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May 11, 2022

Web3 and Its Implications for Digital Public Services

The historic pattern of how Web1 and Web2 ecosystems affected digital public services suggests that the Web3 ecosystem will eventually make real contributions to government as well.

A polarised discussion has emerged around Web3 over recent months. Some view Web3 as the harbinger of decentralised societal coordination, marking a return to the democratising ethos of the pre-2000 internet. Others view Web3 as just another bunch of centralised platforms, and slow, energy-inefficient ones at that. An increasingly large group of investors and tech entrepreneurs, meanwhile, consider Web3 to be an enabler of innovative, NFT-powered business models operating in the “metaverse”, most recently raising Web3 funds to the tune of $4.5 billion.

Given the amount of money that is presently pouring into the nascent Web3 ecosystem, it likely won’t be fading away any time soon. For innovators in government, it then becomes necessary to ask the question:

What does Web3 mean for digital public services?

To begin answering this question, it is worth examining how past iterations of the Web have interacted with digital public services. The pattern is striking: The history of digital public services rhymes with the history of the Web. As new manifestations of the Web came around and unlocked new modes of online interaction, governments–with some time delay–have utilised them.

Web1: Serving information since 1989 

Web1, which is often placed in the time period from 1989 to 2005, gave users the ability to write documents and run their own web servers to publish those documents on static pages. In other words, documents were “served” to an audience with few means for them to interact.

Governments took part in Web1. The official web portal of the US government, usa.gov, went online in 2000. In the UK, one of the earliest websites was set up by the Birmingham City Council (est. 1994). In line with Web1 capabilities, these websites provided citizens with easier access to some information.

Web2: Responsive experiences on central servers

The Web2 paradigm began in 2006. In contrast to Web1, Web2 has been characterised by a focus on interactivity and usability. Under Web2, pages have been responsive to user input, such that users can upload and share many different kinds of information. Many online services utilise this input to train recommendation algorithms that further enhance the user experience.

However, interaction under Web2 has also been a highly centralised affair. While the Web as a whole has always been a decentralised communication infrastructure, the actual interaction of users has gravitated around only a few platforms hosted on central servers. These central servers are predominantly owned by intermediaries like Meta (formerly Facebook), Google, Amazon, and Tencent, who set the rules for user interaction and handle the processing of user data. At times, they have exploited this privileged position in questionable ways.

Web2 set the ground for digital public services as we know them today. Some governments were faster to capitalise upon its potential than others. The UK’s Government Digital Service has been a frontrunner in using Web2 features to create digital public services that are user-friendly, responsive, and interactive. Other countries, such as Germany, have been slower to adapt, but are fully committed to catching up. 

Web3: Distributed interaction platforms

Web3, finally, is the ecosystem of online infrastructure and interaction that is currently taking shape.

Web3 maintains the interactivity of Web2, but allows the processing of user interaction to be handled by networks of computers, rather than central servers. In theory, this facilitates users to interact without privileged intermediaries between them, enabling a new online ecosystem in which users themselves control the rules, functionalities, infrastructures and assets of interaction.

The innovation making all this possible is Distributed Ledger Technology (DLT), of which “Blockchain” is the most well-known. Blockchains use peer-to-peer networking to have multiple computers collectively validate and store data in chained “blocks” of information. Through the additional use of cryptography, it can become exceedingly difficult for any individual computer in the network to meddle with that data. For parties that do not trust each other, DLT creates opportunities to collectively run digital platforms processing anything from financial transactions to software code.

Of course, DLT networks like Bitcoin and Ethereum have come into question for the slow and energy-inefficient processing of information that their cryptographic algorithms can cause. Others have pointed out that Web3 applications have not been insulated from centralising social conventions and business models. As a consequence, some have come to dismiss the budding Web3 ecosystem entirely. 

This may be premature. The Blockchains used in Bitcoin and Ethereum are only one particular form of DLT, of which new and innovative kinds are still emerging. New kinds of DLT are faster and more energy-efficient. Further, as there are so many different kinds of DLT, their appropriation by exploitative business models revolving around centralised power is not a fait accompli.

Examples of promising Web3 projects are presented by DLTs that split data processing up across multiple Blockchains, or ones that have information processed and verified only by a subset of network nodes (as opposed to the entire network, like Bitcoin and Ethereum do). These approaches make DLT more scalable and the exchange of data more efficient, without necessarily incurring undue sacrifices in network openness and security. Avalanche, Polkadot, Connext and Holo are examples of open-source projects utilising these approaches.

Implications for digital public services

Web3 projects like these may conceivably grow to become formidable computing networks and interaction platforms over the coming years. How may their characteristics transform digital public services?

To an extent, this question is already being answered. Governments across the globe have experimented with DLT in use cases ranging from procurement, to identity, land records, public finance, and secure messaging. Some of these pilots and projects have delivered real value. However, the majority of them have tended to be based on closed DLT networks in which the core value proposition of the Web3 paradigm–rich interaction among parties that do not trust each other–was not being leveraged. In the end, many of these initial government use cases of DLT required digital transformation, though not necessarily the use of distributed interaction platforms.

However, the latter may still hold great potential for the improvement of digital public services, because lack of trust is acute in this area. Rivalling ministries, controlling federal states, and distrustful citizens frequently hold back the data sharing, coordination of administrative processes, and genuine collaboration that are needed to create new and improved digital public services. Distributed interaction platforms based on open, secure, and efficient DLT networks may help overcome such challenges. Their use in government will require data and identity interfaces forging a link between the emerging Web3 ecosystem and the world of government computing.

At PUBLIC, we are identifying low-risk contexts facilitating experimentation with these technologies and exploration of their potential for improving public service delivery. If you are interested in getting involved in this work, we invite you to get in touch.

Takeaways

  1. The core value proposition of Web3 is the creation of distributed interaction platforms facilitating data and asset exchange, coordination, and collaboration among parties that do not trust each other.
  2. Buoyed by extensive venture capital and retail investments, a Web3 ecosystem of variegated infrastructures and applications is beginning to flourish.
  3. The historic pattern of how Web1 and Web2 ecosystems affected digital public services suggests that the Web3 ecosystem will eventually make real contributions to government as well.
  4. Doubts over the scalability of DLT remain, but are increasingly being addressed by new and emerging approaches.
  5. Government innovators looking to get ahead of the curve should take note now and begin to explore the potential that open, secure, and scalable DLT networks hold for improving digital public services.

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Authors

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Moritz Kleinaltenkamp

Senior Associate

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Henry Taylor

Associate, Public Affairs

Photo by the author

Fil Lekkas

Lead, International

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