Web3 is currently enjoying its moment in the spotlight as users experience the next phase of the internet. But what sets it apart from its previous incarnations?
Web 1.0 was the era of decentralised, open protocols, in which most online activities involved navigating to individual static webpages.
Web 2.0 relates to the so-called era of centralisation, in which a huge share of communication and commerce take place on closed platforms owned by a handful of super-powerful corporations, such as Google, Facebook, Amazon, subject to the nominal control of centralised government regulators.
At the most basic level, Web3 refers to a decentralised online ecosystem based on the blockchain.
Platforms and apps built on Web3 won’t be owned by a central gatekeeper, but rather by users, who will earn their ownership stake by helping to develop and maintain those services.
Gavin Wood coined the term ‘Web3’ (originally Web 3.0) back in 2014, and now he runs the Web3 Foundation, which supports decentralised technology projects, as well as Parity Technologies, a company focused on building blockchain infrastructure for Web3.
Web3 enhances the internet as we know it today with a few other added characteristics.
Web3 is:
- Verifiable
- Trustless
- Self-governing
- Permissionless
- Distributed and robust
- Stateful
- Native built-in payments
That means developers don’t usually build and deploy applications that run on a single server or store their data in a single database.
Instead, web3 applications either run on blockchains, decentralised networks of many peer-to-peer nodes (servers), or a combination of the two that forms a crypto-economic protocol.
These apps are often referred to as dApps (decentralised apps), the term used often in the web3 space.
To achieve a stable and secure decentralized network, network participants (developers) are incentivised and compete to provide the highest quality services to anyone using the service.
Blockchain-based overhyped trends
In a recent report, the US internet entrepreneur and investor Chris Dixon called Web3 “the internet owned by the builders and users, orchestrated with tokens”.
When talking about Web3, we’re talking about “going from an internet built on ‘rented land’ with monopoly overlords, to an infinite frontier of new possibilities,” the report said.
“On the frontier, crypto3 presents a credible revolution to all monopolies, which is why its inevitability scares the incumbents.”
In a post from Eric Peters at One River Capital, he argued that we live in a period of social upheaval, where young people are keen to invest in technologies that disrupt (and potentially bankrupt) older generations’ preferred institutions while pushing investments that benefit themselves at the expense of the old guard.
The best part about being young and broke, he says, is that “you have little to lose”. That’s especially true when younger people view legacy institutions as exploitative.
However, some legal academics expressed concerns over the difficulty of regulating a decentralised web, which they reported might make it more difficult to prevent cybercrimes, online harassment, hate speech, and dissemination of child abuse images.
Other critics see the concept as an extension of blockchain-based trends that they view to be overhyped or harmful, particularly NFTs.
Some critics have raised concerns about the environmental impact of cryptocurrencies and NFTs while others have expressed beliefs that Web3 and the associated technologies are a pyramid scheme.
Discord’s CEO, Jason Citron, tweeted a screenshot in November 2021 suggesting the company might be exploring integrating Web3 into its platform.
This led some to cancel their paid subscriptions over their distaste for NFTs, while others expressed concerns that such a change might increase the number of scams and spam they had already experienced on crypto-related Discord servers.
Two days later, Citron tweeted that the company had no plans to integrate Web3 technologies into their platform, and said that it was an internal concept part of a company-wide hackathon.
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.