What impact will the EU's proposal of Web4 have on the crypto world?
The popularity of Web3 in Europe is still insufficient, and how the concept-driven Web4 will evolve requires time to observe.Author: veDAO
On July 11, local time, the European Commission (EC) passed a new strategy regarding Web4 and the virtual world, aimed at guiding the next technological transformation and ensuring an open, secure, trustworthy, fair, and inclusive digital environment for EU citizens, businesses, and public administration.
The concept of Web3 has yet to be fully digested by the world, and the European policy arena has already introduced a new narrative for Web4. Is it that the traditional world has finally opened the next mainstream narrative for the crypto world ahead of time, or is Europe, with its low awareness of crypto, trying to overtake on a bend? In this article, the veDAO Research Institute will interpret the Web4 proposed by the EU.
Proposal and Web4
What is Web4?
The proposal released on July 11 states that Web4 echoes and encompasses the term Web3, becoming part of a new internet vision that integrates virtual experiences, the Internet of Things, and blockchain. The European Commission has clarified the strategies and initiatives it will adopt to increase the EU's participation in the Web4 technology world.
In the EU proposal, Web3 is defined as: "The main characteristics of the third generation of the internet, Web3, are openness, decentralization, and complete user sovereignty." Based on the EU's recognition of the current concept of Web3, it will allow for the integration between digital and real objects and environments, enhancing the interaction between humans and machines, referred to as Web4. In short, we can understand Web4 as an evolution of the Web3 concept, where the Internet of Things, blockchain, virtual reality, and augmented reality converge.
The EU emphasizes that the Web 4.0 and virtual world initiative mainly consists of four pillars. The first three align with the pillar objectives of the 2030 Digital EU project: talent skills, business environment, and public services. The fourth pillar includes goals for infrastructure development such as computing power and cloud, as well as the openness and global governance of Web 4.0 and the virtual world.
Although the European Commission also lists blockchain as one of the constituent technologies of Web4, the proposal uses the term trusted blockchain rather than the trustless blockchain that is native to and supported by the crypto world. Additionally, the European Commission has not yet provided any details, such as how to integrate all technologies together to give birth to this new narrative of Web4.
Plans Related to Web4
The announcement of this Web4 strategy also discloses many new initiatives: First, it proposes a plan inherent to Horizon Europe called the "Virtual World Partnership," expected to launch in 2025. The goal of this plan is to help developers, creators, and companies that widely use the internet understand this new trend, thereby formulating an "industrial and technological roadmap for the virtual world." It will also require experimentation with new solutions in collaboration with all EU member states. Secondly, a project named "CitiVerse" is envisioned, described as a city virtual universe for managing and planning city work and activities in alternative ways, though its target audience is not detailed. Finally, another idea proposed by the Commission involves virtual replicas of humans called "European Virtual Human Twins," which can assist doctors in studying disease outbreaks and treatments.
Regarding the introduction of new Web4 technology frontiers, Thierry Breton, the EU Internal Market Commissioner, stated: "Today, Europe officially becomes the world leader in Web 4 and the virtual world. Europe has the conditions needed to lead the next technological transformation: innovative startups, rich creative content and industrial applications, a strong role as a global standard setter, and a favorable and predictable legal framework for innovation."
Challenges Facing Web4 in the EU
In the "EU Economic Outlook Beyond 2030" released by the EU in March, it emphasized that digitalization is one of its key driving forces, and Web4 represents a significant technological transformation that will bring a seamless, intelligent, and immersive world. After the European Commission obtained approval for MiCA (Markets in Crypto-Assets) in April, opening the door to cryptocurrencies and blockchain, it now hopes to take a further step in competing with technological innovations in the United States.
With these messages, including the current Web4 narrative, it is not difficult to see that Europe's regulatory framework is about to become one of the most lenient in the world regarding cryptocurrencies, willing to allow the continent to stand out in the context of new technologies. However, it seems premature for the entire EU to discuss Web4 at this stage.
A survey conducted by Consensys (the parent company of MetaMask) in June showed that only 8% of people across the EU believe they are familiar with the concept of Web3. On the other hand, terms like blockchain, cryptocurrency, and DeFi remain unfamiliar to inexperienced individuals and have yet to be understood by the majority. For many who are not familiar with the basics of virtual currencies, understanding Web3 or Web4 still presents significant barriers to entry. Many European hubs like Berlin, London, and Lisbon are becoming centers for crypto and blockchain, but other regions of the continent are even unaware of the meaning of the term "Crypto."
Which Segments of the Crypto Market Are Likely to Benefit?
After gaining an overall understanding of the grand strategy of Web4 proposed by the EU, let's focus on which aspects may benefit the crypto market. The EU's announcement regarding Web4 mentions that blockchain technology can be used to manage assets in the virtual world, such as virtual currencies or virtual real estate, allowing for secure and transparent transactions within the virtual world. There is also considerable emphasis on "virtual worlds," "digital cities," and other content, which are among the main future directions of the announcement. Therefore, this could be positive information for the metaverse-related sectors.
The EU proposal mentions "Blockchain" 30 times, "Crypto" and related terms 7 times, and "NFT" 40 times. Overall, NFTs are also a key area highlighted in this EU proposal. The text points out that NFTs are being widely applied in various applications. It recognizes that "NFTs promote innovation in content creation and provide opportunities for artists (and creators). NFT platforms directly connect artists (and creators) with potential buyers, facilitating direct connections at lower costs." This consensus has already become widespread.
Additionally, the proposal suggests ways to combine NFTs with traditional business: "In fact, NFTs have already been introduced into new business models. NFTs can also be used in sales and event ticketing for specific use cases in sports, fashion, gaming, music, and more." Currently, the application of NFT + traditional business is not yet perfected, and this signal from the EU may promote the development of this sector.
Finally, the importance of blockchain for Web 4.0 in terms of security and privacy protection, cross-border payments, and international trade is also mentioned, but not elaborated upon. This may provide potential growth points for the booming zk technology in the crypto market and the yet-to-be-popularized payment applications.
Conclusion
The EU's introduction of the concept of Web4 seems to aim at accelerating in the blockchain field, seeking to surpass Asia and America, which are continuously expanding in the infrastructure domain, and thus plans to create and become a standard setter locally. However, the popularity of Web3 in Europe is still insufficient, and how the concept-driven Web4 will evolve remains to be seen over time. Although the connection between Web4 and Web3 is not tight, the crypto sectors involved in the EU's Web4-related construction may ride the wave of enthusiasm during the EU's proactive efforts.
Original EU Proposal:
