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The Internet is firmly embedded in our daily lives, providing an essential communications network and service infrastructure. Yet the rapid adoption of digital systems has also led to a major imbalance of power that benefits only a handful of large tech companies and is under increasing scrutiny following examples such as the Cambridge Analytica scandal which Meta recently settled for US$725 million.
The next generation of the Internet, commonly referred to as Web3, aims to change this situation by creating a secure, decentralized system that allows users and organizations to regain control of individual privacy and network systems.
While blockchain technologies are most commonly associated with cryptocurrency trading and decentralized finance (DeFi), Web3 has the potential to offer much more. The European Union (EU) is quickly emerging as a pioneer in decentralized services with its policies that help ensure digital sovereignty and boost innovation with a mature Web3 ecosystem.
A vehicle for digital sovereignty.
The EU has demonstrated its long-standing commitment to a digital future that prioritizes privacy and the rights of individuals. The bloc was the first to adopt data protection regulations and digital sovereignty is a common theme within this group. GDPRTHE Digital Markets ActTHE Digital Services Act.
Although the fundamental concept of digital sovereignty – self-determined control versus concentration of power – is a laudable goal, such policies are often fall under fire due to their potential impact on agility, innovation and the ability to compete and collaborate internationally.
Web3 solves the main problem of today’s centralized networks in which value is accumulated by major providers by allowing all users to control their data and build their own network systems. As pioneers of Web3 technologies, EU and European leaders hope to preserve citizens’ digital sovereignty without hindering vital progress.
The growth of blockchain legislation.
The concept of Web3 has entered mainstream discourse in recent years, but EU leaders actually implemented their first blockchain policy in 2018. European Blockchain Services Infrastructure (EBSI) leverages blockchain to create cross-border services for public administrations, businesses, citizens and their ecosystems to verify information and make services reliable.
This is achieved through European-wide action distributed node network and cross-border applications that provide a reliable way to exchange data and verify credentials. This high-level Web3 framework enables new Web3 use cases, such as the ability to check diplomas and professional diplomasaccess public services and manage elections.
The EU was also the first major jurisdiction to pass a comprehensive crypto law known as Regulation of Crypto-Asset Markets (MiCA). It aims to provide legal certainty to the crypto sector in order to support the future of the European financial sector and encourage investors in establish standard regulations.
New economic opportunities.
With the European tech scene having been booming for many years, Web3 could consolidate Europe’s position on the global innovation scale. London-based nChain was recently acquired for €516 million in a landmark deal that will provide a “huge boost” to the blockchain and Web3 sectors.
nChain’s patents influence everything from the global cryptocurrency market to enterprise offerings from some of the world’s largest companies. This deal represents the largest investment in blockchain to date, highlighting the economic benefits that Web3 can bring.
Web3 also helps create new revenue streams for existing businesses. For example, German engineering company Bosch is working with the EU and a number of blockchain companies to launch a project decentralized IoT mobility network. Major initiatives like this will not only help boost local economies, but will also help realize the future of decentralized services.
A new digital direction.
As with any natural evolution, Web3 promises to build on the immense progress already made while addressing the challenges that have emerged alongside our transformation into the digital age.
Europe offers a glimpse of a future in which policymakers create the frameworks and infrastructure necessary to give rise to a dynamic world of web services that harnesses the benefits of innovation for the benefit of all.
