A formal business arrangement providing regular dealings or services. It is a recording of transactions that an individual or entity engages upon. Both debits and credits are tracked as part of the ledger.
Accounts historically have been opened by companies. This has caused the environment where they were controlled by said entity. This is true for finance with banks and other financial institutions making the call on the account. It also applies to social media with the likes of YouTube and Twitter controlled what takes place on the platform.
Account Based Systems
The business world mostly uses account based systems. Corporations set up their customers or users with an account. Everything is tied to this as it is how all the financial statements are created. Each entry in the ledger relates to an account.
It is an accounting distinction that actually drives the structure of how businesses operate.
Drawbacks To Accounts
One of the issues with account based systems is they are owned by the company that established them. This is true whether it is social media, finance, or telecom.
The user or customer has to adhere to the terms of service of that company. This is most notable with Web 2.0 social media entities.
In many countries, there is a wall between the accounts a company house and governments. To access the information often requires a court order.
Web 3.0: True Account Ownership
Under the idea of Web 3.0, individuals will completely own their accounts. This is due to the concept of a private key system tied to a blockchain. While most think of this in terms of cryptocurrency, the account management system these types of networks provide is very valuable.
One of the tenet espoused by Web 3.0 proponents is true account ownership. Here is where the control of an account is outside the platform. By designing applications that utilize the account management system of a blockchain, users are not beholden to them.
This is a radical shift from the existing financial and social media systems of today. Web 3.0 also is inclined to merge the two, putting wallets with social media accounts, creating a new realm of responsibility.
None of this is an issue when the users have account ownership.
Wallet Based System
The idea is to transform the system to one based upon wallets as opposed to accounts. With blockchain, the identification is only wallet. This alters the set up of the DApps.
Decentralized finance (DeFi) is often built on a second layer or utilizes a smart contract to provide financial services. All of these are tied to the wallet address with the blockchain managing transactions occurring. Here is how balances are maintained by the network.
When the data, including account information, is at the base layer, all data pulled is the same. This means that front end are not the offering the account. It is all on the blockchain and integrated into the wallet system.
Social media and other Internet based industries could be affected by a change to a wallet based system.
With the present format, users have to establish followers in each application. Blockchain changes this since this is driven by the base layer. That means all applications will pull from that system.
Web 3.0 DApps have the ability to show the same information. This is a big switch. Social media personalities will only have to focus upon establishing a single list of followers and now have to start over with each new applications.