4 scenarios for navigating uncertainty and creating a winning strategy for Web3

As virtual and blockchain technologies accelerate our transition to Web3, there is growing apprehension among many of the business leaders we talk to. But planning for this new iteration of the Internet doesn’t have to be a source of fear. Instead, let us imagine the possible future we face.

There are two major considerations shaping the future of Web3: the speed of adoption and the type of governance. These ideas frame four future scenarios that can help business leaders gauge their organization’s alignment to potential risks and opportunities. There are four future scenarios: Network Tribalism, Great Rag Pull, Great Equalizer, and Crypto Nationalism. Each scenario has different implications for different stakeholders, be it corporations or start-ups, investors, media or governments. But first, let us give you a similar look at where Web3 is headed.

The scale and scope of Web3

Crypto-currencies, non-fungible tokens (NFTs), decentralized finance and the virtual world of the metaverse are the early innovations heralding the advent of Web3. These changes show how Web3 has the potential to be even more disruptive than the read-only transition from Web1 to Web2 in the interactive world that has defined the Internet over the past decade. Big tech may have to relinquish control of our data. Our experience of ownership can be enhanced. How we transact and pay for services will likely look very different. How we are rewarded for engagement and loyalty may also evolve. Such disruptions raise many questions. How much of the economy will be driven by Web3 innovation? Will high adoption lead to significant investment? Or will it be more modest going forward, requiring only limited changes to business models and market structures? Much more than just another technology – including AI, battery technology and robotics – Web 3 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 the question is when – if not – Web3 will become a reality:

Optimists see Web3 as providing a unique opportunity. The relationship between brands, manufacturers and consumers will be based on co-creation, economic partnership and loyalty. Online communities will be involved in all aspects of personal expression. Smart contracts will promote democratization by enabling access as well as the exchange of goods and services. Companies will access new sources of growth by launching advanced digital businesses with new products and governance structures.

Critics view Web3 as an over-hypod phenomenon. At the very least, they describe its arrival as a threat to individuals, businesses and governments. Opponents argue that blockchain will not have the scale, speed and long-term data storage capacity needed 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 lead to instability amid global capital flows. There are critics who argue that Web3 will facilitate illicit financing, money laundering, terrorism financing, and sanctions evasion (the same can be said of the Dark Web developed in Web2). There is also a sustainability critique that argues mathematical equations require a large amount of energy to process transactions made through the blockchain.

Two key ideas shaping the future of Web3

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

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

High Adoption: Web3 can grow rapidly and widely in many sectors of the economy. This “bull” market is projected to grow Web3 to US$19 trillion, or 15% of global GDP.

  1. What is the degree of governance decentralization?

Recently: Web 3 can develop rapidly and widely in many sectors of the economy. This “bull” market is projected to grow Web3 to US$19 trillion, or 15% of global GDP.

Decentralised: Power, control and governance can 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

With these two key considerations in mind, Web3 can appear with a variety of 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 clusters centralized around network protocols and their ecosystems.
  2. The Great Rag Pull – Web3’s growth has stalled due to endless hacks, scams, and an inability to contain bad actors who carry out suspicions.
  3. The Great Equalizer — Web3 finds widespread acceptance and continues to push the boundaries of decentralization, transforming the digital and physical worlds.
  4. Crypto Nationalism – Web 3 has become a new battlefield of economic competition and digital industrial policy that hurts adoption.

The speed and scope of infection remains highly uncertain. But four scenarios form a framework for asking strategic questions in this rapidly changing business environment:

  1. Which scenario most closely matches your organization’s current perceptions about the future of Web3?
  2. Which scenario would undermine your organization’s ability to win in Web3?
  3. What potential future is currently being overlooked? 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 field

Those who act quickly and develop their own strategies to win in whatever Web3 landscape emerges will reap the rewards and shape the future of Web3. It is also essential to fully understand the legal, financial and reputational risks arising from the early stages of Web3.

People who take a “wait and see” approach can go blind and miss the change happening around them. If you don’t have an avatar, trade cryptocurrencies, own an NFT, engage in a dispute or otherwise participate in the emerging Web3 economy, start experimenting.

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