Web3, also known as the decentralized web, refers to the use of blockchain technology to enable peer-to-peer (P2P) communication and decentralized application (DApp) development on the internet. It represents a shift from the traditional, centralized model of the internet, in which a few large companies or organizations control and operate many of the services and platforms that users interact with.
In contrast, the decentralized web is built on the principle of decentralization, which means that it is not controlled by any single entity or group. Instead, it relies on a distributed network of computers, or nodes, to validate and record transactions and interactions. This allows for greater transparency, security, and autonomy, as the network is not reliant on a single point of failure or censorship. Web3 technologies, such as blockchain and smart contracts, are being used to build a wide range of decentralized applications (DApps), which can include everything from social media platforms and marketplaces to voting systems and supply chain management tools.
Web3 is often associated with the Ethereum blockchain, which is a decentralized platform that runs smart contracts: applications that run exactly as programmed without any possibility of downtime, censorship, fraud, or third-party interference. However, it is also being used to build decentralized applications, including EOS, TRON, and others.
Overall, web3 represents a new paradigm for the internet, one that is focused on decentralization, transparency, and user control, and that has the potential to disrupt and transform many traditional industries and business models.
History of web3
Although the web remains an unfinished undertaking, the internet is likely the most important technical transformation in human history. It’s difficult to imagine how different the web was just ten years ago. However, evolution never ends. Web3 is anticipated to bring about a fundamental change in the way websites are made, ushering in a new era of web interaction. We need to look back at history and consider how things have changed over the years to better appreciate what Web3 has to offer.
Tim Berners-Lee pioneered the early development of the internet in 1990 while working as a computer scientist at CERN, Geneva in 1989. He had written the three fundamental technologies that became the foundation of the web by October 1990, including the first web page editor/browser, WorldWideWeb.app: (HTML, URI or URL, and HTTP)
The introduction of web browsers such as Netscape Navigator in the mid-1990s ushered in the era of Web 1.0. This was the era of static web pages retrieved from servers, which was a far cry from the slick content that we now take for granted. Most internet users were fascinated by the novelty of features like email and real-time news retrieval at the time. Content creation was still in its early stages, and users had few options for interactive applications, though this changed as online banking and trading became more popular.
Web 1.0 consisted primarily of static websites owned by businesses, with little to no interaction between users, and individuals rarely produced content —leading to it being dubbed the read-only web.
Web 2.0 refers to the current state of the internet, which features more user-generated content and is more user-friendly than Web 1.0. Web 2.0 generally refers to the Internet applications of the twenty-first century that, in the wake of the dot-com bubble, have revolutionized the digital age. Web 2.0 does not specifically relate to any internet technology advancements. It merely indicates a change in the way people use the internet in the twenty-first century. The extent of information exchange and connection among individuals has increased in the modern era. Instead of just being information consumers that passively consume content, users can now actively engage in the experience.
Key developments like mobile internet connectivity and social networks, as well as the almost universal availability of potent mobile devices like iPhones and Android-powered devices, have all contributed to the exponential expansion of Web 2.0. These advancements allowed for the supremacy of apps that significantly increased online involvement and utility in the second decade of this millennium, such as Airbnb, Facebook, Instagram, TikTok, Twitter, Uber, WhatsApp, and YouTube, to mention a few.
Social media platforms’ introduction in 2004 marked the start of the Web 2.0 era. The web developed into a read-write medium rather than a read-only one. Instead of offering users material, businesses started to offer platforms where users could exchange user-generated content and communicate with one another. As more individuals went online, a small number of leading businesses started to hold a disproportionate percentage of the traffic and value produced on the internet. The business model based on advertising was also created by Web 2.0. Users may generate content, but they didn’t own it or get paid when it was made.
Blockchain and Web3 Introduction
Blockchain technology plays a crucial role in the creation of web3, also known as the decentralized web. Blockchain technology is a decentralized digital ledger that records transactions across a network of computers. It allows for the secure and transparent record-keeping of transactions, without the need for a central authority or third-party intermediaries.
Web3 refers to the integration of blockchain technology into the internet, enabling decentralized applications (dApps) to operate on a decentralized network. In web3, users have more control over their data and can interact with applications without the need for centralized servers. This gives users more privacy and security, as well as the ability to participate in the governance of the applications they use, unlike web2 applications where decision-making is centralized.
Blockchain technology also enables the creation of decentralized autonomous organizations (DAOs), which are decentralized networks that operate based on predetermined rules and protocols. DAOs allow for decentralized decision-making and can be used for a variety of purposes, such as managing a company or voting on community decisions. The integration of blockchain technology into web3 allows for a more decentralized and transparent internet, where users have more control and security in their online interactions.
What is the significance of Web3?
Although Web3’s killer features are not isolated and do not fit neatly into neat categories, we have attempted to separate them for clarity.
Web3 gives you unprecedented control over your digital assets. Let’s say you’re playing a web2 game. When you buy an in-game item, it is linked to your account. You will lose these items if the game’s creators delete your account. Alternatively, if you stop playing the game, you will lose the value you have invested in your in-game items.
Web3 enables direct ownership via non-fungible tokens (NFTs). No one, not even the game’s creators, has the authority to take your ownership away. If you stop playing, you can recoup the value of your in-game items by selling or trading them on open markets.
Resistance to Censorship
The power dynamic between platforms and content creators is significantly skewed.
OnlyFans is a user-generated adult content site with over a million content creators, many of whom rely on the platform for a living. OnlyFans announced plans to prohibit sexually explicit content in August 2021. The announcement sparked outrage among platform creators, who felt they were being cheated out of an income on a platform they helped build. Following the backlash, the decision was quickly reversed. Even though the creators won this battle, it highlights a problem for Web 2.0 creators: if you leave a platform, you lose your reputation and following.
Your data is stored on the blockchain in Web3
When you decide to leave a platform, you can take your reputation with you, plugging it into another interface that better reflects your values. Censorship resistance is a native feature of a Web3 platform, whereas Web 2.0 requires content creators to trust platforms not to change the rules.
Decentralized autonomy (DAOs)
In addition to owning your data in Web3, you can own the platform as a collective by using tokens that function similarly to stock options. DAOs enable you to manage a platform’s decentralized ownership and make decisions about its future. DAOs are technically defined as mutually agreed-upon smart contracts that automate decentralized decision-making across a pool of resources (tokens). Users with tokens vote on how resources are spent, and the code executes the voting outcome automatically.
Traditionally, you’d set up an account for each platform you use. You might have a Twitter account, a YouTube account, and a Reddit account, for example. Would you like to change your display name or profile picture? You must do this for each account. In some cases, social sign-ins can be used, but this brings up an old problem: censorship. These platforms can lock you out of your entire online life with a single click. Worse, to create an account, many platforms require you to trust them with personally identifiable information.
Web3 solves these issues by giving you control over your digital identity via an Ethereum address and an ENS profile. Using an Ethereum address provides a secure, censorship-resistant, and anonymous single login across platforms.
Comparison of Web3 to Web2
There are several key differences between web3 and web2:
Decentralization: Web3 is decentralized, which means it is not run by a single entity or organization. Instead, it stores and validates data through a network of decentralized nodes, making it more resistant to censorship and tampering. In contrast, web2 is centralized, with a few large companies controlling much of the internet’s infrastructure and content.
Security: Blockchain and other web3 technologies are intended to be more secure than traditional web technologies. They employ cryptographic techniques to ensure data integrity and immutability, making it more difficult for hackers to access or manipulate it. Web2, on the other hand, is more vulnerable to security breaches and data leaks.
Privacy: Web3 technologies, like zero-knowledge proofs, provide greater privacy than web2 technologies. They enable users to share information without disclosing their identity or personal information, thereby protecting their privacy and data security. Web2 technologies, on the other hand, frequently require users to share personal information in order to use specific services, making them more vulnerable to data breaches and privacy violations.
Interoperability: Web3 technologies, such as smart contracts, allow various systems and platforms to communicate and exchange value in a standardized manner. This increases interoperability and decreases the need for intermediaries, making it easier for people and organizations to interact and transact with one another. Web2 technologies, on the other hand, are frequently proprietary and do not interoperate well with one another, making it more difficult for people and organizations to communicate and transact with one another.
Use cases: Web3 technologies are being used to develop new types of applications and services that were not previously possible. Decentralized finance, non-fungible tokens (NFTs), and decentralized autonomous organizations are examples of these. Web2, on the other hand, is primarily used for information sharing and communication.
Advantages of Web3
Web3 might have several advantages for users, including more effective search, pertinent marketing, improved communication, and more information connecting.
Ownership of information, data, and digital assets
Web3 uses blockchain technology to give people full ownership of their data to unseat IT behemoths. Your data and personal information are currently stored by large tech corporations like Facebook and Amazon, largely to enhance their target marketing. Many, however, have voiced privacy concerns over such a one-sided data governance model and see Web3 as a potential remedy.
Blockchain technology is already being used to secure financial data in the cryptocurrency space, where transactions in the ledger are permanently and verifiably stored. Access to the data can be maintained using encryption keys that are unrelated to the service or application that created the original data.
Secure peer-to-peer (P2P) network
Users have the option to connect, do business, and share data discreetly and independently via Web3. With Web2, copies of your data are transferred to the data servers each time you interact with the internet; you are no longer the exclusive owner. P2P can be defined as a network of connected computers that share equal rights and duties for processing data; there is no centralized server. With Web3, users have the option of choosing which data they want to share with whom. In other words, the user can decide to be completely anonymous while requesting a service.
More democracy and participation
Users will be more involved in ecosystem development in the future. As a result, ecosystems will no longer have presidents or CEOs, but rather Decentralized Autonomous Organizations (DAOs) in which token owners will collectively decide on important changes and developments.
There are no requirements for joining the network, thus neither users nor suppliers will need permission from a ruling body to participate, which is another way that Web3 offers a more democratic structure. Everyone can access services, and depending on the value they offer, different people can have an impact on the networks. As an investor, developer, or marketer, you can contribute your special talents and abilities to the network’s success. You might even get compensated with a portion of the token supply overall.
Users will enjoy greater privacy control and their own digital identity than in web 2.0. Users might be certain that their internet activity is private and secure, for instance, by utilizing an alias and a virtual identity, which would dispel many of our concerns about the existing Web2 system. Decentralized Digital Identity (DID) is now a possibility with the advancement of Web3. A DID is an Internet address that a person can directly own and manage. It is possible to utilize it to locate a DID document, which in turn contains pertinent data needed to support use cases like login, data encryption, and communication. Cryptographic proofs are used to demonstrate control over these identifiers to others. Users have complete control over everything, including when, with whom, and under what conditions their digital identity elements are revealed. DIDs can do for the Internet what passports do for governments: securely identify and authenticate users, but with greater ownership and self-governance.
Currently, Web 2.0 data is kept on centralized servers. Any entity that acquires control of the server, such as businesses, governments, or hackers, can view, modify, or remove data from these servers. In their power, these parties can also refuse access to services, which may not be legal. IPFS and distributed hash tables, two blockchain-related technologies, can create a content system that is considerably harder to block and take down.
Challenges and Limitations of Web3
While the technology has the potential to revolutionize many aspects of the internet and the way we interact with it, it is still in the early stages of development and adoption by the general public.
Limited adoption and understanding of web3 by the general public
One of the main challenges to the widespread adoption of web3 is the lack of understanding and awareness among the general public about what it is and how it works. Many people are still not familiar with the concept of blockchain technology or decentralized applications, and they may not fully understand the benefits and potential uses of web3.
Another challenge to the adoption of web3 is the technical complexity of the underlying technology. Building and using decentralized applications requires a certain level of technical expertise, which can be a barrier for those who are not familiar with programming or blockchain technology.
There are also regulatory and legal challenges that need to be addressed for web3 to reach mainstream adoption. Governments and regulatory bodies around the world are still working to establish clear guidelines and frameworks for the use and development of decentralized applications and services.
Despite these challenges, the adoption of web3 is gradually increasing as more people become aware of the technology and as the underlying infrastructure and tools for building decentralized applications continue to improve.
Potential for misuse and abuse of web3 by malicious actors.
As with any new technology, there is always the potential for misuse and abuse by malicious actors. Web3 is no exception, and there are several ways in which it could be misused or abused. One potential risk is the use of decentralized applications and services for illegal or malicious purposes. Decentralized applications have the potential to enable anonymous or untraceable transactions, which could make it easier for malicious actors to engage in activities such as money laundering or the sale of illegal goods and services.
Another potential risk is the use of web3 technology to disrupt or manipulate decentralized networks or applications. For example, a malicious actor could attempt to compromise the security of a decentralized application or network, or they could attempt to manipulate the outcome of a decentralized decision-making process.
There is also the risk of financial fraud or scams associated with web3. As with any financial system, there is the potential for individuals or organizations to defraud others by misrepresenting the value or reliability of a decentralized application or service. It is important for individuals and organizations to be aware of these risks and to take appropriate precautions to protect themselves from potential misuse or abuse of web3 technology. This may involve educating oneself about the technology and its potential risks, as well as following best practices for securing one’s assets and personal information when interacting with decentralized applications and services.
With its emphasis on decentralization, transparency, and user control, Web3 represents a new paradigm for the internet that has the potential to overhaul and revolutionize a number of established markets and business structures. Users will be able to interact with applications without requiring centralized servers and will have more control over their data. In contrast to web2 apps, where decision-making is centralized, this allows consumers additional privacy and security as well as the option to take part in the governance of the programs they use.
As with any incredible phenomenon, despite its ability to revolutionize the way the internet operates, Web3 has yet to reach its full potential due to challenges stemming from mainstream adoption, technical complexity, and regulatory concerns in the aftermath of technology misuse and abuse. However, a decentralized style of operation, where users are rewarded for their contributions and actively participating in the platform’s development, offers an improvement over a centralized approach where users are sidelined by large corporations.