Web3 Development: Building the Future of the Internet
Updated: Mar 10
Are you ready to join the Web3 revolution? As the internet enters a new era of decentralization and user control, Web3 development is poised to transform how we interact with technology. This week, I covered the first essential topics to consider when starting a Web3 project. Did you miss it? No problem. I create a compact article on the points I covered every Saturday.
I updated this article on March 11th, 2023.
Every topic I am writing about this year has a special meaning to me, and it might also have one for you. Either now or in the future. Regarding Web3 and its foundation, blockchain technology, my first touch-points go back to 2015. Back then, I did not know much about technology and its potential for the future. But as it is happening most of the time, my network and existing business partners started to talk about it more and more.
As our main product we develop is a platform for Cultural Traveling, I started thinking about potential use cases for Web3 early. I had the pain points of hundreds of talks with people in the cultural industry noted over the years, and in 2017 it got clear that the field we are working in would be excellent for the paradigm of Web3. European regulatory frameworks were vague back then, and barely anyone talked about NFTs. Decentralization, transparency, and user control were the keywords I had in my mind, so we finally decided to give it a shot and carried some partners around our project. Some use cases we had in mind back then are also the ones we are currently building on but in a completely different business environment. Here they are:
1) A decentralized Social Network where you are in control of your data
2) A transparent and decentralized ticketing system to avoid fraud
3) Decentralized crowdfunding for culture and art to support the sector while cutting off the middle-man
Unfortunately, we directly launched the first ICO crash. We had to get back to the start, adapt to upcoming regulatory frameworks, and consider blockchain technology's general development and the forthcoming community dynamics. I will cover more use cases in detail in one of my following articles, which I think you can already get a clue about "The Why" behind all that. In 2022, we could re-launch our project again after a successful IDO in April, just weeks before the first big Crypto Crash of Terra/Luna. What followed after that was a blood bath in Crypto and Web3. But, we are still around and kept building. With a new partner setup, advanced technology, and transparent regulations, in 2023, Web3 is still high on our list.
But for this article, let's get a basic overview.
Web3? What the hell
Web3 development is a new paradigm for building applications that takes the principles of decentralization, transparency, and user control to the next level. At its core, Web3 is all about creating a more equitable, transparent, and secure internet that puts users back in control.
Web3 development is built on the foundations of blockchain technology, a distributed ledger that enables secure and transparent peer-to-peer transactions without intermediaries. This technology has already significantly impacted industries such as finance, art, gaming, and supply chain management, but Web3 takes the possibilities to the next level.
At its core, Web3 is about creating decentralized applications (DApps) that run on top of blockchain networks. These applications are designed to be transparent, tamper-proof, and secure, enabling users to interact with them without the need for intermediaries.
One of the critical features of Web3 development is the use of smart contracts. Smart contracts are self-executing contracts that automatically enforce the rules and regulations of an agreement. They can be used to create decentralized marketplaces, automated insurance policies, and more.
Another critical aspect of Web3 development is non-fungible tokens (NFTs). NFTs are unique digital assets representing artwork, tickets, licenses, and real estate. They can be used to create new ownership and value-creation models, enabling creators to monetize their work in new and innovative ways.
The Battle of Royalty Models in the Web3 Era (2023)
As we look ahead to 2023, the non-fungible token (NFT) market is predicted to continue its growth in some industries. This offers creators a valuable opportunity to monetize their digital works. However, with various platforms pursuing opposing royalty models, the predictability of NFT royalties in 2023 needs to be clarified.
Some platforms offer a one-time payment to creators, while others provide ongoing royalties on secondary sales of the NFT. However, enforcing NFT royalties at the smart contract level is currently impossible, creating a lack of predictability and standardization in the market.
This lack of a standardized royalty model has led to confusion and frustration for some creators, who must carefully consider their platform options and look at NFT royalties as optional on the buyer's side. As a creator, staying informed about the various royalty models offered is essential, and determining which is best for your needs is necessary.
Until a standard is established for NFT royalties, creators must navigate the unpredictability of the market and carefully consider their options. This means examining the royalty models offered by each platform, understanding the terms and conditions, and determining the potential long-term benefits.
Web3 development also encompasses the emerging field of decentralized finance (DeFi). DeFi is a new model for financial transactions that are decentralized, transparent, and accessible to everyone. It has the potential to disrupt traditional finance by enabling more equitable access to financial services and creating new opportunities for value creation. You remember the points in "The Why."
To build Web3 applications, developers must have a strong understanding of blockchain technology, innovative contract development, cryptography, and more. It's a complex field that requires a deep knowledge of the industry's technical and business aspects.
But for those who are up to the challenge, Web3 development offers a unique opportunity to build the future of the internet. By leveraging the power of decentralization and the transparency of blockchain technology, we can create a more equitable, transparent, and secure internet for everyone.
Need help? Partners and Consultants
Yes, creating a Web3 project is challenging. There is a high chance that you will need partners on various levels, depending on your knowledge. You might understand your market needs well if you are from the business side. But there is so much more to cover.
Don't be foolish! Pick advisors wisely and work long-term with your community.
Especially in 2021 and early 2022, we saw massive hype on various Web3 projects. Some of them are still around, but most died along the way. Especially for brands who want to include a Web3-strategy in an ongoing business, it is even more critical to think long-term, investigate your current community, and involve them in your implementation process.
Quick wins will not seal the deal, especially when discussing more prominent brands; not involving the community from the beginning can lead to a negative outcome. Keep that in mind if you are building in 2023.
As investors are doing due diligence on you, you must do the same when picking your advisors for the project. The knowledge gap is still huge when it comes to Web3. But finding good ones that will fit your vision and goals is possible.
Keep an eye on the following:
Do your Due Diligence
As investors or clients will do it on you, you must also start doing it. There is still a considerable knowledge gap in the field of Web3, and it is your responsibility to choose your partners wisely from the beginning. Check the persons or companies' track records on projects, reviews, and external communication. Connect and discuss your vision and goals and see if they are suitable. Understanding the legal framework you are operating in is beneficial to avoid additional problems in execution and going to market.
Get clear on what you want
Break down your project goals into several sub-goals and see what you can achieve internally and where you have to onboard a partner. As a Web3 project consists of various layers, from legal to technology and community marketing, get yourself clear on what you need first.
I am a fan of a transparent and fair deal structure. Define pricing and deliverables upfront to not wake up with a lousy surprise. As I investigated several partners, many will offer you equity deals alongside transparent hourly rates. If you are a fan of that, go for it. I love to work on equity + cash deals with people who believe in the project.
Clear communication and structure
As you are the ones who need to add partners, you should set up the right communication strategy to align them with you and your core team. Precise time management and clear communication of goals and deliverables are becoming even more critical if you work with external. Time is money, and speed counts.
The community is your best advisor
The community is essential for the success of any Web3 project. By engaging with users, developers, and other stakeholders, project teams can build momentum, generate feedback, and create a virtuous cycle of adoption and growth that can help to propel their project forward. We also had to learn that the hard way.
The community is your best advisor and can help you in various fields. If you are coming from the Web2 and "traditional" influencer and branding game, like me, you must take a step back and re-think.
Why is community so essential, and building it organically is critical?
Here are some of the major bullet points:
Adoption: Web3 technology is still in its early stages, and adoption can be a significant challenge. Building a solid community around your project can generate buzz and increase awareness, which is crucial for attracting early adopters and building momentum.
Feedback: Web3 development is a highly collaborative process that requires constant feedback and iteration. Engaging with the community can provide valuable insights and help identify improvement or optimization areas.
Support: Building a Web3 project can be complex and challenging and having a supportive community can make all the difference. A strong community can keep developers motivated and engaged, whether providing technical assistance, sharing knowledge and resources, or simply offering encouragement.
Validation: In the Web3 space, trust and credibility are critical. Building a solid community around your project can validate its legitimacy and credibility, which can be crucial for attracting investors, partners, and users.
Network Effects: The Web3 ecosystem is highly interconnected, and building a strong community can help to create network effects that can drive adoption and growth. By fostering collaboration and cooperation between different projects and stakeholders, a strong community can help accelerate innovation and create new opportunities for value creation.
Your project will succeed with a strong community and taking it to feedback seriously. And it does not matter if you are already running a prominent brand in Web2. Get the community on board early and tell them when things are not going well. After all the bad news in the industry, 2023 is the year to rebuild and focus on community building even more.
Regulations (European View)
Understanding the legal framework is essential for the success of any Web3 project in Europe. By ensuring compliance with relevant laws and regulations, protecting intellectual property, and navigating complex legal issues such as token sales and intelligent contracts, project teams can mitigate legal risks and build a solid foundation for their project's growth and success. If you are not an expert, get one!
With the current regulation on crypto-assets (MiCA) markets, you already have an excellent framework to start. I recommend getting an expert who understands your project and goals. Also, communicate upfront with your local regulators to receive feedback. It is critical to understand some of the key points within your jurisdiction. Otherwise, it can get very costly and frustrating.
Here are some points you must get clear on before starting the project.
Note: Those points are for European projects. The rules might be different in your country.
Compliance: In Europe, there are strict regulations around data privacy, security, and financial transactions. Web3 projects must comply with these regulations to avoid legal issues, fines, or penalties.
Intellectual Property: Intellectual property (IP) is a crucial concern for many Web3 projects, particularly those that involve the creation of digital assets such as NFTs. Understanding IP law and securing the appropriate licenses and permissions is crucial for protecting your project and avoiding infringement lawsuits. You will find some examples if you follow the NFT market closely, especially in the US.
Smart Contracts: Smart contracts are a key feature of many Web3 projects and can have legal implications. For example, if a smart contract is designed to enforce a legal agreement, it must be drafted in compliance with relevant laws and regulations. Only do that with legal support!
Token Sales: Token sales, or initial coin offerings (ICOs), can be a complex legal issue. In Europe, token sales are subject to securities laws and must be conducted in compliance with relevant regulations. Understanding these regulations is crucial for avoiding legal issues and protecting your project and investors. Check out MiCA to get a better understanding of the classification of tokens. The same goes for initial dex offerings or IDOs like we performed last year.
Jurisdiction: In the Web3 space, jurisdiction can be a complex issue. Web3 projects are often decentralized and global, making determining which laws and regulations apply difficultly. Especially when it comes to investors' and users' money, keep an eye on KYC and AML requirements.
Yes, it sounds like a lot, and it is. But what helped me here is to break down your project into all the features and create easy flows for your legal advisor and, later, your local regulatory supervision. Explain all the flows clearly, and you will know what is doable and what is not before you start.
The Promising Web3 Trends of 2023
According to Forbes, 2023 will be an exciting year for Web3, with several promising trends to watch out for. These include the emergence of new blockchain platforms, the rise of decentralized finance (DeFi) protocols, the expansion of the creator economy, increased adoption of non-fungible tokens (NFTs), and the growth of virtual worlds and the metaverse. These trends offer an exciting opportunity for innovation and development in the Web3 space.
However, the lack of regulations has led to uncertainty among investors and consumers, especially with the growth of DeFi and NFTs over the past year. Fortunately, the author predicts that the US government will take steps toward creating regulations to promote transparency and protect consumers.
The European Union has already adopted the regulation on markets in crypto-assets (MiCA) to regulate the market. Such rules will create a level playing field for businesses, make it easier for mainstream companies to enter the space, and ultimately encourage more investment in this promising technology.
The need for regulations in Web3 is becoming increasingly apparent as the industry matures and gains more mainstream attention. Regulations can establish trust and confidence in the market, providing a foundation for growth and innovation.
As the Web3 industry continues to evolve in 2023, it's essential to keep a close eye on these trends and the regulations being put in place to ensure a stable and prosperous future for this exciting technology. The Cultural Places Web3 team is also focused on these trends and will explore ways to incorporate them into our platform in the upcoming months.
Summary and Conclusion
In conclusion, Web3 development offers a unique opportunity to build the future of the internet by leveraging the power of decentralization and transparency. We can create a more equitable, transparent, and secure internet for everyone by creating decentralized applications that run on top of blockchain networks.
However, building a Web3 project is a challenging task that requires a deep knowledge of the technical and business aspects of the industry. Choosing partners wisely and involving the community from the beginning is crucial to building momentum, generating feedback, and creating a virtuous cycle of adoption and growth.
Understanding the legal framework is also essential for the success of any Web3 project, and compliance with relevant laws and regulations is crucial to avoid legal issues, fines, or penalties.
With the right approach, Web3 development can transform how we interact with technology, and it's an exciting journey that we should all be ready to join. So are you prepared to be a part of the Web3 revolution and build the future of the internet? Cool, then reach out for additional questions.
If you are seeking a reliable partner to build together, check out THIS overview =)
Until next time!
Something to laugh
Why did the smart contract need therapy? It had too many trust issues.
Here are some recommendations to start. There is way more, and you can always check YouTube, Udemy, or other platforms for free or reasonably priced education. Another tip is using Twitter. Just search for "Web3" and get into the discussions.
"Mastering Blockchain: Distributed ledger technology, decentralization, and smart contracts explained" by Imran Bashir
"The Basics of Bitcoins and Blockchains" by Antony Lewis
"The Blockchain Developer: A Practical Guide for Designing, Implementing, Publishing, Testing, and Securing Distributed Blockchain-based Projects" by Elad Elrom
"Blockchain Basics: A Non-Technical Introduction in 25 Steps" by Daniel Drescher
"Building Ethereum DApps: Decentralized Applications on the Ethereum Blockchain" by Roberto Infante
"Blockchain Revolution: How the Technology Behind Bitcoin and Other Cryptocurrencies Is Changing the World" by Don Tapscott and Alex Tapscott
"Blockchain: The Ultimate Guide to Understanding the Hidden Economy" by Keith Baker
"Ethereum Programming: Build blockchain applications with Solidity" by Kiran Karkera
"Blockchain for Beginners: A Comprehensive Guide to Understanding Blockchain Technology and its Applications" by Scottie T. Carroll
European Parlament (MiCA): https://www.europarl.europa.eu/thinktank/en/document/EPRS_BRI(2022)739221
Cultural Places: https://www.culturalplaces.com/metaverse/