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Web3 could rewrite the rules of user identity

Web3 has reached mass markets in recent years, with globally more than 300 million holders of cryptocurrencies. However, many use cases are yet to be adopted by the masses. Today's blog post is about how user identity could be rethought as a key use case and was written by Boardwave member, Jayne Zecha.

What is Web3? What is the real potential of it? My colleagues Thomas Olsen, Gene Rapoport, Parker DeRensis and Nihar Naik outlined the key concepts and perspectives on the future potential in our recent 2022 Tech report.

Web3 key concepts

Web3 is a collection of technologies seeking to create a more decentralized and composable Internet. Blockchains, smart contracts, and tokens are the building blocks of web3's approach to open, decentralized, and public infrastructure. This approach unlocks the power of composability and allows for “compounding software development,” just like open source software does. From these building blocks come many core web3 applications, including decentralized applications, DeFi (decentralized finance), open digital wallets, tokens, decentralized autonomous organizations (DAOs), and open metaverses (see Figure 1). Familiar web3 products include decentralized exchanges like Uniswap, digital dollars like Circle's USDC, and OpenSea's nonfungible token (NFT) market.

Already now the ecosystems boasts thousands of companies and has attracted more than >$80 billion in funding. So far, the financial services industry has experimented most with the technology but as Web3 matures, the core applications will sit squarely within the technology sector.

The wallet and web3 identity

One of the emerging battlegrounds is the concept of identity. The technology has the potential to democratize the online experience, enable users to reclaim control of their data, and open the door to mass customization of each user’s experience. Digital web3 wallets act as unified bank accounts and digital passports that have the potential to change how users connect with applications by offering universal sign-in capabilities.

The pace of innovation has continued to accelerate, and companies are creating specialized tools that abstract away the complexity of wallets, while leaving core benefits in place. Examples include using a wallet to transport digital assets and goods (video game assets like skins, digital artwork, or next-generation loyalty tokens) and promote interoperability and help users freely move assets unlocking benefits that could threaten customer stickiness and existing business models, using wallets to store credentials and access identities and move data and content rights from platforms to the user. For example, companies like Lens Protocol and Farcaster are working to build social graphs in which all of your content—likes, comments, and other data—is decentralized and available to you.

There will be more exciting developments – watch this space.

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