Disclaimer: The opinions and viewpoints expressed in this article are the author’s own and do not necessarily reflect the views and opinions of the editorial team at crypto.news.
If data is considered to be “the new oil,” then we are all in possession of valuable reserves waiting to be recognized. In the realm of web2, personal information is stored in isolated platforms and controlled by large corporations. To make matters worse, this data is often sold to unknown entities for their own profit.
In web3, users have had enough of this misuse and abuse of data. As a response, they are reclaiming control by linking their gaming, social media, and various other accounts to the blockchain. Through on-chain records and data-earning protocols, they are consolidating their digital identities and finally deriving value from what rightfully belongs to them.
Let’s delve into why, in addition to owning digital assets, the true value lies in owning your data.
The issue of data in web2
The saying goes: “If the product is free, then you are the product.” This is the modus operandi of most tech companies in web2. Users are seen as both customers and commodities. From Facebook to Google, these companies have built empires on advertising and targeted marketing fueled by user data.
Unfortunately, user information has time and again been compromised, lost, and traded under this system. Facebook, for example, has faced numerous scandals related to its loose sharing of user data with third parties. As a result, this data often ends up in the hands of brokers who have an average of 1,500 data points per consumer. This data is then repackaged and sold to the highest bidder for marketing purposes. Big data equals big business.
This cycle has continued for over a decade, and users are understandably dissatisfied with the current situation. Three-quarters of consumers are more concerned about their data privacy today than in the past few years.
As digital technologies become more integrated into our daily lives, from online shopping to remote work to social media, users are acutely aware of the imbalance in data ownership. With their identity and privacy at stake, younger generations are actively seeking a solution.
The solution for data in web3
The good news is that technology offers hope for change. The blockchain has popularized the concept of digital asset ownership, and now, innovative protocols and startups are shifting the paradigm towards data ownership. By utilizing on-chain recording of off-chain information, web3 empowers users to reclaim control and monetize the value derived from their data.
In January, Ethereum introduced a new protocol proposal, ERC-7231, to merge digital identities with a consolidated NFT. This standard connects multiple identities from web2 and web3 to a single NFT, enabling encrypted aggregation of multi-domain identity data.
What does this mean? It means users have complete control over an “identity of identities.” Not only is this more interoperable across platforms, but it also allows users to participate in the commercial value generated from their data.
A prime example of this in action is within the gaming industry. For years, consolidating disparate gaming identities and storing gamer achievements and history in one place has been a challenge. Traditional game studios are slow to adapt, and the lack of communication between platforms has hindered progress.
ERC-7231 bridges the gap between traditional and modern gaming by unifying identity on the blockchain. This allows gamers to seamlessly navigate the ecosystem under a single flag, and since they own their data on the blockchain, they have the authority to decide its usage. By sharing this data, gamers can passively earn from brands utilizing their on-chain and off-chain data.
The concept of data self-sovereignty is crucial, and several startups are bringing this idea to life. One such example is Clique, a decentralized identity-oracle protocol based in San Francisco. Clique enables users to verify their off-chain data on-chain and earn from its utility, ensuring value generation and privacy protection. This approach guarantees end-to-end privacy through trusted execution environments and multi-party computation, making user data secure and eligible for continuous incentive distribution.
Participating in the value of the internet’s “new oil”
A shift in mindset is occurring. Users are awakening to the fact that their data holds value, and they are not currently benefiting from that value. Half of the respondents in a survey by Consensys believe they contribute value to the internet, with two-thirds asserting that they should own what they create online. However, only 38% feel adequately compensated for their contributions.
Moreover, concerns about data privacy are prevalent and increasing. Over 80% of respondents 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. Change is necessary.
Web3 presents an opportunity to transform outdated data dynamics into a fairer and more accessible system. Supported by the transparency and immutability of the blockchain, as well as data-sharing protocols and platforms, we can redefine digital ownership.
I am convinced that we are at a pivotal moment, and users will lead the way. In fact, the term “users” may no longer be fitting for this group. Instead, they must become “builders” in the next phase of the internet, utilizing web3 to address issues related to identity, privacy, and monetization.
By redistributing data from the data-rich to the data-poor, everyday internet users can tap into the untapped reservoirs of data value within their reach.