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Tiffany Liu

Professor Carmen Acevedo Butcher

R4B

12 December 2022

A New Way of Trusting: The Technological and Social Implications of Web 3.0 and Blockchain

Weebly: tiffany-r4b.weebly.com

Abstract: Analyzing the technological and social implications of the Web 3.0 revolution, this

paper highlights the impact of blockchain technology on security and trust in society. This paper

aims to dissect the definitions of decentralization, Web 3.0, and blockchain technology. Its goal

is to make Web 3.0 and blockchain understandable for the average consumer as it is more

important than ever to get in touch with these topics. From research analysis on cryptocurrencies

to comparison analysis of traditional versus blockchain governance structures, this paper will

drive home the role of blockchain in the world as we know it. As a glimpse into the paper,

blockchain is a technological solution to a social problem—the lack of trust between humans and

the reliance on centralized web services. Blockchain allows peers to not have to trust one another

because they can simply trust their own copy of information, but everyone must trust that the

system functions correctly and ethically. Ultimately, this paper will dive into what this means for

our virtual world and, in turn, our real world as well.

Our technological world is undoubtedly changing faster than ever, and one of the largest

innovations in recent years has been the decentralization of the web or the Web 3.0 revolution led

by blockchain technology. Decentralization of the web is the shift from centralized data hosting

services of corporations or the government to peer-to-peer networks where each user can gather
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and send information without a third party. The Web 3.0 era is what we live in today,

encompassing the shift from a centralized web to a decentralized web. Lastly, blockchain is the

technology that allows all of this to happen. Blockchain is a system of recording information that

is near impossible to change or hack. Using blockchain technology, information can be

maintained by multiple computers that are linked in a peer-to-peer network. In short, blockchain

leads to the shift from trusting humans to trusting machines as well as the shift from centralized

to decentralized control of the digital world. Ultimately, these new concepts of Web 3.0 allow

users to take control of the security of their information and the governance of their

communities, which increases trust in both the technological and social scopes of society. The

figure below illustrates how a blockchain works in practice.

How Blockchain Works (Bylund, 2022)

Each generation of the web has marked a huge transition in the technological world, and

it is important to understand the defining characteristics of each era. Web 1.0 is considered the

“read-only” web, meaning that users could only search for and read information. Web 2.0 is the

“read-write” web, meaning that users could create content and interact with other users online.
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Finally, Web 3.0 is the “read-write-execute” web. It describes a network where computers can

interpret information like humans and distribute content tailored to the needs of individual users

(Naik, 2009).

Examples of Web 1.0, 2.0, and 3.0 Services (Kalam, 2022)

Rather than accessing the web through services mediated by companies like Google, consumers

themselves own and govern particular areas of the web. The goal of Web 3.0 is essentially to

eliminate third parties in any industry ranging from finance to healthcare. Besides blockchain,

Web 3.0 also encompasses advancements in artificial intelligence and machine learning.

However, for the purposes of this paper, we will focus on blockchain technology and its

implications in our world today.

An explanation of cryptocurrencies—the most common application of blockchain—will

help drive home the definition of blockchain. Blockchain is the technology that enables the

cryptocurrency industry to exist. A cryptocurrency is a fully digital medium of exchange, and it

uses cryptographic techniques in order to verify transactions and control its value. This is where

blockchain comes into play. Participants can confirm transactions without a need for a
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centralized authority like a bank as the blockchain is a decentralized ledger listing all

transactions in the peer-to-peer network (Likens, 2017). Peer-to-peer is the term used to

characterize how computers can connect to one another without the help of another server. There

are several reasons why cryptocurrency like Bitcoin has become so popular in recent years. First,

they are not associated with centralized governments, meaning that they are independent of any

turmoil that may exist in certain parts of the world. For those who do not trust their government,

cryptocurrency is the key to their world of financial assets and investments. Second, owning

cryptocurrency is more secure than owning traditional fiat currencies as cryptocurrency

transactions are safeguarded by the blockchain (World Financial Review, 2020). Since

blockchain allows peer-to-peer transactions, governing agencies do not need to act as the linkage

between a borrower and a lender. Instead, a borrower can directly borrow money from a lender,

ensuring that the money they receive is secure.

Peer-to-Peer Bitcoin Transaction (Sedgwick, 2020)

Besides cryptocurrency transactions, the healthcare industry is another concrete example

of blockchain technology in the works. The field has had fragmented governance until the rise of
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blockchain technology enabling trustless interoperability. Interoperability refers to seamless and

secure interactions between separate technologies. An example of interoperability in healthcare

would be a technology that allows a user to find patient information on a database, send a smart

contract to get consent for a surgical operation, and then ensure that medicines arrive efficiently

through a ledger system. There would be a seamless transition between the three steps, and a

patient would not need to sign the same forms each time they go to a new doctor’s office. It is no

secret that the United States healthcare system is expensive. According to Statista, the United

States spent over 20% of its GDP on healthcare in 2020 (Statista Research Department, 2022).

U.S. National Health Expenditure as Percent of GDP from 1960 to 2020 (Statista Research

Department, 2022)

However, blockchain technology may be the answer to this decades-long problem. Not only can

blockchain keep a transparent log of patient data, it can also conceal the identity of each patient.

Due to the administrative complexity of the healthcare system, healthcare costs are record high.

With the help of blockchain, these costs can be decreased. Medicalchain, a service based in
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London, allows hospitals and laboratories to request patient information while protecting the

patient’s identity from outside sources (Daley, 2022). This represents decentralized control of an

individual’s personal information, which further points to the security of blockchain.

The main reason why blockchain will increase trust among participants is that it

represents the shift from trusting humans to trusting machines. Tomaso Aste, founder of the

University College London Center for Blockchain Technologies, highlights two lenses through

which to view the technological implications of blockchain. He argues that blockchain is an

information and communications technology (ICT) used to log ownership of assets, rights,

obligations, or any other data type (Aste, 2017). This is no different from current modes of

recording information except blockchain allows the log of ownership to be recorded in a safer

manner. Through this lens, blockchain is seen as a solution to the lack of trust between people.

Through the second lens, on the other hand, blockchain can be seen as an institutional

technology used to decentralize governance structures of leadership, decision-making, and

people management (Aste, 2017). Blockchain technology allows independent people to work

with public data sources simultaneously. Thus, it is a tool to govern entities or communities of

people. This makes the impact of blockchain expand from merely the technological world to the

broader social world as it can increase security in patient, customer, and client information

within nearly every industry. Businesses that use fully automated and secure transactions would

have an upper hand over businesses that have not yet transitioned. In the supply chain,

blockchain would create a seamless process from production to distribution. Therefore, trusting

machines over trusting humans becomes a solution for both convenience as well as security.
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How Blockchain Connects Participants in a Supply Chain (Litke, 2019)

With blockchain technology, all users can hold one another accountable for the

information they put onto a chain. Thus, blockchain can be referred to as a technological solution

to a social problem—the problem being lack of trust in society. It is impossible to hack a

blockchain system because every person on the network retains a copy of the list of transactions,

meaning that if one person changes it, everyone else could prove that the change was invalid.

This requires that a majority of people on a network are honest and want what is best for the

system. While blockchain allows people to not have to trust one another because they can simply

trust their own copy of the information, everyone must trust that the system functions in a way

that prevents unethical activity on the internet. In “Blockchain and Web 3.0: Social, Economic,

and Technological Challenges,” Massimo Ragnedda argues that the goal of blockchain

technology is on the basis of distributed trust as well as the basis of rational self-interest and

competition (Ragnedda, 2021). Each user must trust everybody else as economic agents

participating in a network. Each user may also be acting in self interest as they want their own
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transactions and actions to be deemed valid, which is only possible if the invalid transactions are

deemed invalid. In short, there is still a level of trust that is associated with the technology in that

participants must trust that the mechanism works in the way it is intended to.

Not only does blockchain increase trust, but it can also increase involvement within an

organization or community. In any organization, there exists a governance structure that

employees abide by. Institutional hierarchies govern how socioeconomic communities interact

with each other. Blockchain technology, however, will alter the way in which these communities

coexist in society through DAOs, decentralized autonomous organizations. In DAOs, decisions

are made across the network’s nodes—devices within a system—rather than being concentrated

at its center (Aste, 2017).

Traditional Centralized System VS Decentralized Autonomous Organization (Fadilpasic, 2022)

Businesses can run under an incorruptible set of rules coded into smart contracts that are possible

through blockchain. A smart contract is a computer program that automatically executes actions

when certain terms are met (Frankenfield, 2022). For example, an organization can use a voting
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mechanism on the blockchain to ensure that votes are not tampered with and that every

stakeholder has equitable power. In a decentralized organization, members share the

responsibility to collectively manage its resources, inverting the hierarchical management

pyramid (Aste, 2017). However, members must be active and involved participants in order for

this to occur. Therefore, it is important for the general public to learn about blockchain

governance so that they can participate in the consensus mechanism—how decision-making

works in blockchain. If the governing structure of traditional blockchain technologies eventually

spreads to the governing of communities or even countries, maybe we will have an autonomous

and decentralized real world.

Though Web 3.0’s emergence is an exciting innovation for industry experts, it is still a

relatively new and unexplored topic for the general public. At the time that this paper is being

written, there are over 170 million blockchain wallets worldwide (Ruby, 2022). With 8 billion

people in the world, only 2.1% of the global population uses blockchain wallets. These wallets

are likely only owned by those who invest in cryptocurrencies, presenting the discrepancy

between those who have access to the finances to own cryptocurrency and those who do not. As

consumers begin taking control of their own information, it will become much more important to

provide adequate and equitable education on how to use blockchain and buy cryptocurrencies.

This presents the possibility of wealthier communities having easier and quicker access to

information than less privileged communities. For instance, the general public can enroll in

online courses created by campus clubs of accredited universities like Blockchain at Berkeley.

However, certification in the courses requires a fee that not everyone has access to.
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Blockchain at Berkeley Logo (Blockchain at Berkeley, 2022)

Eventually, the governance of blockchain technologies may directly or indirectly influence those

who do not understand how it works, meaning that minorities and marginalized communities

cannot be informed participants in decision-making processes.

Nevertheless, this presents new opportunities for innovation within the blockchain space.

The challenge of involving those who have not yet had the opportunity nor access to these

technologies is one that is currently being explored. For instance, Optimism is a blockchain

protocol that aims to launch a new governing system called the Optimism Collective. This

collective will be governed co-equally by two houses: the Token House and the Citizens’ House.

The Token House would comprise of people who own Optimism’s native token, available only to

those who have the ability to purchase them. The Citizens’ House, though, would include

communities like college organizations that closely study the blockchain industry (Optimism,

2022). The goal of this governance model is to include those who do not have the funds to

purchase Optimism’s tokens in making decisions that could still potentially impact them. This is

a prime example of how the field of blockchain is constantly evolving and how it can

reformulate how we think about governance throughout various environments of the world.

Due to the current lack of knowledge surrounding blockchain, there is also a lack of trust

in it. In fact, according to Pew Research Center, only 16% of Americans say that they have
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invested in or traded cryptocurrencies in their lifetime (Perrin, 2021). Additionally, the majority

of those who participated in the study have only heard a little about cryptocurrency.

Awareness on Cryptocurrencies (Perrin, 2021)

Ross Thompson, Accountancy and Finance Lecturer at Arden University, explains that “While

organizations may start trusting the security of blockchain once the technology is widely

accepted and used, blockchain users may not fully trust other parties on the blockchain network”

(CAEW Insights, 2022). If a business uses blockchain, it does not necessarily mean that the shift

from centralized to decentralized technologies will be successful. In order for a blockchain to

function properly, the people using the system must participate in consensus. If someone is still

skeptical of others on the network, they are also skeptical of the blockchain’s functionality

because blockchain is supposed to eliminate the need for trust in others. Accordingly, there is not

enough awareness on how the blockchain works, which hinders the public’s trust in it.
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Another factor of trusting a system is how much others use it or believe in it. As humans,

we are heavily influenced by those around us. Since a majority of the population uses Google,

we believe it to be safe, and we add ourselves to the group of people who also use Google. It

becomes a cycle where more and more people use a system that is already trusted by others. This

is also the case for cryptocurrencies and other blockchain technologies. Ethereum, an

open-source blockchain, is a popular platform amongst people building smart contracts. Because

it is such a popular blockchain, the security of Ethereum is high. However, there is not enough

space on the Ethereum blockchain to accommodate each person who wants to include their smart

contract in a block. This leads to sky high transaction costs that are required of those who add

their smart contracts to Ethereum. A user who adds their smart contract on Ethereum is paying

for the security of the platform. For users who have smart contracts that do not require the same

level of security that Ethereum provides, their contracts can be built on a layer-2 solution—a

blockchain on another blockchain.

Layer 2 Blockchains on the Ethereum Blockchain (Roberto de Isidro, 2022)

Optimism, an aforementioned blockchain protocol, is built on top of the Ethereum blockchain.

Although it inherits some of its security from Ethereum, it does not inherit all of it. Thus,

transaction fees on Optimism are a fraction of the cost of those on Ethereum. Layer-2 solutions
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are still being explored, and layer-3 will likely come as layer-2 solutions become more

expensive.

Taking all of the above into consideration, Web 3.0 and blockchain is at the center of how

many industries can eliminate the need for direct trust between different parties. Instead, if

everyone trusts that the technology works properly, direct trust becomes unnecessary. A

decentralized digital society can in turn create decentralization in real world social interactions

and organizational governance. As blockchain continues evolving, so does our perception of trust

and governance of society. Ultimately, it is imperative to spread the knowledge of Web 3.0 and

blockchain to all communities in the world as it is only a matter of time before everyone feels the

effects of the revolutionary third era of the web.

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Works Cited

Aste, Tomaso. “Blockchain Technologies: The Foreseeable Impact on Society and Industry.”

IEEE Xplore, 2017, https://ieeexplore.ieee.org/document/8048633.

Bylund, Anders. “What Is Blockchain Technology?” The Motley Fool,

https://www.fool.com/investing/stock-market/market-sectors/financials/blockchain-stocks

/what-is-blockchain/.

Castro, H., et al. “Meta-Organization and Manufacturing Web 3.0 for Ubiquitous Virtual

Enterprise of Manufacturing Smes: A Framework.” Procedia CIRP, Elsevier, 14 Oct.

2013, https://www.sciencedirect.com/science/article/pii/S2212827113007099.

Daley, Sam. “Blockchain in Healthcare: 17 Examples to Know.” Built In, 9 Aug. 2022,

https://builtin.com/blockchain/blockchain-healthcare-applications-companies.

Fadilpasic, Sead. “What Is a Dao & How Does It Work?” DappRadar Blog RSS, 2 Sept.

2022, https://dappradar.com/blog/what-is-a-dao-how-does-it-work.

Frankenfield, Jake. “What Are Smart Contracts on the Blockchain and How They Work.”

Investopedia, Investopedia, 16 Sept. 2022,

https://www.investopedia.com/terms/s/smart-contracts.asp.

ICAEW. “How Can Blockchain Technology Build Trust?” ICAEW Insights, 19 Aug. 2022,

https://www.icaew.com/insights/viewpoints-on-the-news/2022/aug-2022/how-can-blockc

hain-technology-build-trust.
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Juzwishin, Donald W.M. “Political, Policy and Social Barriers to Health System Interoperability:

Emerging Opportunities of Web 2.0 and 3.0.” Healthcare Management Forum, No

Longer Published by Elsevier, 25 June 2010,

https://www.sciencedirect.com/science/article/abs/pii/S0840470410601366.

Kalam, Nazhim. “Web 1.0 vs Web 2.0 vs Web 3.0.” Medium, Enlear Academy, 18 Jan. 2022,

https://enlear.academy/web-1-0-vs-web-2-0-vs-web-3-0-e428cfe09dde.

Kshetri, Nir. “Web 3.0 and the Metaverse Shaping Organizations' Brand and Product Strategies.”

IEEE Xplore, https://ieeexplore.ieee.org/document/9770453.

Litke, Antonios, et al. “Blockchains for Supply Chain Management: Architectural Elements and

Challenges towards a Global Scale Deployment.” MDPI, Multidisciplinary Digital

Publishing Institute, 18 Jan. 2019, https://www.mdpi.com/2305-6290/3/1/5.

Medicalchain. “Home.” Medicalchain, https://medicalchain.com/en/.

Murray, Alex, et al. “The Promise of a Decentralized Internet: What Is Web 3.0 and How Can

Firms Prepare?” Business Horizons, Elsevier, 3 June 2022,

https://www.sciencedirect.com/science/article/pii/S0007681322000714.

Naik, Umesha. Comparative Study of Web 1.0, Web 2.0 and Web 3.0. Mar. 2009,

https://www.researchgate.net/publication/264845599_Comparative_Study_of_Web_10_

Web_20_and_Web_30.
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Optimism. “What Is the Optimism Collective?” Optimism Docs, 7 Nov. 2022,

https://community.optimism.io/docs/governance/#token-house.

Perrin, Andrew. “16% Of Americans Say They Have Ever Invested in, Traded or Used

Cryptocurrency.” Pew Research Center, Pew Research Center, 23 Aug. 2022,

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nvested-in-traded-or-used-cryptocurrency/.

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Pop, Ionut. “7 Ways Blockchain Helps Businesses Accelerate Digital Transformation.” Allgeier,

https://www.allgeier.com/en/blog/blockchain-und-digitale-transformation/#:~:text=It%20

creates%20trust%20and%20security,of%20cross%2Dborder%20digital%20connectivity.

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ROUTLEDGE, 2021.

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0/blockchain-web-3-0-massimo-ragnedda-giuseppe-destefanis.

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Interoperable Chains?” Global X ETFs, 14 Sept. 2022,

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erable-chains/.
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Robertson, Harry. “Ethereum Transaction Fees Are Running Sky-High. That's Infuriating Users

and Boosting Rivals like Solana and Avalanche.” Business Insider, Business Insider, 9

Dec. 2021,

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solana-avalanche-cardano-crypto-blockchain-2021-12#:~:text=The%20average%20trans

action%20or%20%22gas,to%20crypto%20exchange%20Kraken's%20analysts.

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15 Nov. 2022, https://www.demandsage.com/blockchain-statistics/.

Sedgwick, Kai. “You Can Privately Cash out Bitcoin on These P2P Exchanges – for a Premium

– Exchanges Bitcoin News.” Bitcoin News, 10 Feb. 2020,

https://news.bitcoin.com/private-bitcoin-p2p-exchanges-cash/.

Statista Research Department, and Jul 27. “U.S. Health Expenditure as GDP Share 1960-2020.”

Statista, 27 July 2022,

https://www.statista.com/statistics/184968/us-health-expenditure-as-percent-of-gdp-since

-1960/#:~:text=In%202020%2C%20U.S.%20national%20health,higher%20than%20othe

r%20developed%20countries.

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Annotated Bibliography

Aste, Tomaso. “Blockchain Technologies: The Foreseeable Impact on Society and Industry.”

IEEE Xplore, https://ieeexplore.ieee.org/document/8048633.

Tomaso Aste is a professor of complexity science at University College London and

founder of the UCL Center for Blockchain Technologies. He conducts research on

blockchain applications. This article describes various perspectives on the challenges and

opportunities in blockchain technology and provides a historical overview of the field.

While Aste takes on a supportive and positive outlook on blockchain technology, he also

presents its drawbacks and limitations. This provided insight into the positive and

negative aspects of trusting blockchain technology in the paper.

Castro, Helio, et al. “Meta-Organization and Manufacturing Web 3.0 for Ubiquitous Virtual

Enterprise of Manufacturing Smes: A Framework.” Procedia CIRP, Elsevier, 14 Oct.

2013, https://www.sciencedirect.com/science/article/pii/S2212827113007099.

Helio Castro is an engineering professor in the School of Engineering at Polytechnic of

Porto. His research article is about how small and medium-sized enterprises (SMEs) are

driving economic and social development. His paper discusses the Meta-Organization

supported by information and communication technologies including Web 3.0.

This article is relevant to the project because it discusses specific organizations used

when examining blockchain through a case study lens. By drawing from real-world
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applications of blockchain, it becomes easier to break down technical aspects of Web 3.0

and blockchain.

Juzwishin, Donald W.M. “Political, Policy and Social Barriers to Health System Interoperability:

Emerging Opportunities of Web 2.0 and 3.0.” Healthcare Management Forum, No

Longer Published by Elsevier, 25 June 2010,

https://www.sciencedirect.com/science/article/abs/pii/S0840470410601366.

Donald W. M. Juzwishin is the former CEO of the Health Council of Canada. His article

explains the interoperability of health informatics that is made possible by blockchain

technology. It also highlights governance in the healthcare industry, comparing the effects

of Web 2.0 and Web 3.0.

This article is different from any other sources utilized in the paper because it discusses a

specific use case of blockchain. It compares how blockchain can transform healthcare

and how Web 2.0 is currently affecting the industry, which allowed for further research

into Medicalchain.

Kshetri, Nir. “Web 3.0 and the Metaverse Shaping Organizations' Brand and Product Strategies.”

IEEE Xplore, https://ieeexplore.ieee.org/document/9770453.

Nir Kshetri is a professor at the University of North Carolina, Greensboro whose research

focus lies in blockchain, artificial intelligence, and socio-economic effects. Kshetri

describes blockchain as a 3-D virtual world, showing the crossover between the real

world and virtual reality.

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This article allowed the paper to adopt a conceptual lens to introduce the complex

technical aspects of blockchain. In examining the intersections of blockchain, Kshetri

informed the parallels and discrepancies between our digital and real worlds.

Murray, Alex, et al. “The Promise of a Decentralized Internet: What Is Web 3.0 and How Can

Firms Prepare?” Business Horizons, Elsevier, 3 June 2022,

https://www.sciencedirect.com/science/article/pii/S0007681322000714.

Alex Murray is a professor in the Lundquist College of Business at the University of

Oregon. The article illustrates what Web 3.0 means for established businesses and

industries. As a decentralized database allows information to be securely recorded

without a third party, some companies will eventually lose utility.

Murray lays out the effects of increased peer-to-peer interactions, which is central to the

paper’s argument that Web 3.0 alters socialization between people. Seeing Web 3.0 from

a business perspective brought more insight into research on decentralized autonomous

organizations and cryptocurrencies.

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Final Research Project Reflection

While putting together project 3, I learned that research goes through dozens of iterations

before it even becomes ready for review. Writing the assigned research arcs helped immensely as

it provided the opportunity for me to write freely without the pressure of perfecting my paper.

After I completed three research arcs, I was able to connect them together in order to generate a

full first draft. From there, I just had to create a better flow within and between the paragraphs.

A challenge I dealt with throughout the research process was simplifying complex

technical terms used in primary academic sources to make my essay palatable to my target

audience: the general population. However, this became a wonderful learning experience as it

allowed me to dissect quotes that I also found difficult to understand. I believe that the best way

to learn a concept is to attempt to explain it, which is a skill I practiced for my project.

Although I am a member of Blockchain at Berkeley and have explored the topics of

decentralization and Web 3.0 extensively within the club, there is always more to learn. For

example, upon researching decentralized autonomous organizations (DAOs), I learned that

DAOs invert the hierarchical management pyramid. If the governance of blockchains eventually

spreads to the governance of real world organizations or countries’ governments, then the rise of

blockchain will impact our political world as well.

Ultimately, project 3 was one of the most beneficial projects I have ever done because

executing research from beginning to end was not an easy feat. After this project, I will continue

research in the world of blockchain as well as explore other topics that interest me.