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The Internet is firmly woven into the fabric of our everyday 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 best serves just a handful of big tech firms that is coming under increasing scrutiny following examples such as the Cambridge Analytica scandal which Meta recently settled for $725M USD.
The next generation of the internet, commonly known as Web3, aims to change this 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 often associated with cryptocurrency trading and decentralized finance (DeFi), Web3 has the potential to deliver so much more. The European Union (EU) is quickly emerging as a pioneer of decentralized services with its policies that are helping to deliver digital sovereignty and jumpstart innovation with a mature Web3 ecosystem.
A vehicle for digital sovereignty.
The EU has demonstrated its longstanding commitment to a digital future that prioritizes personal privacy and the rights of individuals. The bloc was the first to deliver data protection regulations and digital sovereignty is a common theme within GDPR, the Digital Markets Act, the Digital Services Act.
Although the core concept of digital sovereignty – self-determined control in contrast to a concentration of power – is a worthy goal, such policies often come under fire due to their potential impact on agility, innovation and the ability to compete and collaborate on an international scale.
Web3 fixes the main problem of current centralized networks in which the value is accumulated by the main providers by allowing all users to control their data and build their own network systems. By pioneering Web3 technologies leaders from the EU and Europe hope to preserve the digital sovereignty of citizens without hampering vital progress.
The growth of blockchain legislation.
The concept of Web3 entered the mainstream discourse in recent years but EU leaders actually delivered its first blockchain policy in 2018. The European Blockchain Services Infrastructure (EBSI) is leveraging blockchain to create cross-border services for public administrations, businesses, citizens, and their ecosystems to verify information and make services trustworthy.
This is achieved through a European-wide network of distributed nodes and cross-border applications that is a trusted way to exchange data and verify credentials. This top-level Web3 infrastructure makes it possible to create new Web3 use cases, such as the ability to verify educational and professional credentials, access public services and manage elections.
The EU was also the first major jurisdiction to pass a comprehensive crypto law known as the Markets in Crypto-Assets (MiCA) regulation. It aims to provide legal certainty for the crypto industry to support the future of Europe’s finance sector and encourage investors by establishing standard regulations.
New economic opportunities.
While Europe’s tech scene has been burgeoning for many years, Web3 could cement Europe’s position on the global innovation scale. London-based nChain was recently acquired for €516m in a landmark deal that will provide a “huge boost” to the blockchain and Web3 sectors.
nChain’s patents have an influence on everything from the global cryptocurrency market to corporate offerings from some of the largest companies in the world. The deal is the single largest blockchain investment to date, highlighting the economic benefits that Web3 can bring to the table.
Web3 is also helping to create new revenue streams for legacy corporations. For example, German engineering firm Bosch is working with the EU and a number of blockchain companies to spearhead a decentralized IoT mobility network. Major initiatives like this will not only help to boost local economies but help to realize the future of decentralized services.
A new digital direction.
As with any natural evolution Web3 promises to build on the immense progress already achieved while improving on the challenges that emerged alongside our transformation into the digital era.
Europe offers a glimpse into a future in which public policymakers create the frameworks and infrastructure required to empower a dynamic world of web services that leverages the benefits of innovation for collective benefit.
