Illustration: Nadia Mendez/ WIRED Middle East

Editor’s note: This is the second story of our series The Future of the Internet.
Over its three-decade evolution, the internet has seen a pivotal shift: from open source protocols managed by non-profit communities to proprietary services run by tech giants. This transition brought forth incredible, free technologies to billions, but it also spawned significant issues. Privacy breaches and data theft have affected millions, while creators and businesses face the whims of internet platforms, risking their audiences and earnings. Yet, hope arises from the blockchain and cryptocurrency realm—a movement to meld the centralized service efficiency with the original internet’s community-driven spirit. This emerging trend champions a new era of internet services. The question, however remains: Can we wholeheartedly embrace blockchain and move towards a system that prioritizes fairness and equity in the digital realm?

A revolution is underway

In past few years, blockchain has been a hot topic, heavily hyped but poorly understood. Blockchain is public ledger shared across a network of many computers, providing transparency and accountability to everyone involved. This setup is different from a traditional single computer in a key way: it offers a higher level of trust. The trust comes from the way blockchain is designed, using principles from mathematics and game theory (a study of how people make decisions). These principles ensure that once something is programmed into the blockchain (like a set of rules or a transaction), it will keep working as intended, no matter what. Even if some people involved in the blockchain network change their minds or try to mess with the system, the original programming stays intact. This is because no single person or small group has full control; instead, control is spread across the entire community of users. “From a technical standpoint, blockchain is the technology that underpins Web3, and upon these blockchains are built the cryptocurrencies, NFTs, DAOs, decentralized finance, and other use cases,” Nicola Buonanno, VP Southern EMEA at blockchain analysis firm, Chainalysis explains.

Today Web3, heralded as the decentralized evolution of the internet, is redefining the landscape of digital services through the innovative application of blockchain technology. This new wave promises a paradigm shift, granting users unprecedented control over their data, content, and financial interactions. Central to Web3’s ethos are principles of user empowerment, enhanced privacy, and fortified data security. “Web3 is meant to be a more democratic version of the internet — one that lends itself to more interactive and personalized experiences for users,” says Buonanno. The UAE has been at the forefront of blockchain technology adoption, with a particular focus on Dubai. The Emirates Blockchain Strategy 2021 was launched to transfer 50 percent of government transactions to blockchain by 2021. In 2023, the UAE’s Central Bank announced plans to launch its own digital currency, central bank digital currency (CBDC). Dr. Najwa Aaraj, Chief Researcher, Cryptography Research Center opines that the internet has undergone significant transformations, culminating in the imminent arrival of its third evolutionary wave of Web3. “This paradigm shift aims to restore the internet to its original architecture—a decentralized network facilitating the connection between information holders and seekers,” states Aaraj.

The transition from Web1 to Web2 is fundamentally marked by a significant expansion in the range and complexity of activities available on the internet. While Web1 was characterized by static, read-only content, Web2 introduced dynamic, interactive experiences, enabling users not just to consume but also to create and share content across a myriad of platforms. This evolution has transformed the internet from a repository of information into an interactive, socially-driven network. The transition now from Web2 to Web3 relates more to the degree of ownership and control that users will regain on that content they produced, according to Robert Kopitsch, Head of Blockchain for Europe. In Web2 we are producing content that we then publish on centralized platforms, from YouTube to Instagram, that Kopitsch notes effectively hold and own that content. “Web3 aims to bring about a huge paradigm shift and give back control and ownership to users who would then remain the owners of the content they produce, as well as the assets they own and the data they share.”

The trust issue

Unlike the existing internet, where access is dictated by nation-states and various providers, a blockchain-powered internet ensures unrestricted access, preserving the internet’s initial purpose of facilitating easy and unfiltered data accessibility. “Diverging from the current internet landscape managed by ISPs, DNS resolution providers, and centralized hosting, Web3 cultivates a censorship-resistant environment,” Dr. Aaraj explains.

The horizon of a Web3-enabled internet brims with boundless potential, fuelled by innovative companies pioneering diverse applications set to define the digital future. This burgeoning ecosystem was vividly showcased at Dubai’s largest hackathon in 2023. With a prize pool of $110,000, the event catalyzed advancements in the Web3 space. The winners included Evai.io, Pravica, and Timeswap, which presented innovations in asset evaluation, peer-to-peer Web3.0 messaging, and decentralized lending and borrowing protocols, respectively “Control of data in Web3 shifts to individuals through decentralized networks, where users can truly own, control, and monetize their digital assets with the aid of technologies such as blockchain and Non-Fungible Tokens (NFTs),” says Alex Chehade Executive Director and General Manager of blockchain and cryptocurrency infrastructure provider, Binance FZE in UAE. Web3’s vision includes a seamless multi-platform communication for a more cohesive digital ecosystem, contrasting the relative isolation of Web2 platforms. Additionally, it offers smart contracts, enabling secure, automated transactions without middlemen, and uses blockchain cryptography to boost transparency, trust, and user privacy. “Web3 marks a significant upgrade from Web2, emphasizing user-centricity, security, interoperability, and potential for digital asset monetization,” explains Chehade.

Technically speaking, the main differences relate to how data and information is stored and shared. In Web2, all data and information are stored in centralized servers owned by a specific company to which then users connect from their own devices to access that data and content.  Web3 instead is based on distributed ledger technology, meaning that data and information are stored in the decentralised ledger, of which each node holds a copy allowing it to validate the information included in the ledger. Users would then be able to interact with decentralized services build on top of this decentralized infrastructure by using their own personal “wallets”, where they would then be able to store their own data and content. “Practically speaking, posting my mirror selfie for my friends to see and “like” will potentially look like having that picture stored in my own personal wallet and connecting that to a decentralized social media network of my choice, giving other users of that network the possibility to see my selfie,” explains Kopitsch. “That picture however would remain in my own wallet and would not be hosted/held by the platform itself, meaning that at any point I could decide to disconnect the wallet, and no one would be able to see my selfie anymore. This would contrast with the current model where my selfies are posted on Instagram and is then Instagram/Meta that holds/owns that picture forever on their own centralized server.”

Believers for the part state that Web3 underpinned by blockchain, is set to revolutionize the internet structure power dynamics in user data control and content distribution. “In Web3, individuals get a self-governed data model essentially owning and deciding the use of their data, unlike the current internet, where central entities own and exploit user data,” says Chehade. Thanks to technologies like Non-Fungible Tokens (NFTs), creators can monetize their work without ad or sponsor reliance. “Web3 signifies an internet evolution towards user empowerment, security, and privacy,” Chehade states.

Web3-powered internet, propelled by decentralized protocols and blockchain technologies, enables data sharing across internet-capable devices, liberating users from the constraints of centralized hosting solutions. “This decentralized network empowers users to reclaim control over information accessibility, governance, and utilization,” says Dr. Aaraj. Web3 technologies hold great potential to reshape the digital landscape of the Middle East. Given the region’s sizable unbanked and underbanked populace, Chehade explains that the decentralized finance aspects of Web3 could enhance financial inclusion. “For the large expatriate demographic, blockchain’s secure, fast, and low-cost asset transfer capability could revolutionize remittances,” he adds.

Blockchain versus Big Tech

Transitioning to a blockchain-powered Web3 internet poses scalability challenges, as current blockchain networks can support far fewer transactions per second compared to traditional platforms. Chehade says that “interoperability among disparate blockchain systems can be complex, and achieving seamless information exchange is key for a truly decentralized internet.”  Complexity in understanding and using blockchain and cryptocurrencies can be another hurdle to mainstream adoption. “Big Tech firms, currently dominating the internet with vast user data access, could resist the decentralization shift due to potential losses, using their substantial resources and influence,” he states. While a challenging endeavour, progressing towards Web3 necessitates overcoming these crucial technical, user-experience, and industry hurdles to foster a more secure and user-centric internet.

Though success in Web2 can’t guarantee success in Web3, Buonanno notes that it is hard to imagine incredibly well-funded technology companies such as Meta and Google not at least attempting to play a major role in this next evolution of the internet. Case in point is how in 2023, we saw Google Cloud partner with the Tezos Foundation to grow its Web3 application development abilities and provide new services to customers. Beyond the technical hurdles such as interoperability and scalability inherent in blockchain technology, there are more complex societal challenges that are expected to surface. These include the steep learning curve for individuals who are not technically inclined that necessitate user-friendly interfaces and educational resources alongside the need for robust regulation and consumer protection measures that is paramount to ensure safe and fair use of this technology. Chehade says that blockchain could also augment Smart Government initiatives, driving public service efficiency, security, and transparency. “Web3 could stimulate the region’s thriving start-up scene by offering a new technology base for innovation and transform the booming entertainment sector with direct content monetization.”  He says that the regional challenges such as regulatory uncertainty, public awareness, and technological infrastructure need to be tackled for successful Web3 adoption.

The MENA region’s escalating significance in the global Web3 and blockchain arena is becoming increasingly evident. Animoca Brands, a Web3 venture capital firm recently expanded into the MENA region by partnering with Manga Productions which aims to propel Web3 projects and foster the Web3 ecosystem in the region. “In the Middle East, known for pioneering ground-breaking technologies, the transition to Web3 could position the region as a serious frontrunner in adopting and exemplifying the third wave of the internet revolution,” Dr Aaraj notes.

The future is now

Financial institutions in the region have embraced blockchain for cross-border payments, trade finance, and identity verification. The UAE’s Central Bank, in collaboration with the Saudi Arabian Monetary Authority (SAMA), is working on a joint digital currency for cross-border transactions between the two countries. While Web3 still faces significant challenges, such as deployment issues for decentralized nodes, global recognition of blockchain benefits is fostering its adoption. “As countries worldwide implement blockchain solutions, obstacles to Web3 deployment are gradually diminishing,” says Dr. Aaraj.

To effectively harness the potential of this technological innovation, we will require not just well-defined regulatory frameworks, but also strong political willingness to embrace and actualize this advancement, as well as targeted funding opportunities aimed at establishing public-private partnerships to develop innovative public and online services. “Finally, we need to educate about the new potential revenue models that will be enabled by this innovation in order to move forward to a new consumer-centric economy,” says Kopitsch.

Governments across the MENA region are actively working to create stable regulatory environments to support blockchain and crypto sector growth. This includes initiatives like the Dubai Virtual Asset Regulation law, which aims to protect investors and serve as a global benchmark for governing the virtual asset industry. In Turkey, political efforts aim to boost cryptocurrency adoption, as seen in the Nation Alliance’s election doctrine focusing on crypto released in 2023. Morocco is also drafting a crypto law while Bahrain, recognizing cryptocurrency as an official payment method, has established banking regulation for crypto, attracting many crypto companies to the region. Kopitsch feels that the Middle East is in a very unique position as it possesses a number of attributes that will support and ensure the positive development of Web 3 technologies, such as a “very young, tech-savvy population, a growing appetite for digital services, strong financial investment capabilities or open-minded governments with efficient decision-making processes.” On the other side, he notes that it will be interesting to see how governments will react to a more decentralized internet and therefore society. “A number of benefits of Web3 might be considered threats to existing control structures in the region,” he opines. Overall, Kopitsch feels that Web3 technologies have a tremendous potential to elevate the Middle East to the front of the “queue concerning technological innovation and therefore making regional actors such as e.g. the UAE a leader in a future global economy.”

Web3 might also be poised to revolutionize the business landscape by ushering in an era of decentralization and community-driven ownership. “We see this happening now with DAOs — decentralized autonomous organizations — in which anyone who buys in can help guide the direction of a company or project through an asynchronous voting process,” Buonanno says. Buonanno envisions a future where Web3’s integration into the corporate world is not just a possibility but an inevitability. He foresees a time when all companies will evolve into crypto-based entities, evidenced by a “Connect wallet” button becoming a standard feature on company homepages. “Crypto is how they’ll get there,” he says.

Interestingly Web3 holds the potential to unlock new use cases in finance that currently aren’t possible due to the illiquidity of traditional assets. Buonanno paints a picture of a future where selling fractional ownership of tangible assets like real estate or vehicles becomes commonplace. This approach would enable sellers to tap into capital currently inaccessible to them, while simultaneously offering buyers an opportunity to invest in these assets through more affordable partial ownership. “Web3 can make that happen,” he asserts.

The MENA region has surfaced as the world’s fastest-growing cryptocurrency market, as per Chainalysis. Witnessing a staggering 48 percent increase in crypto volume, amounting to $566 billion between July 2021 and June 2022 which not only highlights the growing acceptance of decentralized financial systems but also says a thing or two about the broader movement towards a decentralized internet. Blockchain might be the answer to wrest the internet from the grips of corporations but to make it a reality Kopitsch insists that for companies in the space there needs to be a re-thinking of how we approach privacy and identity online, how we monetize data, and reinvent our advertising models. “Any company, regardless of whether they were pioneers in the Web2 or not, should be looking at this innovation as a great opportunity to reinvent and innovate their business models in a way that brings true innovation to our societies,” he states. 

Read this article in Arabic. 

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