Dispelling Web3 confusion: clarifying the digital future

Article originally published in French in Bilan

In recent months, the crises surrounding cryptocurrencies and metaverses have cast doubt on the future of Web3. However, investors and companies continue to rightly bet on this technology in economic sectors inclined to embrace structural evolution.

The setbacks, including crypto crashes, that occurred during the second half of 2022 (such as FTX and Terra) may have led several observers to believe that the once shining star of Web3 was on the decline. But for whom or for what was this bell really tolling? Clearly, not for Web3 itself, which remains a major investment object, particularly in Switzerland, and whose key players have never been as highly valued.

How can we explain this paradox? Have companies and investors chosen risk over security, abandoning all caution? Quite the contrary! Web3 has just experienced a crucial moment of clarification, demonstrating that investments are even more necessary than previously thought.

A veil of confusion surrounding Web3

Web3 has brought its share of disappointments, particularly during the second half of 2022.

First, there were troubles related to cryptocurrencies, with FTX being the most widely publicized example. The news was accompanied by the abandonment of investment plans, resulting in social consequences: the announcement of the first massive workforce reduction in the history of Meta (Facebook, Instagram) was attributed by some to the Metaverse in which the company had made massive investments.

In reality, both entities fell victim to more widespread shortcomings that went beyond Web3 itself.

concept of Web3

The first paid the price for clear and major management missteps. For Meta, caught in a global recessionary context (with Silicon Valley’s results also losing momentum), the group saw a significant decline in advertising revenue, thereby undermining its ability to sustain long-term investments.

Ironically, many saw this as a vulnerability induced by Web3, when it was actually the core of the business model of centralized Web2 platforms – advertising revenue – that endangered their structural investments.

It is not abnormal, nor surprising, that the transition from Web2 to Web3 is complex for one of the major champions of Web2.

Not a speculative burst: it’s a creative destruction

The veil has been torn. It has shed light on distorted uses of Web3 and penalized ill-conceived investments. But these flaws should not be seen as an invalidation of Web3 itself. Web3 represents a global paradigm shift that leads to industrial disruption.

The crisis that Web3 has just experienced, though localized, should not be interpreted as the bursting of a speculative bubble. It is, in fact, the precise moment when a new industrial model is created and the first signs of “creative destruction” truly emerge. This process of transition is logical in the context of our industrial history, and even though it generates uncertainties, it is as healthy as it is indispensable.

Beyond the veil of confusion: a major and necessary investment

This interpretation is indeed shared by numerous investors who now better understand the need to develop Web3 projects in sectors where this evolution will be structural: the banking sector, luxury, gaming, healthcare, IT services, and more. This is what motivates investments and valuation levels never before reached.

Regarding the Metaverse, which has faced considerable criticism, Citigroup estimates that it represents a $13 trillion economic opportunity by 2030. Europe provides ample other examples.

This paradigm shift is even recognized by governments, which are initiating national strategies for scaling up. Despite the recent abandonment of its NFT issuance project, the United Kingdom announced an allocation of over £370 million to the new Department for Science, Innovation, and Technology to explore the economic and commercial opportunities of the metaverse.

This is why companies need guidance to identify the investments that offer them the best chances of success. To ensure a successful industrial transition, the hurdle of appropriate investment, tailored to the realities and specificities of each company, must be overcome.

Written by: Mathieu Ragetly, Digital Marketing and Experience EVP and Web3 Program Director at Mantu

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