What is the EU’s proposal for Web4? What impact will it have on the crypto world?
EU's Web4 proposal and its impact on the crypto world.
On July 11th, local time, the European Commission (EC) approved a new strategy on Web4 and the virtual world, aiming to guide the next technological transformation and ensure an open, secure, trustworthy, fair, and inclusive digital environment for EU citizens, businesses, and public administrations.
The concept of Web3 has not been fully digested by the world, but the European policy field has launched a new narrative about Web4. Is it the traditional world finally taking a step ahead to open the next mainstream narrative for the crypto world, or is it Europe, with a low level of crypto awareness, trying to overtake on the curve? In this article, veDAO Research Institute will interpret the Web4 proposed by the European Union.
Manifesto and Web4
What is Web4?
The manifesto released on July 11th stated that Web4 echoes and covers the terms of Web3, and will become part of a new internet vision that integrates virtual experiences, the Internet of Things, and blockchain. The European Commission has clarified the strategies and measures it will take to enable more EU participation in the Web4 technology world.
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In the EU manifesto, Web3 is defined as: “The main features of the third-generation internet, Web3, are openness, decentralization, and complete user sovereignty.” Building on the recognition of the current Web3 concept, the EU will allow the integration of digital with real objects and environments, and enhance interaction between humans and machines, calling it Web4. In short, we can understand Web4 as the evolution of the Web3 concept, integrating the Internet of Things, blockchain, virtual reality, and augmented reality.
The EU emphasizes that the Web 4.0 and the virtual world initiative mainly consist of four pillars. The first three are aligned with the goals of the Digital Europe 2030 project: talent skills, business environment, and public services. The fourth pillar includes the goals of infrastructure construction, 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 includes blockchain as one of the technologies that constitute Web4, the language used in the manifesto is “trusted” blockchain, rather than the trustless blockchain native to the crypto world. At the same time, the European Commission has not provided any details yet, such as how to integrate all the technologies together and launch a specific plan to foster this new narrative of Web4.
Plans related to Web4
In this announcement of the Web4 strategy, many new initiatives were disclosed: first, the announcement proposed an inherent plan of Horizon Europe called “Virtual World Partnership,” which is expected to be launched in 2025. The goal of this plan is to develop a “roadmap for the industrial and technical aspects of the virtual world” by helping developers, creators, and companies that extensively use the internet understand this new trend. It also requires testing new solutions with all EU member states. Secondly, a project called “CitiVerse” is envisioned, described as a city virtual universe used to manage and plan urban work and activities in an alternative way, but its target objects are not specified. Finally, another idea proposed by the Commission involves the “European Virtual Twin” virtual replica of the human body, which can help doctors research disease outbreaks and treatments.
Regarding the introduction of the new Web4 technology frontier, Thierry Breton, the EU Internal Market Commissioner, said, “Today, Europe officially becomes the world leader in Web 4 and the virtual world. Europe possesses the necessary conditions 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 legal framework for innovation and predictability.”
Challenges Faced by Web4 in the EU
In the “2030 EU Economic Outlook” released in March, the EU emphasized that digitization is one of its key drivers, and Web4 is a major technological transformation that will bring about a seamless, intelligent, and immersive world. After obtaining approval for MiCA (Markets in Crypto Assets) in April, the European Commission now hopes to go further and compete with American technological innovation.
From the news, including the narrative of Web4, it is not difficult to see that the regulatory framework in Europe is about to become one of the most lenient regulatory frameworks in the world in the field of cryptocurrencies, and Europe is willing to stand out on the continent in the context of new technologies. However, it seems premature to discuss Web4 for the entire EU at this time.
A survey conducted by Consensys (the parent company of MetaMask) in June showed that only 8% of people in the EU claimed to be familiar with the concept of Web3. On the other hand, terms such as blockchain, cryptocurrency, and DeFi are still unfamiliar to inexperienced individuals and are not yet understood by the majority. Understanding Web3 or Web4 still presents significant barriers to entry for a large number of people who are not familiar with the basics of virtual currencies. Many European centers such as Berlin, London, and Lisbon are becoming hubs for crypto and blockchain, but other regions on the European continent are unaware of the meaning of the term “crypto.”
Which sectors of the crypto market are expected to benefit?
After gaining an overall understanding of the grand Web4 strategy proposed by the EU, let’s focus on the aspects that may have positive implications for 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, and enables secure and transparent transactions within the virtual world. Many sections of the announcement also mention “virtual world” and “digital cities,” which are among the main future directions. Therefore, this may be positive information for the metaverse-related track.
In the EU initiative, “Blockchain” is mentioned 30 times, “Crypto” and related terms are mentioned 7 times, and “NFT” is mentioned 40 times. Overall, NFT is also a key area mentioned in this EU initiative. The article points out that NFT is being widely used in various applications. It acknowledges that “NFT promotes innovation in content creation and provides opportunities for artists (and creators). NFT platforms directly connect artists (and creators) with potential buyers and facilitate direct transactions at lower costs”, which has become a widely accepted consensus.
In addition, the initiative also proposes ways to combine NFTs with traditional business: “In fact, NFTs have been introduced into new business models. NFTs can also be used in sales and event ticketing in specific use cases such as sports, fashion, games, music, etc.” Currently, the application of NFTs in combination with traditional business is not yet fully developed, and this signal from the EU may promote the development of this track.
Finally, the importance of blockchain to Web 4.0 is mentioned in terms of security and privacy protection, cross-border payments, and international trade, but not discussed in detail. This may bring potential growth points for zk technology, which is hot in the encryption market, and payment applications that have not yet become popular.
The EU has put forward the concept of Web4, seemingly wanting to accelerate in the field of blockchain and surpass Asia and the Americas, which are constantly expanding in the infrastructure field. Therefore, it plans to create and become a standard setter locally. However, the popularity of Web3 in Europe is still insufficient, and it will take time to observe the direction of Web4, which is currently only a concept. Although the relationship between Web4 and Web3 is not closely related, the encryption track involved in the EU’s Web4-related construction may benefit from the EU’s active efforts and usher in a boom.