Web3: Where do lawyers fit in the craze?

“Web3” was coined in 2014 by Ethereum co-founder Gavin Wood but it was only in 2021 that the term became mainstream. Since then, much speculation has been about what it is and isn’t. At the same time, many people, organisations, and entities have been trying to learn about, know and use it.

Owing to this, there has been an increased number of Web3-related events and discussions.

In the third session at the 5th IBA European Startup Conference, Vladislav Linko, our junior associate, sat with Pedro Oliveira, the CEO of Talent Protocol, and Pedro Cerdeira, a multi-startup founder and a board member of Investors Portugal, to discuss Web3 and some of its use cases. Talent Protocol is the same startup we advised in launching their Web3 tokenisation platform a little while ago.

What was before Web3?

To prepare the ground, Vladislav started with an introductory overview and explanation of Web3, how it came into existence, and what had been before it. 

Vladislav Linko talks Web3 with Pedro Oliveira and Pedro Cerdeira.

Web3 is a kind of development of what we want to see from the web,” Vladislav said. “We started the Web in the 90s with Web1. It was very specialised. You enter the website, see the needed information, and then move on with your life. Web2 is what we have right now. It’s the development where users started generating their own content,” he continued. 

Web2 is the basis of the likes of Facebook, YouTube, and Twitter, where the content is user-generated, and monetisation is made chiefly through ads. And revenue generation through ads is made possible by commodifying the users’ data collected by these platforms. At this juncture, he noted the flaws of this business model, which thrived on the commercialisation of people’s data, and pointed out how it spurred the GDPR.

What is Web3?

Vladislav explained Web3 as a more democratic development that allows users to be co-owners, stakeholders, and action makers rather than cash cows, as is the case with Web2. According to him, the core principle of Web3 is decentralisation. So, total ownership by anyone or entity does not exist. It’s permissionless, so no one controls how another individual or entity transacts within it. 

At the same time, Web3 is trusted, so there’s no need for intermediaries like notaries, banks, fund managers, and the like. It is the “decentralised dream,” he said. He then explained blockchain, tokenisation, and NFT and offered multiple usage cases. According to him, Web3 provides numerous possibilities for different kinds of decentralised services, from financial services, to media, to games, to investments. Vladislav described Web3 as a fast-growing area for startups with about 15 billion per quarter already getting fundraised by different startups around the world, making it an exciting area not only for crypto enthusiasts that want to buy bitcoin. However, he also pointed out that there is still more to come regarding its development, usage, and wide adoption. 

Mr. Cerdeira chimed in, saying, “Web3 is relatively new, so diverse opinions abound. There are many definitions, many crazy things, and many weird things. But it is what it is. I would risk saying that it is massive disintermediation through technology.” According to him, there’s always a moment in history where there is a quantum leap in technology that changes how things are done, and Web3 is one such quantum leap.  

He explained further that Web3 is a form of digital transformation that enables doing many things that are not humanly possible. So it is the sort of thing that empowers many possibilities. And likewise, it is a development that is all about taking apart already efficient and productive tools and rebuilding them in totally different ways that are even more disruptive and game-changing. So far, we have seen this with the metaverse, blockchain, smart contract, crypto, and NFTs, and much more. 

The future of lawyers in the face of Web3 

Web3 and its associated technologies are regularly discussed as the eliminator of the intermediaries. So, Vladislav wondered if lawyers should be worried about going out of jobs and business since they are also intermediaries. Mr. Cerdeira replied that there was no need to be concerned, but it should be kept in mind. Nevertheless, he noted that even if the worst came, there is still so many lawyers can do in terms of litigation and setting and revising laws and regulations for both physical and digital societies.

If you’re betting on the baseline of making regulations, you are absolutely fine. There’s a lot of work to be done there. How do we regulate, for example, DAO, a decentralised autonomous organisation, which is now becoming a prevalent form for people to get together and do things? How do we regulate this? How do we make sure that this is recognised across several jurisdictions, and it’s effective, and it works all the time?” he questioned, pointing out where and how lawyers could come into the picture. 

He also noted that startup founders are pretty unconventional. This means they’ll almost always disintermediate the system, turn things upside down, and do weird things so lawyers would be there to keep them in check. For this reason, there will always be a ton of work to do for lawyers. 

Similar to Mr Cerdeira, Mr Oliveira pointed out DAOs. He noted that based on his observation, DAOs would get huge in terms of how they influence the future of work, from HR to startups to investment and fundraising. “They are making everything quite different but very productive,” he said, adding that he sees the future of work going in this direction. For this reason, he advised that everyone find a couple of DAOs with any mission they feel connected to, maybe climate change, sustainability, or whatever else, and join them. 

Again, adding to Mr. Cerdeira’s point on regulations, Mr. Oliveira said, “one thing is the political, regulatory play. I mean, obviously, there’s a lot of work to be done there. So you’re more than welcome to join that play, and you know, do the best show you can. “Think about the founders and the innovators too. Don’t try to override it, please,” he added, pleading. 

Giving another reason why lawyers had no cause to worry about going out of employment, he pointed out that since Web3 is still at such an early stage, Web3 startups are pumping a big budget into the legal stuff to get it right. Finally, he noted that given where the world is headed and looking at emerging technologies like smart contracts, the next generations of lawyers would eventually become developers and programmers. “Knowing the law, knowing the regulations, who better to write the smart contract?” he asked. He concluded by stating that he believed legal entities would start to have a significant tech play in the future. 

Conclusion

As we have seen, Web3 is gearing up to disrupt things just like Web1 and Web2. So, we must be well-positioned for the new technological wave that abounds. We are yet to know where it will lead to and where it will lead us, but we can prepare ahead by investing our time and resources in learning about and exploring this terrain. Here at Hedman Law Firm, we’ve already taken a significant step towards that, with Vladislav Linko being our Web3 frontman. 

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