Cryptocurrencies have not yet taken over the world, because the brain starts to boil from the slightest attempts to dive into this zoo of tokens, mining, staking, farming, bridges and other complex terminology — few people are ready to understand it. The problem is that today all crypto is made by geeks for geeks, and ordinary people don’t go there, it’s too complicated for them. The mass adoption of cryptocurrency technologies will happen when we start using cryptotechstack in real world services. This will be the basis of the new era of the Internet — Web 3.0.

A little about myself. Now I am developing an Internet bank for b2b in Alfa Bank, before that I launched a b2b ecosystem in Sber , before banks I worked in VK (ex Mail.ru Group) and Yandex, where I invented and launched Yandex.Disk. I recently launched my own author’s telegram channel — OxParshikov, where I write about fintech, management, reflect on my eternal struggle between hedonist and zojanic, in short, about everything that interests me today — subscribe!

Evolution of the Web

I’ve been around the internet for a long time and have lived through several eras. And now we are on the threshold of a new era — web3. To understand what web3 is, I suggest you take a retrospective look at the web as a whole. First came web1, in which the user could browse pages, and that was the end of his interaction with the resource. At the turn of the transition from web1 to web2, I was making websites, and a client came to me and asked me to make a blog. This was back before Livejournal. That was the first time I heard the word “blog”. And then sites began to appear en masse where users could publish materials, comment and so on — that’s how web2 came into being. This is the Internet where a user can not only read, but also create. Since then, web2 has evolved a lot, and we are safely using it. Youtube, Facebook, Instagram, X (formerly Twitter) are all web2. And the next step in the evolution of the internet, which I call web3, is when you can own content in addition to consuming and creating it.

Web3 allows you to own any content in the digital environment, be it text, image, sound or anything else, by tokenizing that content. Tokenization means tying that content to a special identifier on the blockchain network, which is where ownership rights are secured.

When you hear the word “blockchain,” many people think of Bitcoin, but crypto has nothing to do with it. We are interested in the technologies that the crypto boom has brought. The same blockchain as a distributed database is a technology, another protocol along with others that will work under the hood of the web3, and no one will talk about it like no one talks about TCP/IP now. People use the Internet and don’t even know what TCP/IP is, because it’s hidden under the hood. It will be the same in Web3: technology is under the hood, and people interact with a simple and clear interface, and we’ll talk more about that. The key properties of distributed ledger technology are the inability for third parties to change data and the ability to secure ownership of anything. And we can build different business models out of that ownership.

It used to be that if you released, for example, a song, you had to go to some label that would own your asset in the form of the song, and you would get a share of the profits that the label would extract from your asset — that’s how it works in web2. And in web3, you can attach your token to a song and release it “free floating” on the internet, and that token will guarantee you copyright and profit from sales. And I believe that the future of the internet is to entrench ownership of content in the end user. Other functions can be superimposed on this mechanism, and we will discuss this further, but first we need to implement content ownership on the principles of tokenization.

In the web2 era, sites and labels own the content, while in web3, users own the content.

I understand that there is not much novelty in the idea of tokenization, and some will even say it’s a buzzword, but I haven’t seen a normal implementation of it yet, and a normal implementation is exactly what’s missing to start the transition to the next generation of the web.

Web 1.0 — read it. Web 2.0 — read and create. Web 3.0 — read, create and own.

Auth ID evolution

By the way, I see similar eras in the evolution of bank authorization services regarding ID, which I’ve been doing lately.

• ID 1.0 — accounts through which you could authorize in banking products.

• ID 2.0 — those very popular bank IDs that you and I see on the Runet today. Everything is good in them, there are many of them and there will be even more, but none of these accounts really belongs to us.

• ID 3.0 is when an account belongs to a person, and this is in line with web3. But private companies will not develop in this direction because it is not in their scope of interest and does not help in retaining customers in the company.

This concept can be explained through the analogy of a blue check mark, for example, on Facebook. To get it, you need to apply for it, and then the administration will check who owns the account, whether it is a real person, whether he needs this tick, in general, will conduct KYC (Know Your Customer) procedure. And when you get this checkmark after all the checks, then people visiting your page will realize that it is a genuine page. To get a blue checkmark in other social networks, you’ll have to go through their identification procedures as well. But in reality, that check mark never really belongs to you, it’s owned by the organizations — the web2 sites. And I, as a manager developing bank ID 1.0 and 2.0 generations, see the next era of web3 based ID, where you (the person) owns your account. And NFT (Non-fungible token) is ideal for this.

How do I see it from a technical point of view? To make this all work with multiple counterparties that will act as data providers, like KYC and a host of others, we need to develop a single standard. A user’s NFT, which is used as their account carrier, will contain slots into which providers will be able to write multiple bits of data. Which providers are allowed to write data there will be decided by the user. The data set may include:

• Personal data, such as your full name, driver’s license, etc.

• Profile of your purchases.

• Medical data.

• Credit rating.

• Anything at all.

And you can decide who to give access to that data and who not to. It’s a kind of digital passport with updatable meta-information that can’t be lost.

In the next generation of the Internet, the user is the bearer of his or her authorization entity.

If, for example, you go to Alfa Bank with this account, they can put their mark there that it is a real account — KYC passed. Then you go to Ozon, and they can enrich your profile with categories of products that you usually buy, clinics can add a basic medical profile or important health markers. And you go to different sites with this ID, on the one hand enriching your profile, and on the other hand providing the sites with the necessary information about yourself.

Monetizing your data

In the next generation of the web, thanks to the tokenization of his digital identity, the user will be able to control to whom and under what conditions he will give access to his data. For example, he can share access to some of his data with a site to watch targeted advertising, and in return receive a commission for each banner shown to him.

Now Internet users’ data is being appropriated and monetized by tech giants by collecting data on websites visited and search queries. Users’ data is used to advertise products to them. Lawmakers are trying to fight the collection of data through cookies, but the advertising business on the Internet has been working as it is, and users get more relevant advertising at best. And we cannot say that this advertising is very effective, because the data on the interests of users may be flawed. And in the concept of web3 the user will have the opportunity to agree to view really relevant advertising that matches his interests, and get a conditional dollar for it.

Of course, the situation where you have all your data stored in your account can be disconcerting. We’re not used to this level of transparency, and some might argue to me that this is not a bad way to social ranking. And I think social rating is a good thing, because we’ve all been scanned already, we just don’t know it. Techno-giants know who is interested in what, what categories of goods they buy and in what price segment. Every customer has a credit rating in the bank. And who knows how many scorings even exist. It would be better if these ratings were public and transparent, so that everyone understands what kind of game they are playing. Yes, those who are doing something illegal won’t like it. But for those who play by the rules, it’s ideal.

Fighting fakes

Content produced by neural networks is now becoming widespread. I think that in a few years 80% of new content on the web will be produced by neural networks or with a large share of their participation. And people will probably be interested in reading people rather than AI, but how do we verify who created that content? We don’t have a working way of determining the origin of content, it has to be invented. And this problem can be solved by implementing mechanisms to sign the authorship of content, so that everyone can see that the content is original, and it was written by this person. How do you sign content? With their tokenized web3 account.

To combat bots on social networks, for example, Ilon Musk has proposed introducing a fee of $1 per X account. What would that accomplish? Nothing, just the cost of each bot will increase by one dollar. And when real users have NFT accounts with marks from multiple data providers, the cost of creating a botnet will increase significantly. We may not be able to solve the bot problem completely, but we can reduce the scale of the problem.

Problems of realization

Right now web3 looks as complicated as possible. NFT and DeFi is a place where some geeks sell some shit to other geeks. Nothing makes sense to the mass user.

There is a great lack of simple interfaces, simple tools where you do not have to learn the principles of network operation, consensus algorithms, and the peculiarities of bridges in order to perform elementary operations. Few people would want to understand unfamiliar terms to make a simple transaction. There’s no such word as deposit, for example — no, there’s steaking, farming. What is that even? Why can’t we just call it a deposit so we don’t scare people away?

Or, for example, bank details — it’s the same as hashes in cryptocurrencies, we in the bank have put these details under the hood and made transfers by phone number. Why can’t it be done the same way? If I send someone money through a bank, the app asks me which bank I want to send to. Why can’t crypto do it the same way? Just hide it all under the hood. No, the user is offered hashes, private keys to keep track of everything himself. How many times has someone sent crypto to the wrong network and the money disappeared? Yes, and I also have money stuck when swapping through the bridge, it seems to be there and it seems not! Today, the most convenient UX for working with crypto is on centralized exchanges, but my mom, for example, won’t go there because it’s the exchange, the stakes, the charts and all that stuff.

At the beginning of this year, I thought of making my own startup, taking the interface of a banking application and hiding all these complicated things under the hood, and leaving people with a simple and clear interface. Call everything familiar words: deposit instead of steaking and farming, etc.. Send transactions by phone number. Make normal registration there with a choice of storing account data: store it yourself and sign transactions with your own key or trust us to store it — as you like.

When I created Yandex Disk and we were deciding how to simplify users’ lives, we abandoned the complicated words “cloud” and “synchronization” that were in the Dropbox interface. We spoke differently: “Save photos from your phone to Yandex”, not to the cloud. At first we spoke the language of geeks, and the audience didn’t grow. When we switched to a language that housewives could understand, and the service became popular, it became one of the four services that Yandex brought to Turkey.

Web3 needs to speak the language of households, that’s when it will become popular.

All crypto lacks simplicity in terms and interfaces. Look at the same DeFi — it’s unreal to figure it out there. You took it on Aave, sent it on Compound, mixed up the contract, money hangs — in short, it’s an inhuman experience. It’s bare technology, there is no user-friendly interface there. It’s made by geeks for geeks, and regular people won’t go there. The only ones who are trying to make it normal are Binance, but you go there and there’s steaking, farming, yielding, mining — it’s really complicated. We need to make it simpler.

When there is a product that utilizes the best practices of current interface solutions without overloading the user with new terminology, then it will all become popular. Because the benefits of moving to Web3 are obvious, and owning your authorization entity is the next stage in the development of the Internet.

Implementation attempts

When I was working at Sberbank, as part of my “off-duty” activity, I made a mvp of an instantaneous settlement system together with Modulbank. I realized that banking processes could not be changed quickly and that it was necessary to comply with the requirements of the regulator, so I had no intention of chasing money through crypto. What did I do? I set up two nodes: one in Sberbank and one in Modulbank. From the SberBank Online mobile application, data on the fact of the transaction was sent to our private blockchain (we took Ethereum at the time). For example, I sent 200 thousand rubles, and this data was recorded in the blockchain. And the Module application read the data from the blockchain and showed the user my payment in the list of incoming transactions, but in the status “Pending confirmation” — similar to Bitcoin, when the payment is visible, but requires validation by validators. This approach elegantly solves the problem of the speed of sending payments. Such a transaction display is enough for the seller to start shipping goods. Because in Russia, what do entrepreneurs do? They send a payment, get a stamped payment slip from the bank, and bring it to the partner so that he can start shipping the goods. And my project solved this problem.

And it would be inexpensive and convenient, it would work on holidays, when banks do not conduct transactions at all. You can send money on January 1, and the legal entity will see this transaction in the system. Such transactions can be made regardless of the day of the week, time of day, holiday, non-holiday — it doesn’t matter, the transactions work. This does not violate the law, it is just an exchange of data. SWIFT is, in fact, also a data exchange system, but it is very costly and slow, with a lot of restrictions. In the SWIFT system, counterparties send emails to each other over a secure circuit. And the pilot that I made is also about data exchange in a secure loop. But unfortunately, this pilot was, let’s say, way ahead of its time (it was in 2017), and we couldn’t get it into the bank.

To create a new user experience, as in my pilot, you don’t need any huge expenditures on research and development of blockchain technologies, there are already many solutions on the market, they just need to be appropriately implemented into the existing infrastructures.

A little bit about risks

Ilya Segalovich — co-founder and CTO of Yandex. Once wrote on a blackboard: “Progress is unstoppable,” and I share his point of view. I think we will get there anyway, and humanity will have to adapt to new conditions, both positive and negative. And there is a higher probability that we will suffer from our own stupidity than from the creation of quality digital services.

When the web3 comes

In general, I am sure that in the coming years we will all be hit by a new wave of digitalization, in which many trends that now seem disparate will come together: artificial intelligence, augmented reality, virtual reality, the digital economy and new types of accounts will all come together in Web 3.0. And to avoid being left on the sidelines of progress, it’s time to start making really user-friendly tools to interact with it all.

Serious players now have a chance to become pioneers in the mass adoption of the new generation of the Internet. My hands are itching and I’m thinking about creating an independent Web 3.0 ID solution. But I don’t have enough time yet. But sometimes I manage to write short notes in my telegram channel, where I share ideas and experience gained over decades of work on top digital services. Subscribe, there will be much more interesting stuff to come.