Web3 is often discussed and hotly debated and is said to offer many opportunities for content creators, consumers and brands.
That said, where are all the people using Web3 today? Where are all the Web3 apps? What are the barriers preventing the acceptance and adoption of Web3 by the general public and the business community?
Crypto Wallets for the Masses?
A cryptocurrency wallet, or crypto wallet for short, is a physical device or software-based service — which can be standalone or a browser extension — that stores the public and private keys used for cryptocurrency transactions. It typically has the ability to encrypt and can use signing to execute smart contracts, cryptocurrency transactions, for identification or to legally sign a document or agreement. Popular crypto wallets include Coinbase, Electrum, Ledger, Exodus, Mycelium and Crypto.com.
Not all Web3 distributed apps (dApps) require the use of a crypto wallet, but the majority do. It's reasonable to assume that if crypto wallets are required to participate in Web3 to any extent, there are a huge number of people who are not able to be a part of it.
As of 2021, according to the Pew Research Center, 16% of Americans — around 52 million people — had invested in or used cryptocurrency in some way, meaning they'd created digital wallets. To have different types of cryptocurrencies (both Bitcoin and Dogecoin, for example) people often have to use more than one wallet. Still, that leaves roughly 80% of the country without crypto wallets, thus exiling them from Web3 due to technical limitations.
Metaverse applications may also require users to sign in using a crypto wallet. Decentraland (mentioned below) allows users to participate in the game using a guest account with no crypto wallet, but to actually log in, purchase land or merchandise, etc., they must sign in with a crypto wallet.
Besides actually having a crypto wallet, many dApps require that the user has funds in the wallet, either in the form of cryptocurrency or US dollars.
To compound the issue, adding funds to a crypto wallet is more costly than simply purchasing cryptocurrencies on a crypto exchange, as it typically involves “gas fees,” that is, the fees associated with moving cryptocurrencies or funds from one blockchain to another. Simply adding $5 in ETH (Ethereum coin) to a crypto wallet costs as much as $12.50 with gas fees included.
Related Article: Web3 Crypto: A Decentralized Utopia or Dystopia?
Crypto Addresses and Passphrases Are Not Memorable
An example of a typical crypto wallet address is: 0x368add25ebsy8a94cd2ad0427g9ce73k92a73831. An average person cannot remember such an address, so to use it, they keep it somewhere in digital form where it's easy to copy and paste. This inefficient process is the sort of thing that hinders rapid adoption.
Additionally, you need a passphrase to access the crypto wallet — and transfer assets from one wallet to another — which can be anywhere from nine to 25 words in length, with each word being random rather than a readable phrase or sentence. Unlike traditional passwords, they are cumbersome and not easy to remember.
A potential solution regarding crypto wallet addresses is the use of the Ethereum Name Service (ENS), which converts machine-readable identifiers (such as Ethereum wallet addresses) to human-readable domain names. The ENS is a Web3 blockchain mechanism that enables people to create their own unique and memorable usernames. An ENS domain name typically costs around $100 to register for a period of a year.
Graphics and Design: What Is This, 2000?
If one were to judge Web3 and the metaverse based on the graphics often used in metaverse and dApp games, one might come to the conclusion that the designers time traveled from 2000 to the current date and immediately began creating old school designs.
The screenshot below is from one of the most popular metaverse games, Decentraland, a virtual 3D environment complete with the ability to purchase land and other items or to rent land owned by others. While miles ahead of other dApps in terms of graphics, it's still far behind what people are used to when they play games on PCs or consoles.
Cynthia Huang, head of growth at Dtravel, which bills itself as “the DAO of travel,” spoke with CMSWire about the current limitations of the Web3 experience. “One of the big barriers to acceptance and adoption is the Web3 user experience,” said Huang. “This encompasses many areas including product design, security, onboarding and education, and is important whether it’s a B2C or B2B product.”
Huang believes that there needs to be an intermediary of sorts, a “Web2.5” app that acts as the bridge to true Web3 applications. “These Web2.5 apps will have some of the benefits of Web3 but still have familiar design patterns and experiences that make it easy for anyone to use, even without any prior Web3 experience or knowledge."
“Decentralization is the ideal state," she added, "but the journey to get there is on a continuum, and we need to get people started and want to continue that journey to full decentralization.”
Michael Gaizutis, founder and CXO at RNO1, a branding and digital design agency, spoke with CMSWire about what he sees as a huge barrier to the adoption of Web3: a lack of fluid and flexible design.
“Things are changing at a rapid pace, and design strategists have the opportunity to craft concepts that are nimble and adaptive," said Gaizutis. "I am hopeful that we will see more brands and agencies lean into the idea that change will be a more constant flow state. If we approach our digital process that way, I think we will be less afraid of the possibilities, and the barrier to adoption will be less intimidating across the board.”
Related Article:Is Web3 a Buzzword? Or the Real Deal?
Lack of Compelling Apps Available
Although there are several thousand Web3 dApps available, most in the DeFi (decentralized financial) genre, there are still not that many compelling dApps available for consumers.
Compared to Android apps (2.59 million) and iOS apps (2.22 million), to which several thousand new apps are added each day, the lack of dApps is disappointing to many consumers, some of whom consider themselves to be early adopters, gamers, technologists and those that pride themselves on being on the bleeding edge of technology.
Also, as mentioned above, most dApps, including the few games that are available, require users to have or create crypto wallets to participate in the games, some of which require the purchase of Non Fungible Tokens (NFTs) as avatars.
API bridges, such as API3, and other solutions like Chainlink, enable developers to use data from Web2 apps, Ethereum developer resources and tutorials and even application development tools such as One Click Dapp and Infura, taking much of the work out of dApp development. A dApp requires that the app be decentralized, permissionless and utilize blockchain technology.
If there is a lack of compelling consumer apps for Web3, the problem is compounded when it comes to enterprise apps. Enterprise acceptance of Web3 is only slighter greater than consumer acceptance, mostly due to forward-leaning business leaders who see the writing on the proverbial wall.
It’s not that there are no enterprise dApps available — rather, it’s that enterprise IT departments are slow to implement what they view as unproven solutions. Some, such as Storj, a decentralized cloud storage dApp, use Web2 solutions for identification and security, such as email addresses and passphrases. Others, such as Filebase, work in conjunction with other decentralized cloud storage providers, including Storj, Skynet and IPFS, providing an API that functions as a drop-in replacement for existing apps that use Amazon S3.
Sam Simmons, CSO for NFT Stadium, a fan-first NFT platform, spoke with CMSWire about what he sees as the barriers to Web3 adoption, namely technology and use cases. “Right now, onboarding into Web3 is complicated and at times dangerous with scammers and opportunists flooding the space."
"Web3 is built on blockchain technology," he said, "and while that provides incredible benefits to both brands and end-users, there can be immense complexity involved in building good blockchain integration tools. There aren't a high number of practical use cases to the technology today that amply provide the benefits needed to overcome the technological obstacles."
Brands Are Unwilling to Turn Over Control to DAOs
Decentralized Autonomous Organizations (DAOs) are a huge part of Web3. In fact, they're considered by many as the business model of Web3. A DAO is a group or entity represented by rules that are controlled by its members and not influenced or controlled by a central government or entity — all governance is done as part of a group or collective. Everyone that owns the DAO’s crypto token is a member of the DAO, with voting rights. When the DAO makes money, DAO members also make money.
Service DAOs use on-chain credentials to funnel and allocate resources from one DAO to another through the creation of decentralized working groups, allowing members to work in the Web3 world. Rather than turn over total control of the organization to a DAO, many brands are considering Service DAOs, as they provide a “work for hire” solution that enables them to turn over specific areas of the organization, such as content production, sales, marketing, customer service, etc. In exchange, members of the Service DAOs are included in the profits when brands prosper, similar to standard DAOs.
This type of “hybrid” DAO model allows the brand to retain control of time-sensitive business decisions while the DAOs make decisions (through voting) regarding other aspects of the business. In this way, brands are able to contribute to DAO members as they continue to build community, brand loyalty and ROI.
The Majority of People Do Not Own VR and AR Devices
In the book "Ready Player One," the masses began to acquire Virtual Reality goggles after the largest manufacturer of VR goggles donated them to every school system in the United States. That introduces the majority of young people to VR and enables them to be a part of OASIS, the virtual world of the novel.
In the world today, only around 171 million people own VR devices (aside from smartphones, which do not allow the same level of immersion as goggles or glasses), which severely limits the 3D virtual experiences that the metaverse is supposed to provide.
Additionally, although manufacturers have made great improvements in VR hardware in the last decade, VR goggles are still largely oversized, blocky and uncomfortable. Wearing them for any length of time is somewhat painful. Altogether, they're mostly a novelty rather than a regularly used device.
Forward-thinking manufacturer MojoVision is already marketing a contact lens with AR functionality, a device that could definitely open up the multiverse to many more people, although initially, the price is likely to be prohibitive. Below is a screenshot that depicts what it would look like if one was wearing the AR contacts in an outdoor environment.
Related Article: The New Metaverse: What's Different This Time?
Web3 and the metaverse promise to be the next iteration of the internet, ripe with opportunities for creators, consumers and brands. For acceptance and adoption, brands must address the challenges of Web3, including crypto wallets, graphics, standardization, a lack of compelling apps, DAOs and VR/AR goggles.