How Web 3.0 will change International Relations

By Asish Singh

The discipline of international relations has always sought to operate one level above the people. Its operating variables range from coalitions, nation-states, non-state actors to international bodies. However, the postwar metrics and institutional structures it uses to evaluate and predict the trajectory of foreign affairs might need a rejig downwards. It will take a while, but ultimately these variables shall either lose relevance or be compelled to reorient themselves downwards, around the people. The compulsion to reorient downwards shall be driven by the mainstreaming of Web 3.0: the future model of society masquerading as the ‘decentralized internet.’

What was (1990-2020)

The advancement of technology since the 1990s, especially the internet, has been a major axis along which—and also against which—international structures have evolved. The “new” power map of a global world had notions of geography, control of territory and oceans existing alongside the flow of ideas, people, trade, money, and data. Every connection between nations, from IT flows to trade standards, became a tool of geopolitical contestation (and expedient cooperation among coalitions). 

The progress and fragmentation of globalization went hand-in-hand. While the international order saw remarkable diffusion of power, ideas and trade, tech capital largely came to be hyphenated with notions of hard power. Countries schemed up to capture and control access to critical technologies. Access to the dollar and the digital realm was often sanctioned. And sometimes alternatives were devised as reactions. 

Citizens and consumers suffered in the crossfire of balkanization of the internet and the emergence of multiple technopolar words (multiple internets with firewalls acting for borders), as if the bloc mentality had found an expression in the cloud. The international order had been divided into China-led techno-authoritarianism and the US model of — as Harvard Professor Shoshana Zuboff coined — surveillance capitalism (i.e., private tech giants accumulating and using personal data for profit). 

Web 3.0 (2020 and beyond)

Some scholars argue that tech companies shall reshape the world order. Some hold that states shall continue remaining central. But the fact is, the global order and its norms and actors are already being influenced and altered. Web 3.0, the third generation of the internet, presents a third way. It might be the runway to achieving people-state parity in the national and international scheme of things. The graph below shows that Web 3.0 is taking off, with heightened user interest in the subject since January 2020:

Search statistics for “Web 3.0”, 2010 to present. Source: Google Trends, accessed 09-01-2022

In Web 3.0, ownership and control of data can be decentralised. Users and builders (e.g., of social networks) can own pieces of internet services by owning tokens, both non-fungible (NFTs) and fungible. This solves the problem of centralized networks, wherein value is accumulated by one firm, and where incentives to run and develop the platform between network participants (e.g., users, content creators, builders) are not always in sync. 

The first internet was born to share information. The second Internet was born to let people interact better and download content quicker. Neither generation was born purportedly to let people securely and independently exchange value, rant or make financial transactions. The internet architecture presently is fragile. Financial institutions drift within non-internet solutions to move value around. Monopolistic international banking protocols like SWIFT — and the likes of PayPal — charge high transaction fees to move value around, excluding billions from banking. 

Web 3.0 is popularly defined as “decentralized internet networks, secure computing and autonomous intelligent software.” It underpins the internet of value. Twitter users even go on to applaud its prospects as “internet of the people.” This preliminary reaction by common people on the internet should serve as an indication of how the people could perceive the mainstreaming of Web 3.0.

Cryptographically-secured transactions weave Web 3.0 together. The rules of Web 3.0 are structured on blockchains: a distributed, decentralised database that is shared among the nodes of a computer network. Crypto assets like Bitcoin and Ethereum are the gas or motivating factor that incentivizes the users acting as nodes in the blockchain who maintain — and own — the system collectively. Quoting from BetterWorld’s Medium article, “In simple terms, Web1 is reading. Web2 is reading and writing. Web3 is owning, reading, and writing.”

Web 3.0 revolutionizes where humans invest their trust. It does this by enabling a new rules-based digital order (a constitution for the digital world) based on peer-to-peer exchange and collective ownership of the blockchain. The trust is posited in the code, not the people. The code is the charter mediating a separation of powers: between users, miners, and developers. As argued by Chris Berg and team, blockchains are platforms for three-side bargaining that convert energy-intensive computation into economically valuable trust.

Web 3.0, in all its features, aligns perfectly with the longed-for attainment of digital sovereignty. The next phase spells full Web3-based decentralization of online marts and sharing economy services, which is already happening via peer-to-peer trading of cryptocurrencies (decentralised exchanges). Eventually, the entire tech industry will ultimately be built on public blockchains. Contracts between parties, incorporation of companies, funding and fundraising, users incentives, employee equity, end-to-end encrypted messaging, the identity of users, accounting, mergers and acquisitions, governance decisions, all can be automated with crypto. 

Metaverse

The trajectory of societal change will run along that of the rise of Web 3.0. Along with crypto and the internet, the Web3 package also comes with an elusive world of its own: the Metaverse. The rebranding of Facebook as ‘Meta’ in October 2021, the innovations underway within Apple and Microsoft to prepare for the Metaverse, the coming of ‘Decentraland’ and ‘Horizon’ as portals to the Metaverse, the frenzied purchase of digital plots and items (non-fungible tokens: NFTs) on the Metaverse by firms and individuals for millions of dollars, all provide a sneak peek into the future world, future living, future workplaces. We are in the Fourth Industrial Revolution, which itself marks an abrupt start from the Third Industrial Revolution, underway since the middle of the last century. The abruptness stems from the failure of international entities and relations between them to adjust with the deepening reality of digital. This is observable in IR focusing on states basing their domestic and foriegn policy decisions on physical power politics, questions of race, religion and immigration, control over land and oceanic routes, and so on. Politics dominates these decisions. The people scarcely benefit positively. Web 3.0 however can go on to cut off the requirement of state-led international interactions. Its operating model in the core, built on blockchains, is not connected to policy decisions, unlike Web 2.0 which can be censored, regulated and bordered off. 

Web 3.0 is inducing a fusion of technologies that is blurring the lines between the physical, digital and biological spheres in a rundown to the Metaverse. Anybody who can claim to define the Metaverse is wrong. It is still arriving. But one can safely understand that it is Zoom on steroids. You could digitally meet and feel your interactions with others in a kind of physio-digital setting: a perfect fusion of both worlds. 

The very model of Blockchain that it operates on implies no country can regulate its basics, much less break it into multiple ‘containable internets.’ Web 3.0 can arrive in amicable conciliation with state power, if it is embraced by the states and not obstructed. Otherwise, like cryptocurrencies, a people-driven Web 3.0 will inevitably clash into state power and create a duopoly of domains: one permeated by state power, the other validated by popular approval, overt or covert.

What will be, the implications for international relations

Century-old policy frameworks that regulate the world today will fail to keep pace with the society that Web 3.0 will actualize down the line. A pilot example is live streaming. Can governments distribute (or deny) licenses to live streamers? It cannot work that way. And that is the type of collectivist-and-digital sharing economy and society that shall increasingly capture our mental bandwidths. Once financial transactions go on the blockchain, all higher-order structures ranging from banking to trade will have to migrate on-chain. 

Web 3.0, as far as IR is concerned, is a test of two things. First, it will test the resilience of surveillance capitalism. Second, it will test the viability of state-led digital authoritarianism. And more importantly, its democratizing tendency will test the resolve of the much tooted liberal and rules-based international order inasmuch as how these actors react to the percolation of power and agency downwards. And IR will similarly experience a pull downwards, for the positions taken by international actors shall increasingly be contingent on the behavior of the digital collectivity of people built on Web 3.0. These peer-to-peer behaviors, digital spaces and Web 3.0 shall constitute the new first-order entities in IR a few decades later.

Web 3.0 snatches control of the internet from Big Tech and nation-states and scatters it wide and far across the blockchain owned by users. Most of humanity’s cultural, intellectual and economic capital is transmuting to and intermixing on the internet. As has been the nature of politics, the digital realm itself became an extension of geopolitical contestation post 1990, and once this control starts to perceptibly slide away, will these entities continue to wield primacy in international relations? It is doubtful. 

The ongoing transformation, supercharged by pandemic churning, is the tech equivalent to the transformations we have seen in politics over centuries. Societal strain and strife always usher in change. We had once moved from warring kingdoms to imperial republics to self-sovereign democracies. The ongoing tech revolution, boosted by a massive migration to online spaces for work, study and entertainment, is propelling the basis of the internet to shift from warring, balkanized digital spaces to self-sovereign blockchains. During the previous transitions, IR did not exist to observe them and reorient accordingly. During the ongoing transition,it exists, and it must adapt to stay relevant. 

Trust and authoritarian interference

This merits special attention. Web 3.0 is to an astonishing degree insulated from attempts to censor it. Governments shall scarcely have jurisdiction (in the negative sense) on Web 3.0. Transactions on privacy-enabled platforms cannot even be seen. Distributed ledger technology of blockchains by design prevents double-spending of digital assets and strengthens transparency. Smart contracts based on crypto protocols shall deepen trust in digital. It can actualize the truest rule of law by architecting impersonal judicial systems and not kangaroo courts. 

Web 3.0 does not siphon off societal trust from human institutions. It cannot mediate trust issues considering that humans (operating nodes/computers) shall ultimately build and oversee blockchain protocols and code. However, these people are distributed across the world and are not centralized in one entity or company. This, and given the transparency of Web3’s constitutive blockchains, confrontations could be much rarer. Web3’s resilience is rooted in the diversity of its owners. 

Of course, the present Web 3.0 is not as decentralized as one would expect because it is populated by “whales” who concentrate computing power under their giant token (crypto) holdings. Most users engage with Web 3.0 via these concentrated systems. And that mounts up a merited counterargument to Web 3.0. Except that it sidesteps the point. Web 3.0 is not enslaved to a particular blockchain or platform. It affords users a choice. One can choose not to use Ethereum or Bitcoin’s blockchain if they wish. Doge and Shiba Inu are recent teasers into the leveling potential of Web 3.0. Web 3.0 can be hosted on any blockchain, and that affords people the power to dilute its ownership. Understand that whales cannot keep buying parts of different blockchains due to limits on capital. This is how Web 3.0 promises to be exponentially more democratic than Web 2.0. 

Boon for middle powers?

Fraying superpowers might not find it easy to build blocs a few decades down the line. Middle (emerging) powers, with the mainstreaming of decentralized protocols, might not throw their weight behind any aspiring hegemon. Using present situational examples, middle powers may instead choose to employ Bitcoin or different blockchains for setting up financial and communication channels, circumventing threats of embargoes and sanctions by either the U.S. or China. This may as well open a new, more equal episode in international relations, where the global order is not at the levers of a select group of nation-states. El Salvador has made Bitcoin a national currency, and it is attracting global investments to its special economic zone called “Bitcoin City.” How can one sanction Bitcoin? Non-alignment in international relations may become more practicable down the line.

Down the line…

Putting a timestamp on the future would be highly premature. But what is highly plausible, as Parag and Balaji write in Foreign Policy, is a decentralised race to the top by countries, cities, companies and communities — both physical and virtual — as they compete to attract talent and capital. Building national blockchains is impossible considering the nature of cryptocurrencies. They pose zero barriers to entry. And that is why the role of nation-states might be fraught. Future international structures, laws and institutions would be built upon code. And code shall be owned by the people, across jurisdictions and borders. Far from being able to monopolize and/or wield Web 3.0, nation-states would struggle to regulate it to suit the information order that suited them in Web 2.0. This is because, as we discussed, Web 3.0 will not know borders. 

Users in Web 3.0 shall have skin in the game. Citizens shall have more stake in the system as is evident in experiments in New York, Miami and Wyoming with City Coins and decentralized autonomous organizations (DAO). The future world order shall be a decentralized and more fluid order. It is also promising. Inequality arising from information and access asymmetry with respect to trade and technology, and discontent-fueled political polarization might as well by giving citizens more stake in governance and business. 

The viability of nations in Web 3.0 shall depend on how they engage with it. They could either unlock new possibilities of engagement, trade and cooperation should they decide to ride on the back of a people-to-people Web 3.0, or they would for sure exclude themselves from world affairs by mounting rearguard, reactionary censoring measures to prevent access to Web 3.0. Nonetheless, Web 3.0 is arriving, and countries that will embrace it would win this race before those who did not, even wake to senses and play catch-up. This is a recurring pattern, the most recent example being different reactions to, and benefits from, tech-based globalization. 

The future world order is rooted in people and Web 3.0, and international relations would do well to start reorienting itself downwards — at the level of people and innovation — to capture the growing reality wherein its present variables shall be put increasingly on the edge.

The author is a first-year student of Political Science and International Relations at Ashoka University. They intend to follow-up on this article as they learn more on the subject.

asish.singh_ug24@ashoka.edu.in

https://www.linkedin.com/in/asish19x/

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