The term Web3 is creating quite the buzz lately, especially among those interested in technology, cryptocurrency, and venture capital. Here’s an introduction to what some people are calling the internet of the future. No one really knows what it is yet, but from an estate planning standpoint, I have some predictions.
WHAT IS WEB3?
To understand Web3, it’s helpful to go back in time and review the history of the internet.
In the 1990s, we were calling the internet the “information superhighway.” Although it was confusing and overwhelming to most, many Americans began to dial up nonetheless. Children were being taught how to “surf” the web alongside adults who learned how to use email and conduct basic web searches for the first time. The internet was very much a blank slate with a steep learning curve. However, many people intrinsically knew this was the next big thing that would change our lives forever. This era of the internet is referred to as Web 1.0.
In the mid-2000s, we entered the age of Web 2.0. Major platforms like Google, Amazon, Facebook, and Twitter emerged. They began to make the internet a more convenient place to connect, interact, and transact. However, critics began to question whether these few companies were beginning to amass too much power. In recent years, we witnessed lawsuits in which tech giants were slammed with billion-dollar fines for harvesting personal data and breaching data privacy laws.
Although the public enjoys taking advantage of free services and centralized data, many are questioning the role of these tech giants and whether their control over data is too great. Should we democratize and create information exchange silos on the internet once again?
This is where Web3 comes in, and why it’s causing a hubbub among tech speculators.
WHAT WOULD WEB3 LOOK LIKE?
The internet would be decentralized without tech giants in the future of Web3. We could be looking at the rise of new social platforms, search engines, and marketplaces built and owned by the collective, rather than by a corporation.
End users would reclaim their power and control over their own data. They could possibly move around from platform to platform on the internet using a single personalized account, rather than having to log into multiple different accounts for each respective company and platform.
We could be given tokens for participating, which can then be used to vote on decisions regarding how a platform should change or improve, or demand what features we want to be offered. These tokens could even increased real value and build our wealth.
How will this be possible? How will all this be secure? Web3 will be built using blockchain technology. Yes, that’s right. It’s the same technology that is used by cryptocurrency right now. One of the reasons why cryptocurrency and decentralized finance are so popular today is because they cut the middleman out of determining value and executing trades on the internet.
Web3 may be the pathway to cutting the middleman out of the internet, data, and information exchange itself. The internet could become a place that is run by the collective, using digital tokens as its currency.
Although the idea of Web3 could make any average person’s eyes glaze over, those who are ahead of the curve and understand crypto are getting excited and placing their bets on Web3.
A BLOCKCHAIN-BASED ESTATE PLAN?
Do you remember the very beginning of the internet? We would dial-up through America Online (now AOL) in the 1990s and the most we could really do was visit our friends’ Geocities pages. Everything felt clunky and awkward, and a lot of us didn’t even really know what the internet was for. It turned out that the experts weren’t wrong, and today, the internet pretty much runs our lives.
Web3 could very much be a parallel to this. It’s something that remains to be seen, and there is no universal understanding of what Web3 is, or what it will look like. We may be decades away from Web3 becoming our reality, but it behooves us to start thinking about how blockchain technology will revolutionize how we conduct our personal business.
One aspect of this is estate plans. It’s entirely possible we could have blockchain-based estate plans. You could, in theory, set up smart contracts that dictate that your digital assets will be passed automatically to your spouse or beneficiary upon a specified trigger event, such as your death. These assets would not go through the probate court as they would today.
In other words, in the age of Web3, we could be looking at a possibility in which the effectuation of an estate plan could become decentralized.
DIGITAL ASSETS AND ESTATE PLANS
Although we may be decades away from a new reality like Web3, the estate planning industry is already taking steps in this direction.
For instance, California has enabled the small-estate affidavit, which allows for estates valued under $166,250 to bypass probate. More states could follow follows. On a grander scale, more and more states are adopting laws that enable the digital execution of wills. This is made possible by legally recognizing e-signatures and e-notaries. These types of regulatory changes make it possible for wills to be effectuated automatically and digitally.
The digital age is here, and one thing you can do now is protect your assets (both physical and digital) with an estate plan. We are hearing too many jaw-dropping stories about hundreds of millions in cryptocurrency fortunes being lost in the ether due to a lack of proper estate planning. Crypto is popular among young adults, demonstrating the need for estate plans to be established earlier in life as well.
Have a plan in place for how to protect your digital assets, how you plan to pass them on if anything were to happen to you, and leave instructions for how they can be accessed and used. Estate planning is the key in this digital age.
Cody Barbo, Founder & CEO, Trust & Will