Disclosure: The views and opinions expressed herein are solely those of the author and do not represent the views and opinions of the crypto.news editorial.
Yeah data is “the new oil,” then we are all sitting on unrecognized reserves of value. In web2, personal information is accumulated on isolated platforms and owned by corporate giants. Worse yet, it is often sold to unknown entities for private profit.
At web3, users are already fed up with the misuse and abuse of this data. As a result, they are taking back control by linking their games, social networks, and other accounts to the blockchain. And, powered by on-chain ledgers and data mining protocols, they are uniting their digital identities and ultimately generating value from what is theirs.
Let's explore why, beyond owning your digital assets, the real value going forward lies in owning your data.
The business maxim says: if the product is free, then you are the product. This is how most tech corporations have operated and continue to operate on web2. Users are, in their eyes, both customers and resources. From Facebook to Google, these companies have created advertising empires and targeted companies that run almost exclusively on this new “oil” of data.
Unfortunately, time and time again, user information under this system has been leaked, lost, and traded. Facebook has been embroiled in too many scandals to count over the way it liberally shares user data with third parties. Consequently, much of this information reaches the hands of brokers who, on average, count approximately 1,500 data points for each consumer. In turn, these touchpoints are repackaged and sold to the highest bidder for remarketing. Big data is big business.
This vicious cycle has continued for over a decade and users are understandably unhappy with the status quo. Three quarters of consumers are more concerned about the privacy of your data today than a few years ago.
As digital technologies encompass more of our daily lives – from online shopping to remote work to social media – users are acutely aware of this data imbalance. With their identity and privacy at stake, younger people are especially looking for a solution.
The good news is that technology brings hope for change. The blockchain popularized the concept of digital asset ownership among Internet users. Now, novel protocols and brave startups are moving the needle toward data ownership. Powered by on-chain logging of off-chain information, web3 makes it possible for users to take back the power and monetize the utility that comes from this data (just as tech giants have been doing for years).
In January, ethereum finalized a new protocol proposal. ethereum.org/EIPS/eip-7231″ target=”_blank” rel=”noopener”>ERC-7231, to match digital identities with an aggregated nft. This standard links multiple identities across web2 and web3 to a single nft to achieve encrypted aggregation of identity data from multiple domains.
What does this mean? It means that users have an “identity of identities” that they completely control. Not only is this more interoperable between platforms, but the standard allows users to generate business value from their data.
The most instructive example of this in action is games. For years, finding a way to unite disparate gaming identities and house player achievements and history in one place has been nearly impossible. Platforms don't talk to each other, data is static, and traditional game studios are lagging behind.
ERC-7231 bridges the gap between old and new world gaming by unifying identity on the blockchain. This way, players can move freely through the ecosystem under a single flag and label. Better yet, since they own the underlying information on the blockchain, only they can decide what happens to it. By choosing to share this information, players can passively earn when brands leverage their data on and off-chain.
Data sovereignty is important and several startups are bringing this concept to life. One is Clique, a decentralized identity oracle protocol from San Francisco that allows users to attest to their off-chain data on-chain and derive utility from the information. Of course, this provides value generation and privacy preservation. Again, a far cry from web2, doing so ensures end-to-end privacy thanks to trusted execution environments and multi-party computing. As a result, user data is tamper-proof and ready for continuous distribution of incentives – a win-win situation.
There is a paradigm shift occurring right now. Users are waking up to the fact that their data is valuable and they are not currently sharing that value.
Half of the respondents in this crypto-global-survey-2023″ target=”_blank” rel=”noopener”>survey According to Consensys, they believe they add value to the Internet and two-thirds say they should own the things they make on the Internet. Furthermore, only 38% feel adequately compensated for their contributions.
Furthermore, concerns about data privacy are prominent and growing. More than 80% of respondents in the same study prioritize data privacy, 70% believe they should share in the profits companies make from their data, and 79% want more control over their online identities. Something has to give.
Web3 is our opportunity to evolve yesterday's data dynamics into something more fair and accessible. Backed by the transparency and immutability of the blockchain, as well as data sharing protocols and platforms, we can fix digital ownership.
I think we are at a crossroads and that users will take the initiative. In fact, this probably won't even be the right word for this group in the future. Instead, “users” must become “builders” of this next wave of the Internet, leveraging web3 to solve entrenched issues of identity, privacy, and monetization.
Only by taking from those who have data and giving it to those who do not have it can everyday cyber citizens tap into the untapped reserves of data value within their reach.