Original post written by Alexa Jacky and Samuel Frank for Auth0 blog.
Web3 is unlocking new ways to implement Decentralized Identity. Discover how the Auth0 Lab team has been monitoring and experimenting with Web3.
Web3, the concept that makes smart contracts and Decentralized Finance possible, continues to grow, having gained the support of tens of millions of users and around $30 billion in VC investments as of late 2021. The Auth0 Lab team has been monitoring and experimenting with Web3 and adjacent technologies.
From our research and the flurry of interest from consumers and investors alike, it appears that Web3 is moving towards a user-centric web experience. We recognize that it's still early days for Web3. There will be stumbling blocks as the space matures. As the Web3 ecosystem evolves, we are looking for opportunities to bridge the gap between Web2 and Web3 technologies.
The Auth0 Identity Platform is the backbone of many conventional Web2 applications, leading us to dive into how we can allow our customers to interact with the "on-chain" identity data of their users. Over the course of our research, we've established relationships with Web3 partners to expand our ecosystem and offerings, and we're excited to share them with you today.
What Is Web3?
Web3 is based on the idea that users should have control over their data, money, and identities without relying on central gatekeepers. In a speech at Web3 Summit 2018, Juan Benet, Co-Founder of Protocol Labs, described it like this:
"Web 2.0 was about linking programs to that content and building rich, dynamic applications across their devices. And what's going on now is that the relationship is getting inverted. We're linking content and programs directly to each other, bypassing intermediary organizations, removing intermediaries, and gaining public verifiability."
Blockchains and decentralized networks run through the heart of Web3. This new digital economy relies on public ledgers and private wallets to keep track of who owns what. They hold the public addresses and private cryptographic keys necessary to conduct transactions. This growing public key infrastructure adds a potentially valuable new security layer to the web.
What Are the Hesitations around Web3?
A major hurdle in the Web3 space is the lack of mass-market momentum. Web3 technologies are largely used by those invested in crypto and developers looking to build for the future.
Criticisms of Web3 include:
- Potential data protection risks
- The environmental costs of mining and transacting
- The length and complexity of completing a transaction.
We're aware of the challenges in this space. Web3 is still largely unregulated, and its decentralized nature makes it difficult to add the consumer protections found in the traditional economy. Unlike your credit card, you can't reverse fraudulent transactions.
Knowing this risk, big players in the Web3 space, such as Coinbase, have taken additional steps to protect customer assets and data. Coinbase Wallet, for example, allows you to authenticate with biometrics or a PIN. It has partnered with other companies to provide hardware wallets that store your private keys in a secure, air-gapped physical device.
The environmental impact of Web3 also remains a pressing concern for organizations. Cryptocurrencies have a steep carbon footprint, particularly when it comes to mining and transacting. To address this, blockchains like Ethereum have switched to "proof of stake" from "proof of work," replacing the mining-focused mindset of crypto.
Aside from the above consumer-level concerns, organizations are heavily invested in Web2 architectures. Many are reluctant to abandon those systems. Organizations need an easy way to bridge their existing Web2 infrastructure and investments with the growing Web3 ecosystem. Unfortunately, blockchains are technically complex to build upon from a developer's perspective. Threat actors can exploit poorly-written or insecure smart contracts to steal funds.
Web3 leaders must address these problems for it to enter the mainstream, as each is individually big enough to inhibit adoption. For many, these downsides can outweigh the potential upsides.
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