What is Web3?
The third generation of the World Wide Web (WWW), Web3 is the concept of a decentralized version of the web, and is still in its early stages of development. This new iteration would use emerging technologies like blockchain to create an ecosystem where users would have more control and be able to interact with data and services in ways that were not possible in previous iterations of the web.
While the web has been evolving for years, not every change has been beneficial for users. Web3 would allow users to have full control of their data and privacy online while at the same time getting unique and personalized experiences from search, purchases, financial transactions and more.
How will Web3 work?
Currently in its early stages of development, Web3 will create a highly customized and decentralized experience for users. While it is yet to be seen if this iteration of the web could ever go mainstream, let’s look at some key concepts and technologies of Web3.
Blockchain and decentralization
Decentralization is at the heart of Web3. Unlike the traditional web, where a handful of entities control large parts of the web, Web3 aims to empower users by offering a decentralized version of the web using blockchain technology. Blockchain is the decentralized ledger system known for its use in cryptocurrencies like Bitcoin and Ethereum—Bitcoin has a blockchain, Ethereum has a blockchain, and so on. However, its transparent and tamper-proof information sharing capabilities mean it can be used in more than just cryptocurrencies. Read this blog post on more in-depth about blockchain.
The traditional web uses conventional banks and payment processors. Web3 plans to shift to native payment systems like cryptocurrency and tokens for direct, borderless transactions. The advantage of using tokens is that third parties will no longer be involved. In addition, people without bank accounts and people from all corners of the world will be able to engage in ecommerce on Web3.
Edge computing is a method of optimizing cloud computing systems by performing data processing at the edge of the network. Rather than using centralized cloud servers, edge computing uses local devices such as edge servers or IoT devices. Web3 will leverage edge computing to reduce latency and bandwidth usage for faster and more efficient operations.
As the name suggests, dApps are like regular apps, but they run on decentralized networks for more transparency and immutability. They’re also open-source and designed to resist censorship. dApps are a core feature of Web3. Examples of dApps include Bitcoin, NFTs, and Ethereum.
Decentralized Autonomous Organizations (DAOs) are autonomous digital entities governed by a set of self-executing rules encoded in a blockchain. DAOs allow for decentralized decision-making and resource allocation. DAOs are strongly linked to the Web3 ecosystem and promise a new form of governance and economy.
Cryptocurrency and DeFi
A cryptocurrency is a digital form of currency that operates independently of traditional banking systems, typically on peer-to-peer, decentralized networks. Cryptocurrencies like Ethereum and Bitcoin are a natural fit for Web3.
People on Web3 can use cryptocurrencies for financial transactions independently and securely. Cryptocurrencies are also expected to accelerate Decentralized Finance (DeFi) on Web3. DeFi will allow users to borrow, lend, and exchange currency without relying on a conventional authority.
Web1 and Web2 vs. Web3: What’s the difference?
It’s helpful to understand Web1 and Web2 to appreciate the significance of Web3:
Web1: The dawn of the internet
Web1 (1990-2004): Web1 sometimes called the “read-only web,” marked the internet’s inception. Web1 was a mostly static place dominated by companies, with users merely consuming the content presented to them. Interaction and user-generated content were minimal.
Web2: The rise of social media
Web2 (2004-now): The web went through a significant transformation in the era of Web2 or the “read-write web.” Web2 is characterized by the rise of social media platforms, user-generated content, and dynamic websites. A handful of tech giants control much of the web, and an advertising-driven revenue model dominates the internet economy.
Web3: Read, write and own
Web3 (The future): Web3 is sometimes termed the “read-write-own” web. It aims to decentralize the web, shifting control from tech giants and states to individual users. This new era promises that users can freely consume, create, own, and monetize content without interference from gatekeepers. Technologies like blockchain, cryptocurrencies, and NFTs (non-fungible tokens) are the backbone of Web3.
Web3 benefits and risks
Web3 users would benefit from improved encryption, stronger authentication systems, transparency, privacy-enhancing technology and decentralized storage.
Without centralized entities, Web3 will have less censorship allowing more control for users to produce and access content. However, reduced censorship is a double-edged sword as it can contribute to the spread of misinformation.
There are some other risks we need to keep in mind about Web3, including fraud, market manipulation, and even environmental impact.
One look at the dark web shows the risks of unregulated online spaces. The decentralized nature of Web3 may make it more challenging for authorities to regulate child abuse imagery, money laundering, and other illegal transactions.
Whether Web3 ultimately goes mainstream or not, one key agreement that industry experts share is that there’s a clear growing demand for user data privacy and enhanced security online. Web3 may not offer the perfect solution for this, yet it is important to monitor its progress, just as we monitor other emerging technologies.
Is Bitcoin considered Web3?
Although Bitcoin and Web3 both use blockchain, they’re not the same thing. Bitcoin is the first and most renowned cryptocurrency. Web3 is a broader concept that encompasses decentralized technologies, such as cryptocurrencies, blockchain, smart contracts, and decentralized applications. While Bitcoin is an important part of Web3, it’s not synonymous with Web3 itself.
Who is the founder of Web3?
Web3 is the brainchild of a collective movement driven by a community of developers, entrepreneurs, and enthusiasts. However, a key figure associated with Web3 is Gavin Wood, who coined the term “Web3” in 2014.
Wood is a computer scientist and the co-founder of Ethereum, a blockchain platform that has played an important role in the development of Web3. Wood’s vision for Web3 revolves around decentralization, privacy, and empowering individuals.
Is Web3 good or bad?
Web3 has its pros and cons, like any technology. The increased privacy, user empowerment, and potential for innovation make it a compelling proposition. However, security concerns, user experience, and regulatory hurdles need to be overcome in order for Web3 to reach its full potential. In addition, there’s concern from some corners that the venture capitalists funding Web3 will shape it to suit their agenda.
Who is using Web3 now?
Although Web3 is still in the early stages, some people and communities use decentralized applications and networks. Examples of Web3 applications are the cryptocurrencies Bitcoin and Ethereum.