4 Scenarios to Navigate Uncertainty and Create a Winning Strategy for Web3

As virtual and blockchain technologies accelerate our transition to Web3, there is a growing apprehension among many of the business leaders we talk to. But planning for this new iteration of the Internet does not need to be a source of dread. Instead, let’s imagine the possible futures we face.

There are two key considerations shaping Web3’s future: the pace of adoption and the type of governance. These considerations frame four future scenarios that can help business leaders to explore their organization’s alignment to potential risks and opportunities. The four future scenarios are: Network Tribalism, Great Rug Pull, Great Equalizer, and Crypto Nationalism. Each scenario has different implications for different stakeholders, whether they are corporations or start-ups, investors, media, or governments. But first, let’s give you our even-handed take on where Web3 is going.

Web3’s Scale and Scope

Crypto-currencies, Non-Fungible Tokens (NFTs), decentralized finance and the virtual worlds of the metaverse are early innovations heralding the arrival of Web3. These shifts show how Web3 has the potential to be even more disruptive than the transition from the read-only Web1 to the interactive world of Web2 that has defined the internet over the past decade. Big tech may have to cede control of our data. Our experience of ownership could be upended. How we transact and pay for services will likely look very different. How we’re rewarded for engagement and loyalty could also evolve. Disruptions like this raise many questions. What share of the economy will be powered by Web3 innovation? Will high adoption lead to significant investment? Or will uptake be more modest, thereby requiring only limited changes to business models and market structures? More than yet another technology — including AI, battery technology, and robotics — Web3 is a transformative force that needs to be understood from many different angles.

And yet the amount of capital already invested in Web3 suggests that it’s a question of when – not if – Web3 will become a reality:

transactions in the billions

Optimists see Web3 as offering an unparalleled opportunity. The relationships between brands, creators, and consumers will be grounded in co-creation, economic participation, and loyalty. Online communities will be engaged in all aspects of personal expression. Smart contracts will foster democratization by sparking access, as well as the exchange of goods and services. Companies will access new sources of growth by launching enhanced digital businesses with new products and governance structures.

Critics see Web3 as an overhyped phenomenon. At worst, they describe its advent as a threat to individuals, businesses and governments. Detractors argue that Blockchain will not have the scale, speed, and long-term data storage capacity required to handle mass adoption. They question whether the value of fungible and NFTs will be transferable and if inadequate consumer and IP protection will open the door to massive risks. There are warnings that large gaps in legal and regulatory frameworks will cause instability among global capital flows. There are critics that argue that Web3 will facilitate illicit financing, money laundering, terrorism financing, and sanctions evasion (the same could be said of the Dark Web that evolved in Web 2). There is also a sustainability critique that argues the mathematical equations that underpin transactions made through the blockchain require large amounts of energy to process.

Two key considerations shaping Web3’s future

  1. What is the scale of Web3 by the end of the decade?

Low Adoption: A variety of factors could cause a Web3 “bear” market with low levels of adoption. At the low end, Web3 would capture only 5% of global GDP, approximately $4 trillion USD.

High Adoption: Web 3 could develop quickly and broadly across many sectors of the economy. This “bull” market anticipates Web3 growing to $19 trillion USD or 15% of global GDP.

  1. What is the degree of governance decentralization?

Recentralized: Web 3 could develop quickly and broadly across many sectors of the economy. This “bull” market anticipates Web3 growing to $19 trillion USD or 15% of global GDP.

Decentralized: Power, control, and governance could move away from centralized organizations, reducing the role of aggregators and giving rise to new governance models such as Decentralized Autonomous Organizations (DAOs).

Four scenarios

Drawing on these two key considerations, Web3 could unfold with different implications for a variety of stakeholders, from corporations and investors to governments and the media. We see four scenarios:

  1. Network Tribalism – Web3 sees significant growth with centralized clusters around network protocols and their ecosystems.
  2. Great Rug Pull – Web3 growth is stunted by the inability to contain bad actors perpetrating endless hacks, scams, and doubt.
  3. Great Equalizer — Web3 achieves mass acceptance and pushes the boundaries of decentralization, transforming the digital and physical worlds.
  4. Crypto Nationalism – Web3 becomes a new battleground of economic competition and digital industrial policy that hurts adoption.

The speed and scope of the transition remain highly uncertain. But the four scenarios create a framework to ask strategic questions in this rapidly changing business environment:

  1. What scenario aligns most closely with your organization’s current assumptions about the future of Web3?
  2. What scenario would your organization’s ability to win in Web3?
  3. What plausible future is currently being ignored? What are the consequences?
  4. What strategic adjustments does your organization need to make to better prepare for opportunities and reduce risk?

Step into the arena

Those who act early and evolve their strategies to win in whatever Web3 scenario emerges will reap the rewards and shape the future of Web3. It is also essential to fully understand the risks – legal, financial and reputational – that can arise from the early stages of Web3.

Those who adopt a “wait and see” approach can be blindsided and miss the transformation occurring around them. If you don’t have an avatar, trade crypto currency, own an NFT, engage on a Discord or otherwise participate in the emerging Web3 economy, begin experimenting.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.

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