The Promise of a Decentralized Internet; What you need to know – Oyetola Muyiwa Atoyebi and John Oladipo | Media Pyro

INTRODUCTION

One of the links of the industrial revolution is the development of digital technology and over the years with interesting technological and scientific advances, one of the biggest discoveries/innovations can be said to be the Internet. Life without the Internet is unimaginable. In its current state, the Internet permeates all levels or areas of human existence, for example, the Internet has helped create businesses around the world. You may be reading this article because the internet has provided a platform to improve learning, so education has not been left behind. Sellers sell a variety of goods and services – create a platform to connect buyers with sellers – commerce is not left out either. These examples go on and on.

As mentioned above, the Internet has created a platform for the development of business and the development of life in general. In the same vein, the Internet is evolving to make sure it is decentralized, more accessible, and guarantees users certain rights. This article tries to dispel the myth about the new era of the Internet called web3, its relevance and possible legal problems.

WHAT IS WEB3.0

Before exploring the meaning of Web3, it’s a good idea to understand the Internet. The Internet as we know it originated as a simplified means of obtaining information. It was considered as a static network. In other words, the web pages did not offer interactive features that could change as a result of user behavior on previous web sites. This period is considered the era of Web 1.0.

Also, as technology advanced, it became apparent that the Internet needed an update to address the shortcomings of Web 1.0. This led to the development of Web 2.0, which gave birth to interactivity. The emergence of social networks is an example of Web 2.0.

Web 3.0 is the next step in the evolution of the Internet. It emphasizes a decentralized Internet, ownership, openness, interoperability, and reliability. Web 3.0 gives you full control over your data and eliminates social media censorship, making the Internet more intelligent. Its compatibility also allows content creators and companies to move their audience from one platform to another. Web3 also includes a process where websites and applications will be able to process information in an intelligent, human-like way using technologies such as machine learning (ML), big data, decentralized ledger technology (DLT), and more. It aims to become a more autonomous, intelligent and open internet.[1]

Web3 is clearly the “next phase” of the Internet, and perhaps no other Web3 term is as important or as common as “decentralization.” Although cryptocurrencies are at the forefront of the movement, some in the tech industry believe that decentralization is an inevitable evolutionary step for the Internet that will affect all businesses.[2]

The main component of Web 3 is Blockchain. This is evident in the features and prominent keys of the Web3 environment. Blockchain is by far the most important invention that underpins most of the Web3. It is a digital ledger that records all Web3 transactions, both financial and non-financial. The main advantage of recording a transaction on a blockchain is that it is public, making the entire blockchain visible to all users who are granted access. Furthermore, once a transaction is recorded in the blockchain, it cannot be changed even by the original author. This makes the registry tamper-proof, which is a very useful feature for authenticating transactions. In addition, cryptocurrencies serve as a medium of exchange for all financial transactions that take place on Web3. Cryptocurrencies are used instead of fiat currencies because they are easier to transfer, have a full transaction audit trail, and can be programmed. These three cryptocurrency capabilities allow transfer, a full transaction audit trail, and are programmable. Others include Defi, NFT, etc[3].

HOW CAN A BUSINESS PREPARE?

Internet businesses or companies with an online presence based on Web 2.0 rely on third-party and third-party data to reach their customers or clients through advertising or online targeting. For example, if a person searches the Internet for a certain product, the next thing they will see on social media and other websites is an advertisement for that product. However, all this may no longer be possible. Platforms may not be able to mine user data due to Web 3.0. Now the question is, how can businesses prepare so that they are not adversely affected?

To avoid being negatively impacted, companies must move from reliance on rental data and third-party data to zero data. You may rely on data that website visitors explicitly and voluntarily provide to you when they visit your website, instead of information from third-party data sources.[4] Also, providing rewards to users to encourage them to voluntarily consent to the use of their data.

LEGAL ISSUES

1. Data autonomy, privacy and security

Privacy and data protection are among the basic fundamental rights in the digital age. Importantly, there are legislations such as the Nigeria NDPR (Data Protection Regulations), 2019, the Constitution of the Federal Republic of Nigeria (1999)[5]as amended, European Union, General Data Protection Regulation 2018, United Kingdom, Data Protection Act, Federal Trade Commission Act (FTC Act), Children’s Online Privacy Protection Act (COPPA), etc., which ensures adequate data protection and policy compliance confidentiality adopted by the organization.

Web3 offers an opportunity where users will own their data and digital footprints, which can only be shared with the permission and express consent of the user. One of the features of Web 3.0 is that it gives you complete control over your data, which ensures privacy and allows you to separate your digital life from your personal life.

However, it is important to note that there may be some problems associated with data placed on the Internet3. Although it helps to achieve the privacy of data autonomy, can we say that web3 can safely co-exist with our laws without any controversy? For example, data protection regulations have provided for the right to be forgotten (deletion of data), but this is a notorious fact. One of the main features of blockchain is data immutability, so once data has been entered, received and verified by a block, it cannot be changed or deleted.[6].

• Combating money laundering and terrorist financing:

Money laundering is one of the diseases that financial regulators and law enforcement agencies around the world are fighting every day. Money laundering, according to Investopedia, is the illegal process of creating large sums of money derived from criminal activities, such as drug trafficking or terrorist financing, that come from a legitimate source. Money obtained from criminal activity is considered dirty and the process “launders” it to appear clean.

The Central Bank of Nigeria has said that the directive issued to banks and other financial institutions to stop cryptocurrency transactions is due to the fact that cryptocurrencies are vulnerable and can be used for money laundering.[7]. Also, the US Financial Crimes Enforcement Network (FinCEN) noted in a June 2021 report.[8] that convertible virtual currencies (CVCs)—another term for cryptocurrencies—have become the currency of choice in a wide range of illegal online activities. In addition to being the preferred form of payment for the purchase of ransomware tools and services, online exploits, drugs, and other illegal goods online, CVCs are increasingly being used to layer transactions and hide the origin of criminal proceeds.[9]

Recently, some law enforcement agencies have discovered that while the blockchain platform can be used for money laundering, it has also made it easier to fight money laundering through cryptanalysis. Thus, the myth that cryptocurrency cannot be controlled has been dispelled (although this may take a long time, depending on the transfer method and the cryptocurrency).

Thus, the decentralized nature of web3, with the help of relevant private firms, can provide financial regulators and law enforcement with the necessary tools and skills to combat money laundering and terrorist financing.

While blockchain data is generally secure, it is not completely immune to theft or other attacks. If attackers obtain the private key, they can compromise entire accounts, causing long-term damage to the account owner and (potentially) others. Those operating platforms or trading on virtual platforms should take precautions to ensure that data is not compromised.[10] In any case of a data breach, the relevant laws and regulations on data protection oblige data controllers to report such cases to the supervisory authority.[11]

CONCLUSION

The promise of Web 3.0 is to further democratize and open up the Internet. If successful, this new decentralized network will provide users with more control over their data, significantly greater transparency of application protocols, and greater security and reliability.

Key terms: Web 3, Internet, decentralization, technologies.

AUTHOR: Oyetola Muyiwa Atoyebi, SAN, FCIArb. (Great Britain).