Gm Web3 Academy DOers!
Web3 promises to solve the digital identity and data problem that follows us around in Web2.
It’s a common discussion and debate amongst the Web3 crowd.
But what is the solution to this?
Is our identity simply going to be within a Metamask wallet with an Ethereum Name Service (ENS) Domain attached to it?
Will soulbound or non-transferable NFTs be the thing that stores all of our data points?
Evin founded Disco with the aim of enabling users to own and store their data in one backpack. A single application that stores all of your Web3 keys and addresses and allows you to operate multi-chain.
Throughout this newsletter, we’re going to introduce you to new terms like verifiable credentials and decentralized identifiers, so without further ado, let’s dive into it!
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The Problem (Business) Of Personal Data in Web2
The business model of every major tech company like Facebook or Google is to gather data about you and sell it to the highest bidder. Every scroll, like, comment or interaction in general is kept in a database with the purpose of profiling you more and more accurately.
This way, Facebook, Google, TikTok and Twitter know everything there is to know about you, which enables them to spit the content that interests you the most to retain you on their platforms, while selling your data to other companies who run ads.
It is mind-blowing and scary that big tech companies know more about you than you do!
Always keep in mind that whenever you’re using a free app, you’re the product!
This is not only unethical, it’s also a breach of privacy. And something Web3 aims to fix.
See, throughout the last two decades, data has been transformed into a business and users have been neglected in the process. Web3 aims to transfer the user data back into the hands of the user, allowing them to control it all.
However, when looking at the alternatives through which Web3 aims to achieve this, we realize that we don’t even know the exact process of how to get there. We only have various ideas. But which will work?
In order to figure that out, it is important to evaluate all alternatives. So let’s do that!
Is Moving Our Data To The Blockchain The Solution?
By the nature of the Web3 structure, every transaction, move and signature is recorded on a public blockchain and is entitled to the person that controls the wallet associated with those signatures and transactions.
Furthermore, the self management of keys allows the user to own everything that’s in their wallet, whether that’s a PFP (profile picture) NFT, tokens or POAPs (proof of attendance protocols).
While this is a big unlock in terms of self custodying our assets, the caveat here is that everything we own is also public and transparent for anyone in the world to see. That’s all fine and dandy when it comes to most assets, but is this really how we want to store our personal data?
Surely there are going to be things that we do on the internet that we don’t want to share with everyone else or every company on the internet. It’s more likely we will want to choose what can or should be shown to different people or companies.
While all of this sounds great, right now, the circulation of data is limited in Web3 to which blockchain you’re using. The interoperability is non-existent at the moment and, as an example, you cannot interact with the Solana ecosystem with your Ethereum based wallet.
And that’s a huge problem because the Web2 issue we’re aiming to solve is the multiple need for log-in, requiring multiple accounts and passwords. Unfortunately, right now, you need a wallet for each blockchain that you want to interact with… That’s going to have to change.
Disco is aiming to make every blockchain interoperable with each other by allowing data to jump over from one blockchain to another seamlessly, without limitations.
Off-Chain Data Backpacks, The Future of Data In Web3
Transparency is not always the answer!
While making transactions and agreements between two parties transparent makes sense for establishing trust, there are some things that should not be open to the public.
And all data certainly should not be public. There are things like favorite foods, music, unusual interests and so on that should remain private.
I told you that we’re going to introduce new concepts… didn’t I?
Question: Verifiable Credentials or DIDs, which is more confusing? Let us know by replying to this email.
What Are Verifiable Credentials?
Simply put, these are files, like PDFs which are written from one party to another, just like a diploma. Once these are written from a person to another, that will be the case forever.
These verifiable credentials are private by default, being situated off-chain. Therefore, you as an owner have the ability to decide whether you want these credentials to be public or private.
Unlike the popular Web3 opinion, transparency is not necessarily a good thing. Some things are better off being private, something that verifiable credentials aim to enable.
These are also revocable and they can be set to expire, a trait which can better express our ever evolving manner as human beings (our interests change, and our credentials should show that)
What Are Decentralized Identifiers?
The accompanied partners of verifiable credentials are decentralized identifiers (DIDs) which act like aliases for our addresses, something that allows them to talk and interact with each other across chains.
Think like ENS but not limited to the Ethereum blockchain.
Imagine creating a DID (alias) for your Bitcoin address and one for your Ethereum address and they can interact with each other, both in the same place: Disco XYZ!
In conclusion, to simplify things, you can think of verifiable credentials as being private NFTs (off-chain), which you can choose to make public at any time. Subsequently, DIDs (decentralized identifiers) are your address aliases which allow you to send, show and receive your verifiable credentials across all of the different chains.
The Powerful Feeling Of Owning Your Data
The struggle of explaining Web3 to your family and friends is real… It’s pointless to explain the power of owning your data, your posts and money because it is something no one seems to understand unless they experience it.
As an analogy, think about explaining to someone how to bake a cake. That person will not understand anything, even though you explain every little detail of the process. In order to make them understand, you have to show them how to bake it themselves and let them taste it.
The same applies to Web3. Unless someone tastes the power of owning their data, they will simply not get it. Unfortunately.
The Future Of Web3 Data
The topic of data is being brought up more and more frequently by the day and is definitely one of the issues that Web3 promises to fix.
There are plenty of projects out there innovating in this sector. Ultimately, what they all promise is to give back data ownership to the users and minimize the data manipulation and exploitation that occurs today.
Whether soulbound tokens, DIDs or verifiable credentials are going to be used in the future remains to be seen. However, the only certainty we have now is that things need to change.
We need to stop allowing big tech to exploit and sell our data without our consent and transfer the ownership of data back in the hands of the users of the internet.
Action Steps For Web3 DOer’s
1. Check out disco.xyz and explore off-chain identity further. Digital identity is our future. The question is, will it be off or on-chain! Join the community call in our Discord on Monday 7pm EST to discuss this topic further.
2. Grant Magdanz, CEO of gm.xyz is coming on the podcast next week! What shall we ask him? Tell us by replying to this email!
3. Learn the foundations of Web3 for Free in The Web3 Rabbit Hole Course.