How Web3 is eliminating vendor lock-in in identity and digital ownership
The internet has gone through several significant transitions over the past decades. Every one of them follows a similar shift in paradigm from closed, more costly, centralized systems to open, more efficient, decentralized systems. We've experienced the evolution from internetworking to the World Wide Web and, more recently, from private to public clouds.
Today, we are on the verge of the next paradigm shift from closed to open infrastructure platforms founded on blockchain technology, and the need for it has never been greater.
Historically, two forces accelerated the end of one paradigm and the beginning of the next:
Democratization: moving from siloed, centralized platforms to decentralized platforms that are distributed, highly scalable, and owned by everyone collectively.
Automation: enabling significant reductions in cost and complexity that make brand new business models possible.
Over the past few decades, we have witnessed a rapid proliferation of new internet platform companies that provide developers with essential services to bootstrap applications quickly. Today, a developer can easily access infrastructure services for computing, data storage, payment, and identity in ways that previous generations of developers could not.
That's the good news, but the overly centralized nature of these platforms has introduced "too big to fail" level risks for developers, businesses, and users alike. Like a teetering Jenga tower, if the wrong piece fails, the entire application stack — or worse, the company — may collapse without the ability to switch platforms.
The millions of developers, companies, and end-users that heavily depend on these platforms are sadly much more vulnerable than they realize - especially for user identity—these platforms store user identity in the user table of their siloed databases or centralized identity providers. The number of threats is immeasurable. These databases and providers are huge targets for hackers and single points of failure, as well as the potential for abuse of power resulting from their vendor lock-in status. Many companies face direct competition from the platforms they were built and depend upon, creating a digital form of serfdom between these closed platforms and companies and users who rely on them.
Thankfully, here's where Web3 comes to the rescue. Unlike in Web2 where user identity is a row stored in the user table of the application's siloed databases, in Web3, user identity is crypto public and private key-pair commonly known as a wallet. The public key is a unique identifier/address for the user to receive funds. The private key represents the user's ability to access and own their digital identity and assets by allowing the user to sign and publish transactions to the blockchain. User's key pair is not only used to store and send digital assets like tokens and NFTs, but also to secure user identity data via decentralized storage (e.g. IPFS, Ceramic) in a way that doesn't rely on any centralized identity providers.
This model gives users complete sovereignty over their identity and digital assets in this new paradigm. Users can export their private keys from one wallet and import them to another - eliminating identity vendor lock-in, except fully custodial wallet solutions that don't allow the export of keys.
There are a variety of wallet and identity management solutions based on user needs for the Web3 ecosystem. From self-custodial wallets like MetaMask, Phantom, and Rainbow, to more mainstream user-friendly non-custodial wallet solutions like Magic which don't require any software downloads or seed phrases.
With Magic, all an end-user needs to do to create a wallet is by logging in with their email or social login — millions are familiar with this experience from having logged into applications like Slack and Medium. The friction of getting started with a dApp drop by orders of magnitude as no 3rd-party software is necessary, allowing developers to fully own and customize the end-to-end user experience.
Magic protects user identities and wallets with our patent-pending, SOC 2 Type 2 compliant, Delegated Key Management system built on hardware security modules (HSMs). With this non-custodial design, private keys are never exposed to Magic or developers' applications, significantly reducing the risk of compromise. Magic also holds dear the Web3 ethos of offering self-sovereignty to internet users, providing portable identity and allowing them to export their private keys and import them to other wallets of their choice — significantly minimizing vendor lock-in.
Web3 will burst the upper bound of internet GDP by enabling consumers to become owners, not renters. The transition from Web2 to Web3 will unlock more innovative and sustainable business models for enterprises that introduce authentic digital ownership to internet users. Our team at Magic is thrilled to help increase the adoption of Web3 with future-proof identity and wallet technology and democratize access to a user-owned internet for billions.