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If data is “the new oil,” then we’re all sitting on unrecognized reserves of value. In web2, personal information is hoarded in siloed platforms and owned by corporate giants. Worse, it’s often sold to unknown entities for private profits.
In web3, users have had enough of this data misuse and abuse. As a result, they’re taking back control by binding their gaming, social media, and various other accounts to the blockchain. And, powered by on-chain records and data-earning protocols, they’re uniting their digital identities and finally generating value from what’s theirs.
Let’s explore why, beyond owning your digital assets, the real value going forward lies in owning your data.
The business maxim goes: If the product is free, then you are the product. This is how most tech corporations have operated and continue to operate in web2. Users are, in their eyes, both customers and resources. From Facebook to Google, these companies have created advertising empires and targeted enterprises that run almost solely on this new “oil” of data.
Unfortunately, time and again, user information under this system has been leaked, lost, and traded. Facebook has come under too many scandals to count in the way it liberally shares user data with third parties. Consequently, much of this information lands in the hands of brokers who, on average, count approximately 1,500 data points for every 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 their data privacy 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 keenly aware of this data imbalance. With their identity and privacy on the line, younger people are particularly looking for a solution.
The good news is that technology brings hope for change. The blockchain popularized the concept of digital asset ownership among netizens. Now, novel protocols and plucky startups are moving the needle toward data ownership. Fueled by on-chain recording 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 the tech giants have been doing for years).
In January, Ethereum finalized a new protocol proposal, ERC-7231, to unite digital identities with an aggregated NFT. This standard binds multiple identities across web2 and web3 to a single NFT to achieve encrypted aggregation of multi-domain identity data.
What does this mean? It means users have an “identity of identities” that they control entirely. Not only is this more interoperable across platforms, but the standard brings users in on commercial value generation from their data.
The most instructive example of this in action is gaming. For years, finding a way to unite disparate gaming identities—and host gamer achievements and history in one place—has been nearly impossible. The platforms don’t talk to one another, the data is static, and traditional game studios are laggards.
ERC-7231 bridges the gap between old-world and new-world gaming by unifying identity on the blockchain. This way, gamers can move freely across the ecosystem under one flag and tag. Better yet, since they own their underlying information on the blockchain, only they can decide what happens to it. If they opt to share this information, gamers can passively earn when brands leverage their on-chain and off-chain data.
Data self-sovereignty matters, and multiple startups are bringing this concept to life. One is Clique—a decentralized identity-oracle protocol out of San Francisco that enables users to attest their off-chain data on-chain and earn utility from the information. Of course, this brings value generation and privacy preservation. Again, in a far cry from web2, doing so guarantees end-to-end privacy thanks to trusted execution environments and multi-party computation. As a result, the user data is tamper-proof and ready for continuous incentive distribution—a win-win.
There’s a paradigm shift happening right now. Users are waking up to the fact that their data is valuable and that they aren’t currently sharing that value.
Half of the respondents in this survey by Consensys believe they add value to the internet, and two-thirds assert that they should own the things they make on the internet. Further, only 38% feel adequately compensated for their contributions.
In addition, 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% desire greater control over their online identities. Something’s got to give.
Web3 is our chance to evolve yesterday’s data dynamics into something fairer and more accessible. Backed by the transparency and immutability of the blockchain, as well as data-sharing protocols and platforms, we can fix digital ownership.
I believe we’re at a crossroads and that users will lead the charge. In fact, this probably isn’t even the right word for this group going forward. Instead, “users” need to become “builders” in this next wave of the internet—leveraging web3 to solve the entrenched issues of identity, privacy, and monetization.
Only by taking from the data-haves and giving it to the data-have-nots can everyday cybercitizens harness the untapped reservoirs of data value within their grasp.
