Seven years later, Web 3 is setting a standard for the decentralised economy

Web 3.0 has been touted as the Internet of the future and is set to radically change the dynamics of the modern financial economy.

The past few decades have witnessed an enormous amount of progress, technology wise. The internet, in particular, served as the foundational spine of digitalisation, providing affordable and easily available global connectivity. Likewise, the Web offered robust, convenient navigation for information of all kinds. 

Since 1989, when the web was first introduced, it has since evolved from its original form as web 1.0, which was essentially read-only and allowed organisations to create content as well as connect them via HTML hyperlinks.

It has further evolved into Web 2.0, which built a range of web applications and expanded the consumer’s ability to generate content via social media and, recently, moving on to the next big phase – Web 3.0, which doubles as a new method of using and interacting with data online. 

Web 3.0 is a term coined by Ethereum co-founder Gavin Wood in 2014 and has subsequently materialised into what can be described as the bedrock of the decentralised economy, gaining even more popularity in 2020.

Web 3.0 has been touted as the Internet of the future, set to radically change how the web works in the hands of a select few organisations that control the centralised web 2.0.

Web 3.0, on the other hand, leverages machine learning, artificial intelligence and blockchain to achieve real-world human communication in a new decentralised world with blockchain as its chief cornerstone. With many great offerings, Web 3.0 brings freedom from centralised regulation and gives it back to its users. 

What is web 3.0 and how does it work?

Web 3.0 was initially dubbed the Semantic Web by Tim Berners-Lee, the creator of the World Wide Web, and was intended to be a more autonomous, intelligent, and open internet. 

Unlike the previous web generation, web 3.0 can be further expanded as data will be interconnected in a decentralised way, making a great leap forward from Web 2.0 where data is mostly stored in centralised repositories.

Although it has gained prominence in recent times, web 3.0 has not yet been fully implemented, so there is no solid definition. However, it suggests that users and machines will be able to interact with data more effectively and liberally. 

For this to happen, though, software programs need to understand information both conceptually and contextually. With this in mind, the two fundamentals of Web 3.0 are semantic web and artificial intelligence (AI).

At its core, Web 3.0 is attempting to empower organisations and individuals by getting rid of centralisation and intermediaries, further implying that you can own your data and monetise it. 

In addition, you can also conduct business, network, and interact with your peers without any third-party interference. Peer-to-peer.

The most intriguing aspect of web 3.0 is how it functions; specifically, it relies on the power of blockchain technology to eliminate the need for centralised operators and instead work with immutable encrypted data. In general, web 3.0 has five characteristics:

  1. Semantic Web: Web 3.0 goes beyond focusing on keywords and numeric values so that it understands content like photo, video, or audio and more complex associations between products, locations, and specific behaviours.
  2. Artificial Intelligence: Artificial intelligence software is able to decrypt natural language and understand the intention. It can also recognize real from the fake and provide more reliable data. 
  3. 3D Graphics: The third generation of the internet should integrate the use of 3D graphics and VR technologies to provide results regarding real-life places, diverse products, and objects of interest.
  4. Connectivity: information is more connected through semantic metadata, leveraging all the available information.
  5. Ubiquity and Security: Data silos are eliminated. Every device should be connected to the network and content operable by different applications.

What web 3.0 means for centralised finance

In a world that basically runs a centralised economy and by extension, a centralised financial system, web 3 poses a destabilising threat for the existing system. Centralised Finance was, before the emergence of Decentralised  Finance (DeFi), the standard for trading cryptos. It holds a stronghold over the cryptocurrency industry. 

In centralised finance (also known as CeFi), all crypto trade orders are handled through a central exchange. Funds are managed by specifically running the central exchange which you don’t own a private key that provides you access to your wallet.

While centralised finance has its own advantages including cross-chain services and more flexibility in conversions, it has disadvantages that have clearly seeped long enough in the system such as lack of transparency. With DeFi riding on the waves of Web 3, innovation battles CeFi’s mere adaptability. Transparency, privacy, and user control fuel Web 3.0. 

Smart contracts and cryptocurrencies emphasize on financial self-empowerment, with users transacting peer-to-peer around the world without the need for centralised authorities. Not only that, the blockchain enables collective governance, removing centralised authorities and single points of failure from systems. 

What the decentralised economy means in a new world

Free power from the grassroots up is what a decentralised economy is looking like and we are already heading towards more freedom. To a large extent, this is high despite the hiccups thus far. 

The decentralised economy, underpinned by blockchain, has improved how we trade but will also radically change how we make, design and produce physical and digital goods. There are even more advancements to come in the new world. 

With Web 3.0, tech giants such as Facebook, Microsoft, Twitter, Google in Web 2.0’s open application ecosystems that exploit user data will have less control. The decentralised Web allows users to gain more power over how their data is used. 

One of the biggest boons to the idea of using blockchain technology to reinvent the finance space lies in how the market can become permissionless and open to anyone. A further attraction is the concept of composability, which means anyone can mix and match any existing DeFi offering to build a new one. 

More countries are getting in the heart of DeFi to change their economies. Recently, the Dubai government became the first in the world to go paperless by shifting all transactions to Blockchain, an online encrypted database.

Regulating the decentralised economy 

The decentralised economy comes with many good and revolutionary fruits. DeFi allows people to engage in financial services such as borrowing, lending and investing but without intermediaries such as banks using blockchains and cryptocurrencies. It is also transparent, immutable and permissionless. 

However, the regulation of DeFi is a head-scratching subject. How can authorities enforce regulations on a system that doesn’t rely on the presence of intermediaries? And how will the regulation protect users and the market? 

For one, there is some difficulty with accountability. No particular person or entity can be held accountable for any technological failure in this market. This could be hacking or stolen digital assets to mention a few.

Regulators are alarmed by the growing money laundering schemes done on DeFi. Global anti-money laundering watchdog, Financial Actions Task Force (FATF), in October, published new draft guidance that, if implemented, could require even decentralised finance (DeFi) platforms to find a way to implement know-your-customer (KYC) rules. This is sacrosanct in fighting money laundering on DeFi platforms. 

Likewise, there is room for the appropriate level of regulation to give DeFi just enough space to make a difference: boosting transparency, increasing financial inclusion and enabling credit to 8 billion people that will see the world take a tremendous jump toward prosperity.

In order to effectively regulate the DeFi economy, regulators must acquire technological expertise and be willing to engage with a wider group of stakeholders, including blockchain software developers, to effectively regulate DeFi.


The Web 3.0  is the next generation of the internet and big firms like Twitter, GameStop, Reddit, and VC firm a16z are all putting resources into building it. In the next era of the internet, you won’t have a social account for each platform. Rather, you’ll have a single social account, able to move with it from Facebook and Twitter, to Google, shopping websites, and more.

Web 3.0 aims to empower organisations and individuals by getting rid of centralisation and intermediaries: You can own your data and monetise it. You also can conduct business, network, and interact with your peers without an intermediary.

Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.

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