Web3 Has the Potential to Transform Everyday Life, but in Its Current Form, It Is at Risk of Abuse

As we rapidly approach the quarter-mark of the 21st century, it is hard to play down the effects of global digital migration on our lives.

As we approach the quarter-mark of the 21st century, the effects of global digital migration on our lives are undeniable. Many aspects of life and society are now conducted at least partially — and sometimes entirely — online.

The global average internet penetration stands at approximately 67.5%, while digitalization has occurred at lightspeed in the European Union, where 93.1% of households are connected to the internet. This trend shows no signs of slowing and is, in fact, evolving toward its next milestone: Web3.

Uneven power balanceWhile Web3 offers numerous advantages, it also raises significant concerns and several unresolved questions — chief among them being the imbalance of power between creators and consumers.

Although Web3 was initially designed to be decentralized, creators are increasingly developing protocols that are often, at best, exploitative or manipulative, consisting of pump and dumps. At worst, they are illegal scams and frauds.

In the United States alone, an estimated $5.6 billion was stolen from investors through cryptocurrency scams in 2023. Power is becoming concentrated in the hands of a few creators, and the only way we can combat this is by giving strength back to the many.

To facilitate decentralized governance and a safe, equitable transition to Web3, we need tools built for the blockchain to democratize the digital society and allow collective decision-making among general populations to mirror real-life social behavior.

If developed correctly, memecoins, otherwise known as “community” or “culture” coins, present a key tool for achieving this. While frequently lacking traditional utility, memecoins are usually designed exclusively to serve the communities they emerge from.

Recent: The new Stellar initiative crowdsources ideas for Web3 innovationHowever, in many current forms, memecoins are susceptible to manipulative pump-and-dump projects. Events like this have harmed most coin holders while favoring select and limited insiders who are privy to certain information surrounding the memecoin cycle.

Bad crypto typically has a messianic leader and a flock. This power dynamic is unsustainable and runs counter to the very reason crypto was created in the first place — to give people a voice in governance.

Overcoming crypto manipulationThe key to overcoming crypto manipulation from a small group of bad actors is to develop memecoins underpinned by community-empowering infrastructures, including decentralized autonomous organizations (DAOs) — an organizational structure with no central governing body.

Combining a DAO with a meme/community coin means that holders of the coin have built-in rights to collectively govern within the remit of the DAO. Only people with a stake in the memecoin have such privileges, meaning the holders’ interests are placed firmly in the center of voting and governance systems. The community’s development and growth coin mirrors the community’s development and growth.

DAOs are already changing the face of decentralized finance. Uniswap DAO has been working toward expanding its $6 billion treasury — a treasury that uses its DAO to vote on what it should do with the capital. While this technology currently has a novel use case, its application also has the power to change how we view money and who can access it.

Whether it be a small group of African entrepreneurs looking to build a liquidity pool or a group of residents in Ohio raising funds for a school, the power of digitally administered democracy is the global breakthrough that will redefine the current state of crypto and finance, and this momentum and support will only continue under President-elect Donald Trump’s administration.

Web3 has the potential to transform everyday life and is developing rapidly, but in its current form, it is at risk of abuse by a small number of malicious creators. We must proceed cautiously to protect Web3 and ensure it delivers on the promise of decentralized finance and decentralized governance.

The best option is to take measured steps to develop community-driven infrastructures and systems like community coins. It is time for the industry to give power back to the community.

Zach Burks is a blockchain developer and the CEO of Mintable. Zach collaborated with the Ethereum Foundation on improving ERC-721 and is the author of ERC-2981.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.