In the early stage of the coinage system, community or tribes developed/identified objects (having specific carving, designs, or aesthetics) to be treated as valuable and could be used during the trade. Though such a system was undoubtedly better than the barter system, as a group or a community has to agree on the value of the object to be used during a trade, it poses a severe valueless transaction if those objects (not recognized and treated as valuable) were used outside their trade community. People could establish the trust which could lead to the trade within the community, but outside the community, it was a far reach goal. Some form of standardization for the business was lacking, and around 600 BC the first official currency (Beattie 2019), a metal piece mixture of silver and gold stamped with picture acted as denominations, was minted by Lydia’s King Alyattes. Lydia’s currency helped the country to increase its economic benefits by performing internal and external trades. People got several advantages due to the presence of the metal coins; first, the marketplace trade price was under control and second, they had the trust-driven community for the trade out spring of the phenomenon of the coinage system. The rise of the centralized trusted party begun. To circumvent the market leader of Lynda’s country for the metal currency, later China introduced the paper currency to capture the market and the economy. European used coins until the sixteenth century. The trading system was functional, and trust was prevalent during the business trade as the involved parties get the fair price for the goods and services. As more and more trade begun to happen between internal and external parties, the other consequence, apart from the business, was the increase of the theft epidemic. The centralized authority helped the community to save their money (metal coins/paper currency) and trust came into existence. Now, parties could transact for trade through these central authorities, which were governed by rules and regulations.
To perform safe transactions between unknown parties, these central authorities started claiming extra transaction fees to validate that the deal that happen between parties is fair and legal. Parties were navigated through the trusted third party to perform any trade or transactions resulting in the involvement of a decidedly less cognitive load. One has to trust the central authority and then initiate/execute the transaction or the business. The advent of the first and second waves of the Internet transformed the market through the use of e-commerce-driven solutions by these trusted third parties. The Internet supported the evolution of the business to be performed, first, by executing digital processes; second, by involving trusted third parties without even getting the trouble of establishing complex internal, external, and foreign trades; third, by breaking the barriers not only in terms of time and space but also by the physical proximity; and lastly by approaching the masses and new territories.
Web transformation
Evolution of Web
The Web provides an interplay of applications, services, platforms, and content. In the early 1990s, the Web emerged as the global ubiquitous connected hyperlinked system, but its network effects were still unclear. The search engines that we see today are different in terms of the capacity and capability of the search that could be performed as compared to the early search engines like Alta Vista and Yahoo. It is the development of the digital communication infrastructure such as broadband solutions and services, and Wi-Fi ignited the growth of the Web. As the Web getting transformed due to its network effects, new technologies were developed to make sense of this unpretentious growth of the Web.
Web 1.0
Size of the indexed world wide web (GB: sorted of Google and Bing; BG: sorted on Bing and Google)
An essential component to access those web pages was a search engine, and people could access web pages to get the information. Such a Web refers to the Web of information (documents) of the read-only Web.
Web 2.0
At the end of the 1990s, the semantic Web growth has begun with the vision to provide meaning to the Web content. The semantic Web started with two purposes: first, to leverage knowledge reasoning and representation to give sense to Web content and second, to allow agents to initiate and perform complex tasks for users. The emergence of the e-commerce business models and scalable and meaningful information discovery led to an enormous network effect and increased the user base. The indirect network effects were also promising; for example, the additional Web sellers were involved in the marketplace, and users could also provide value to the sellers by giving reviews, feedbacks, and comments. Also, the crowd-based collective intelligence of the users enabled to develop the enormous Wikipedia, a global repository of the knowledge. People could also contribute content to the Web (for example, blogs), share the content on the social media platform (for example, Facebook), and engage in collectively organization and structuring information (for example, wikis).
Further, the developments of the communication networks and infrastructures lead to the emergence of video content services, contribution by the users (for example, YouTube). Network effects were tremendous in not only increasing the number of active users but also the in developing and sharing the content across the platforms. The mash-up services helped different platforms to combine data and present it into a more meaningful way. Such a Web was revolutionary in including people as active contributors. The connected Web has nodes that include people or resources, and the edges could represent a connection between people or contribution from people or links between resources. The emergence of social network platforms enabled the human race to collaborate, partner, coordinate, and share.
Moreover, the trust began to shift toward machines and recommender system. The big companies like Amazon, Google, Facebook, and LinkedIn started their growth journey by leveraging long digital trail of the users. Further, users, in turn, benefited from these companies by getting themselves engaged, entertained, and by also getting an excellent and fair deal over services, products, and offers. By now, we could see the rise of two types of users: first, the digital immigrants, who were part of the web 1.0 era and second, digital natives who were born in the web 1.0 era and started using digital services/contents from an early age.
Web 3.0
The content available on the Internet can easily be copied, reused, and forged and thus pose a threat and challenge to the ownership and rights of the parties. Internet faces a severe problem of managing and securing the “values.” One can make a copy of the image or a video file and can claim it as is his/her work. We all are drowning in fake news, forged content, copied, and reused digital artifacts. It is the need of an hour to find the silver lining in the sky and revive our hope to discover the transaction of value to validate our ownership and secure and access information, identities, and objects.
Blockchain give rise to the non-intermediaries by which no intermediaries are allowed to participate, and trust is achieved through the participative ability of the collective peer-to-peer involvement. Such involvement will have a severe impact on the organizations where they interact with various stakeholders such as customers, suppliers, vendors, etc. to revive and reformulate their value chain. For years, people were involving intermediaries for money transactions to establish and execute trade and businesses but in situations where the transfer of value in a reliable way will change the dynamics of the financial intermediaries. Various technologies like virtual reality, augmented reality, and neuroscience are taking mainstream and impacting the business and customer experience of getting services, and goods. We are a combination of physical and virtual (digital) world. Initially, we were lacking in capturing the “ownership” in the digital world, and with the help of blockchain that missing layer can be established. By blockchain layer, one can achieve transactions of value, secure way of accessing information, and identities.
The advocates of the trust-free economic transactions started promoting blockchain technology as the underlying mechanism to attain the Internet of value. One of the leading Research Firm, Gartner, claims blockchain technology to impact the business. Due to the appearance of the digital cryptocurrency, Bitcoin, blockchain technology got immediate fame. The fundamental principle behind the blockchain technology is the notion of a public decentralized and distributed ledger available to the participating parties. Besides, it uses the trust-embedded protocol through smart contracts. Markets and Markets projected the growth of blockchain investments from US$ 210 million in 2016 to US$ 2.3 Billion in 2021 (Transparency Market Research 2017). Another research report, transparency market research, predicts the rapid adoption of blockchain and sales of related technology to grow to US$ 20 billion by 2024 from US$ 316 million in 2015 (Markets and Markets 2016). Such humongous growth of investments and technological advancements in sales and adoption help to develop a sustainable ecosystem for the growth potential of the blockchain in various domains and industries.
Google trends: Blockchain versus Bitcoin
One can track, identify, and verify the historical transactions of value by leveraging the distributed consensus model. Blockchain technology maintains the ever-growing list of records in a decentralized, distributed fashion confirming to the participating nodes. All the participating nodes in the blockchain network have access to the single version of the truth, and the information about every transaction is placed and is available in a public ledger. Moreover, the participating nodes are treated as anonymous. Despite having high expectations from the blockchain technology, there is a lack of knowledge to understand the challenges, potential opportunities, and applications.
Blockchain in Action
In 2017, a game named CryptoKitties, based on Blockchain technology, started gaining momentum and acceptance among the players (Cryptokitties 2018). The game allows the players to purchase, breed, trade, sell, and feed unique digital kittens. One can achieve the transaction of values, digital kitties, and cannot falsify the information. CryptoKitties are the ERC721 token and thus digitally collectible like any other physical characteristics, for example, a Pokemon card. Each CryptoKitty has a unique DNA, and a player can buy and breed CryptoKitties with the help of the token Ether. Each kitty can be fed and nurtured to make it more valuable, and the status is maintained at all the blockchain networks. Such kind of information avoids forgery or falsification of the ownership. Currently, the commercial trade for the CryptoKitty varies to the range of $100,000, and the total collection reaches to $20 million. But the transfer of ownership not only just applicable to digital assets, such as CryptoKitty, but it can also be applied to the physical assets by the way of assigning unique identities in the process of tokenization (Hoff et al. 2017).
Assets like property, automobiles, etc. can be verified at any time for the ownership from the participating blockchain network nodes. The authenticity of the information, for example, a physical property attached with a digitally unique identity, and digital ownership is the main challenge. Everledger is a diamond verifier company that has introduced the blockchain network and streamlined the process accordingly. Now, it is easy to verify the source of the diamond and the ownership. Each diamond is given a unique digital identity, and the information of the diamond throughout its whole value chain is attached to the digital identity. People can verify the provenance of the diamonds and can avoid buying the stolen, unethically mined, and smuggled diamonds. Multiple stakeholders like insurance companies and transporters can join the network as they also get the information about the ownership and can help the owners in case of a loss of diamond (owners get the compensation if a diamond is insured). Well, that is revolutionary and supportive that assists the stakeholders in becoming more vigilant and active.
The impact of the blockchain can be seen in business models, business environments, and businesses. Digital identities will become the new dimensions to the products and services. All over the world, there is a rise in the conceptualization of number of national electronic identification (eID) programs to assign eID to every individual. Once an individual is assigned the eID (as per the biometric or other active profile) on the blockchain, then it is easy for an individual to not only capture the financial history but other required transactions of values. One potential use case would be to apply for a loan, and the credit history of the person would be verified on the blockchain network. Perhaps, digital identities are not restricted to people but can also be assigned to other objects such as products in the business and help to reshape the ownership in the digital world. Besides, it will change the dynamics of the retail market, and people would easily trade peer-to-peer without involving the intermediaries. Moreover, the product portfolios would end up in getting diversified raising to more business opportunities, as “proof of authenticity” and digitalization of the physical assets are materialized.
The existing business models either will be changed or customized to meet the needs of the transaction of values. One of the fundamental principles for the big companies to gain profit is to increase certain factors, i.e., strategize mass production and sale, and in turn, optimize/minimize the pricing for the products. But with the help of blockchain and other technologies like automation, robotics, and smart contracts, one can realize small deals with multiple customers. Consider an example where an individual would want to lease/rent its device’s data storage. Even a tiny portion like 1 MB of the data storage could be rented/leased attaining to the decentralized model principles, and the overall impact would be on the existing business models for the companies like Dropbox, as there is no need of the intermediaries for the transaction. It is an advantage to the participating actors in the transaction of value. Such kind of models will give rise to the entire new economy—microeconomy. Due to the microeconomy model, the business opportunities that were not possible earlier could now be materialized, and user-driven business models will be positioned as direct competitors to the existing companies.
Concluding Remarks
The Web has been transformed to incorporate the transactions of value and that will change the dynamics of the society and business systems. Blockchain technology is the most trending technologies with the promise to impact businesses. The blockchain technology has two critical dimensions—distributed consensus and anonymity—and applies to any digital asset transaction exchanged digitally (online). It is the foundation for trust-free economic transactions. The impact of the blockchain can be seen in business models, business environments, and businesses. The existing business models either will be changed or customized to meet the needs of the transaction of values.