One of the more hyped terms of the past year is Web3. While a definition is a challenge to pinpoint given that different people have varying opinions on what “it” is, the basic idea is to decentralize the internet and give internet users ownership of their data.
To better understand Web3 we need to briefly understand the history of the internet.
The first iteration of the internet was the ARPANET. Developed in 1969 to enable the interconnectivity of computers using wires and servers, this allowed for data and file sharing between remote computers. At the time, only the government had access to it. Fast forward to 1991.
Web1 is considered the original world wide web (also called the syntactic web). Developed by Tim Berners-Lee in 1991 as a read-only version of the internet, it was hailed as a revelation. While interactivity was limited, it had only one goal: to allow information sharing.
Web 1 was dominated by static, newspaper-like web pages filled with links that provided connectivity. While companies were early adopters, anyone could set up websites. However, readers could only consume online content without engaging with it in the manner we’re accustomed to today.
Enter Web 2, which ushered in an interactive web interface. Launched in 2004 as a read-write web, internet users could now create, consume, and engage with content. Social networks exploded as users could create content without having to build websites.
A lower barrier to entry created centralization. Google, Facebook, and Twitter came to dominate the landscape, frustrating many early adopters. It also opened the door to numerous privacy violations and data theft.
Then there’s ownership: platforms’ users no longer owned their own content. The companies that provided these “free” services monetized users by mining their data. Rather than sell products to users, users became products.
As people grew weary of these monopolies, engineers began dreaming of both a better past and an even better future.
That’s where Web3 comes in. Engineers now seek to implement a read-write-own or read-write-execute version of the internet. A new internet won’t need to be installed, however. Users will own their data and dictate what can be done with it.
Web3 (also called semantic web) fans seek to replace Big Tech ownership with sovereign governance. And that will be implemented through blockchain.
What’s blockchain again?
Blockchain technology uses a system that encrypts data and stores it across a network of distributed computers so no one can access or change it without permission. Single point-of-entry hackers can no longer steal or alter data. Thanks to digital wallets, you maintain complete ownership of your data.
While developers built Web2 apps (like Facebook and Twitter) that stored our data on a single database, Ethereum created a Web 3 platform for developers to build dApps (decentralized apps) that stores data across a network. Users will own their data and monetize it however they see fit.
Crypto tokens work simultaneously with Web3 and will advance the token economy by rewarding creators. Users will also be able to:
- Play video games and earn tokens (as NFTs) for completing certain tasks
- Be rewarded with crypto for contributing to the advancement of a project
- Buy, sell, or trade tokens in an integrated fashion on numerous platforms
Interested users will be able to join Decentralized Autonomous Organizations (DAOs), which are community-led organizations with democratized power.
In typical companies, a central authority (like the CEO) makes executive decisions. In Web3, governance token holders in a DAO will vote on decisions, decentralizing the governance of the internet.
Gamers will be able to invest in their favorite games and take part in the decision-making as well. This could potentially solve the issue of game developers releasing newer versions with bugs that affect gameplay.
Trustless and permissionless communications
Web3 will foster peer-to-peer interactions on the blockchain: users will be able to interact and perform transactions without third-party interference.
For example, people will be able to send and receive money without using banks. You’ll also be able to access the web without permitting websites to use your data.
Web3 isn’t perfect…
- Some have claimed that the decentralization dream is a fallacy. “Decentralization theater” implies that some protocols appear to be decentralized while, in reality, ownership isn’t equally distributed.
- Even though Web3 is decentralized, it runs on centralized infrastructure, so it’s subject to platform rules set by centralized authorities. For example, some Web3 communities are built on Twitter and Discord. Right now, 50% of all Ethereum nodes run on AWS (Amazon’s cloud service).
- Web 3’s functionality is likely going to depend on digital wallets and crypto-assets. These assets will be used to reward miners for providing computing power and keeping the blockchain running. On the positive side, Web3 will usher in an improved version of the creator economy, which could diversify income streams.
- Right now, we’re not technologically prepared for this shift, as Web3 services operate on protocols that our devices aren’t capable of accessing. However, that could change over time as the technology advances.