Explore the Infinite Potential of Future Web3 Development with 10 Web3 Regulatory Recommendations from a16z
Before getting to the main topic, there are two small questions: Do you remember when the use of dial-up Internet access started during the time when the Internet entered the mass market? How much time did it take to download a two-hour movie with the speed of the Internet back then?
Even though it feels like dial-up Internet access is something of the past, it is only about 30 years since its introduction. If we were to download a 2-hour movie of average picture quality with the Internet speed at that time, it would take decades. Today, we generally refer to this period of Internet development as the Web1.0 era. Looking back at the past 30 years, we cannot help but be surprised at the rapid development of the Internet industry and its deep impact on the real world.
Today, most of the millennials born in the high-speed Internet may not have heard of the old “dial-up internet”, and enjoy the convenience as well as the rich and colorful content in Web 2.0 directly. At the same time, they are also involved in the exploration of Web3, albeit unknowingly.
We are now moving on to the main topic. Recently, we have noticed that Andreessen Horowitz (a16z), a well-known venture capital company in the crypto industry, has officially issued its principles for Web3 regulation, offering the following 10 principles to “world leaders,” including governments, multinational companies, and globally influential civil society groups.
- Establish a clear vision to foster decentralized digital infrastructure;
- Embrace multi-stakeholder approaches to governance and regulation;
- Create targeted, risk-calibrated oversight regimes for different web3 activities;
- Foster innovation with composability, open-source code, and the power of open communities;
- Broaden access to the economic benefits of the innovation economy;
- Unlock the potential of DAOs;
- Deploy web3 to further sustainability goals.
- Embrace the role of well-regulated stablecoins in financial inclusion and innovation;
- Collaborate with other nations to harmonize standards and regulatory frameworks;
- Provide clear, fair tax rules for the reporting of digital assets, and leverage technical solutions for tax compliance
In fact, not only a16z but also many well-known crypto companies, including MEXC Global, Coinbase, FTX, and Binance, have put forward their own regulatory visions.
Take MEXC Global as an example, although it has been established for less than 4 years, it has already obtained compliance licenses from 5 countries, including the United States, Canada, Australia, and so on. MEXC Global has also developed into a leading global compliance trading platform by laying out in-depth public chain ecosystem projects such as Ethereum, Polkadot, Solana, and conceptual projects such as DeFi, NFT, Web3, Metaverse, GameFi and DAO.
From the recent 10 principles put forward by a16z and comprehensive planning of MEXC Global, we can’t help but ask: After the DeFi Summer in 2020 and the NFT+ Chain Game boom in 2021, why will Web3 also become an industry hotspot alongside the Metaverse in 2022? To answer this question, let’s look for an answer from the development of the Internet.
Although currently there is no consensus on the definition of Web3 in the industry, generally speaking, it is the typical name for the third generation of the Internet. A general understanding is that it will be a new generation of the Internet that is more user-friendly, safer, more private, to achieve the transmission of values. So, this means that Web3 is not only the latest step in Internet technology but also the first step towards a virtual world for human civilization.
If you divide the evolution of the Internet into several stages, the first stage is Web1.0, which probably lasts from the day the Internet was born to the first half of the first decade of the 21st century.
In this period, from the perspective of the underlying technology, most of them adopted the mode of technology innovation to promote business development. The change and use of information technology have played a decisive role in the growth and development of websites. However, from the perspective of user experience, it shows a clear unidirectional feature. Early Internet companies provided platforms and content for people to read, but there was little interaction. Users could only get information from websites in a one-way manner, and only a few content creators could edit and create content. Generally speaking, this is a typical PGC era. In a more vivid analogy, the Web1.0 model is like moving a library onto the web, where users are more likely to be consumers in the sellers’ market and do not have much or even zero bargaining rights. Moreover, both in terms of the number of websites and data transmission speed, they are in a very primitive stage.
The second stage is Web2.0. In 2004, at a brainstorming session between O’Reilly and MediaLive International, the world’s leading publisher, the concept of Web2.0 was first introduced. Thus, from around 2004 until now, the Internet has been at the Web2.0 phase.
After nearly 20 years of development, we can clearly see that compared to the Web1.0 era, the Internet has undergone a fairly comprehensive upgrade of concepts and ideological systems. While the underlying technologies have continued to iterate and progress during this period, they have moved from a decisive position to a supportive position in driving Web2.0 forward, replacing it with the idea of respecting “personal values.” This concept is reflected in the rapid progress of interactive experience in the Web2.0 era. Gradually, the original top-down Internet system dominated by a few resource controllers has been transformed into a bottom-up Internet system dominated by the collective wisdom and strength of a broad number of users.
However, from the point of view of respecting the concept of “individual values”, Web 2.0 is just a good starting point. Generally speaking, Web 2.0 provides every user with equal channels to express their views, connects everyone, and makes the flow of information and the amount of information increase exponentially. But at the same time, we should also see that the price behind this is largely at the expense of user privacy and the value of consumer information.
In other words, Web2.0 is more like a transitional stage for Internet enterprises to further obtain more commercial benefits by transferring part of the participation rights to users. With the development of Web2.0 in the past 20 years, user data has become the most important asset of every company. However, the owner of this portion of assets, which are the users, do not have any control. From this perspective, there is still great room for improvement in respect for individuals. Therefore, it has become an opportunity for Web3.0 to deepen the concept of respecting individual values. Leading the future trend of the Internet, pushing the Internet information age to the Internet experience age, and ultimately attributing the rights and interests to the users, will be an important issue to be solved by Web3.
It is against this background that a16z put forward the above ten regulatory recommendations on the future development of Web3. From a comprehensive view, it essentially hits the pain points faced by the current crypto industry and the development of Web3. As a16z mentioned in its recommendation, Web3 is not a single project but an overall set of technological advances, including crypto assets, DeFi (Decentralized Finance), blockchains, smart contracts, token, and DAOs (Decentralized Autonomous Organizations), and so on. Together, these tools enable a new form of human collaboration. They can break many deadlocks in life and help communities make better collective decisions on key issues such as how networks will develop, what behaviors will be allowed, and how economic benefits will be distributed.
When compared to Web2.0, it looks like Web3.0 is not only an upgrade to the available functions but also extends the development concept of the Internet. When comparing Web2.0 and Web3.0, it’s clear that Web3.0 websites will be more immersive and easy to use, and more importantly, it will maximize the security and privacy of personal user data.
On the other hand, according to a survey conducted by a consulting firm commissioned by a16z, about 45% of the cryptocurrency owners are millennials born between 1980 and 1996. And it is predicted that at least 1 billion new users will be flooded into Web3 in the next 5 years, most of which will be of new generations born after 1980. Millennials are more optimistic about an investment philosophy that enriches both themselves and the world around them, and they are more inclined towards crypto investment opportunities in the market than in the gradual, consolidating real estate and stock markets.
From this point of view, the battle between the crypto market and the Web3 has become a mental battle for the millennials. That is, whoever can win these young people will get the upper hand. As mentioned above, MEXC Global has been on the globally compliance operation route since 2020. MEXC Global is well-known for its fast and progressive crypto sectors, and in 2 years, it has reached the top 3 in terms of the global trading volume.
In this regard, Guy Hirsch, Managing Director of eToro USA, shares a similar view, stating that “the market is now witnessing a generation shift in trust from traditional stock exchanges to digital currency ones.” Once this transformation process starts, everyone can turn stocks into tokens based on blockchain technology in the Web3 world for more convenient, safe, and efficient trading. The size of the market will grow hundreds or even thousands of times larger. A whole new market that may reach trillions of dollars may already be on the way.