Evgeniy Babitsyn, CMO of Bets.io
Is Web3 really the disruptive force that will permanently change our society? Is it nothing more than hype technologies that can never live up to expectations? These questions will lead discussions throughout 2024 and into the next decade. On either-side of the debate, there are commentators who stand firm in their beliefs, one side dismissing technologies like NFTs and blockchain as false prophets, while the other see Web3 bringing about the same changes to society that the internet did during its first mass adoption.
Debate is healthy, but often when it comes to Web3, it can be difficult to strike a balance between both views and give a practical voice on Web3, acknowledging its immediate challenges, long-term opportunities and ways in which it can be effectively used today. There is a lot of conversation about blockchain integration, and the benefits it brings, from transparency and security through to immutability across various online applications. These conversations are not only taking place within the industry, but at government level too, with countries looking into digital versions of their currencies such as the digital pound, and various other central bank digital currencies (CBDCs) across the world.
Yet discussion of its application, and its positive potential, needs to be placed in context. We are only now witnessing the beginning of the end of the ‘crypto-winter’. Triggered by the collapse of the Tether and USTether, the crypto-winter was a chain reaction event. Volatile coin valuations, exchange collapses (the most prominent being FTX), high inflation and government moves to regulate, collectively lead to dramatic drop in crypto-prices from record highs.
For a time, the future of cryptocurrencies was written off. But now, we are seeing a resurgence in general Web3 interest, moving from hype to a more practical realization of how it can be used. My experience in the sector has granted me first-hand access to the use of Web3 in the iGaming sector; an industry that is already taking advantage of blockchain, cryptocurrencies and NFTs.
Where is Web3 heading in 2024?
Are we setting ourselves for another cycle of hype, or will we officially enter a ‘crypto-spring’ and a resurgence in interest in Web3? As a realist, and one that accepts the challenges the Web3 sector faces in iGaming and on a global stage, I can say there is good reason for optimistic projection of Web3 in 2024. However, looking specifically at cryptocurrency and decentralized finance (DeFi) as an aspect of blockchain and Web3, while the recent news of the SEC approving 11 Bitcoin Exchange Traded Funds (ETFs) has certainly improved prospects and value of the currency for the layman, this is a step in the wrong direction for the industry. The point of the technology is to get rid of middle men who have the capacity to control prices. With these ETFs being handled by big financial corporations, it doesn’t inspire a lot of confidence for the state of DeFi going forward. In spite of that, cryptocurrency is but one aspect of Web3, and the development of Web3 is full of optimistic promise. This comes down to the simple facts of how Web3 is currently being used to the advantage of forward-facing companies.
Take smart contracts as an example. These self-executing contracts are completely automated, removing the need of an intermediary and relying on blockchain technology that focuses on transparency and speed – two core advantages of Web3 applications. Within iGaming, smart contracts are used to determine the true ownership of in-game assets through a secure framework. Rather than gamers having to rely on an intermediary to store and effectively hold their in-game assets, smart contracts allow gamers decentralized assets and ownership of their assets, most commonly in the form of tokens of NFTs. There are use-cases and examples of smart contracts and their capabilities across industries, such as within healthcare, the music industry, supply chain and more.
All that being said, there are vulnerabilities we should acknowledge. Much boils down to the code being used for these smart contracts. If you have a code prone with vulnerabilities and bugs, it severely undermines the security involved. There is also the permanent nature of blockchain – once a transaction has been ‘closed’ on the chain, the process of changing that contract is nigh impossible. By their very nature, blockchain cannot be reversed.
Another tool is decentralisation applications or DApps. Functioning off a blockchain, they rely on a peer-to-peer network of computers, which means that control and ownership is divided across various points. Again, this ensures DApps cannot be exploited by one source, with the peer-to-peer network reducing the risk of this occurring in principle. Again, DApps rely on smart contracts built on code which means their effectiveness is determined by how good their code actually is. There are many DApps that have not been properly audited, meaning people can fall victim to scammers who manipulate the smart contracts and DApps to steal their data, with examples including the Ethusdt.buzz DApp approval scam back in 2022.
A final Web3 trend in the new year is interoperability. In principle, Web3 encourages interoperability between different platforms, enabling, in theoretical terms, a seamless data exchange and collaboration. All sounds great, but anyone who has experience in Web3 knows immediately that this concept has not transitioned into a neat application. The technology is simply not there yet, which means an individual must constantly jump on from DApp, chain or project to another, store a lot of access codes which creates risk, and ultimately is not a user-friendly experience. There is progress to be made here, particularly in iGaming, and we should see more developments in 2024.
A smart approach to a smart technology
There is a common theme underpinning all of these points. For all the exciting potential on display with Web3, it is still in a development phase. It needs to be trialed and tested by worthy enablers, improving processes, addressing risks and challenges, and constantly refined. All by doing this will there be a natural curiosity and eventual embrace by the general public across sectors, including iGaming.
Web3 is a smart technology, and as adopters, we need to be smart about it. Let’s not mindlessly buy into the endless hype that is out there, and let’s not dismiss its technologies. A critical mind is needed here, one that is willing to experiment and take a long-term view.
Companies are beginning to do this, led by experienced people who know the sector and understand applications like smart contracts and DApps. This will continue – here is where the real potential of Web3 truly lies.