What is Web3?
Web3 (also Web 3.0 or Web 3) is described as the third era of the internet when users can own a piece of it. It unlocks the roles of users on the internet. This decentralized form of the internet is built using blockchain technology. In short, Web3 is the combination of users and developers with tokens on the internet.
Web3 is a broader term than crypto. Crypto refers to all coins and tokens created on top of blockchains. Web3 refers to everything built on the internet connecting with the blockchain infrastructures. Therefore, Web3 has numerous applications and crypto is just one of those.
In this new evolution, Artificial Intelligence, Big data, Virtual Reality, and so on are also going to reform the technology space. They are all tackling every worldwide problem.
For example, fake news is everywhere on the internet because we can freely upload unverified content for specific purposes. It raises concerns among the people. Artificial intelligence, more specifically Natural Language Processing, can detect and curate fake news so that it will be rejected to protect the internet environment.
Before going down into the rabbit hole of Web3, we will take a tour of the evolution of the web and the internet. The goal is to get an overview of what leads to Web3.
History of the Web
What is the Web?
World Wide Web (or simply Web) is a collection of links that are accessible via web browsers connected to the internet. We can imagine the Web as an information space in which web resources exist. Users access those resources using domain names.
Web1 - The view-only era
Starting around the 90s, the internet was growing in popularity since many links and sites were launched. At this time, websites were so simple and static that users could not interact with them, except by clicking to navigate between sites.
In other words, websites in the 90s contained only lines of plain text without any colors or interactivity. Data was stored natively on the server, making the website vulnerable to attacks.
A notable example of Web1 at that time was Netscape, founded in 1994 by Marc Andreessen (now founder of a16z) and James H. Clark. It was a web browser before it was disbanded in 2003. Netscape became the browser of users before other competitors stepped in and cut the cake.
The primary goal of Web1 developers is to display information to readers.
Web2 - The read/write era
Web2 is another stepping stone of the Web since it empowers users with editing and writing capabilities on the internet instead of view-only or read-only screens. In the Web2 era, users started creating content in the form of writing, video editing, podcasting, etc. Beyond that, they are able to create their own websites at hand using tools such as WordPress and host them online.
Conglomerate and mega-companies are having big pieces of the internet at the moment. Alphabet’s subsidiary, Google, puts advertisements on search engines’ interfaces. Another example is that Facebook allegedly recorded the personal information of the users. Top companies take advantage of users’ data to make money and the users receive nothing in return besides the services.
Facebook, Youtube, and Instagram were founded in the Web2 era (circa 2000 - 2015). They are platforms where the users can create and upload content such as posts, pictures, audios, and videos. However, they do not actually own the content but companies do.
Top tech companies are now having big chunks of data in various fields such as personal data, healthcare data, speech data, etc. They often use the data to optimize users’ experience or allegedly sell to other companies. In general, the data is owned by centralized companies.
Web3 - The read/write/own era
Web3 is the solution to Web2. “Own” means that every internet individual is able to actually own a piece of the internet. Companies, organizations, developers, creators, and users can contribute value and receive something in equal returns.
Non-Fungible Tokens (NFTs) can give the users ownership of what they created. For example, if a user uploads a picture of himself on OpenSea, the platform will mint a blockchain-based NFT representing his ownership of the picture. The NFT exists in a form of a unique token address that can be stored in a blockchain wallet. Anyone who holds it is the owner of the NFT.
Other than that, Web3 can do more to the internet thanks to blockchain technology. To break down the definition of Web3, we will discover more about how Web2 is evolving into Web3 in the next section.
From Web2 to Web3
It is important to separate fact from fiction in Web2 and Web3. Sometimes the overhyped traction creates irrational expectations. For more understanding, let’s take a look at the comparison of Web2 and Web3.
If you are a crypto native, you might be acquainted with the Web3 products in the above infographic. MetaMask, Arweave, Ethereum Name Service, and so on are popular Web3 projects.
Web3 is going to fill in every category that Web2 has. Web3 projects are emerging with ideas to eliminate Web2’s drawbacks. Ethereum Name Service and Upstoppable Domains are two noteworthy competitors to ICANN and GoDaddy in the domain name sector.
Developers building Web3 projects are not limited to any scope. They are threats to Web2 companies because there will be a massive mutual beneficial conflict. To lead the revolution, Web3 must have competitive edges that make people believe in its future.
Features of Web3
Web3 is still Web, but better
Everything in Web3 can be tokenized. When it comes to the crypto space, project builders can tokenize everything, including pictures, collections, arts, financial assets, tickets, in-game assets, etc. Holding the tokens means that the owners have a piece of those assets. For example, a Web3 project can issue NFT-based tickets for sale instead of printing paper tickets.
A decentralized network
Web3 minimizes the need for intermediaries since it becomes truthless. Internet users will interact with each other without worrying about potential fraud thanks to the use of smart contracts. In this scenario, many financial activities will be completed faster.
Peer-to-peer transactions can be securely completed. For example, we can write terms in a smart contract that will be executed once conditions are met.
Focus on users
Because Web3 allows users to own a piece of the internet, they are the source of value. In Web1, users can only view the content while in Web2 users are able to create it. Web3 marks a new milestone for the internet since users can actually own the content.
Interoperability and connection
In Web1 and Web2, despite running on the internet, everything is still not interoperable.
For example, users can not log in to Facebook and Youtube with the same account. The gap can be fixed by registering the same account with the same password on both platforms, creating a memory burden for users.
On the other hand, in the Web3 world, users only have to own one address for numerous platforms that are built on top of interconnected blockchains.
Web2 projects are controlled by a group of individuals who are the founders and stakeholders. On the other hand, if Web3 projects release tokens into circulation, users will be able to own the token and vote on helpful proposals via a token weight-based voting mechanism. Therefore, token holders can make changes to Web3 projects.
Limitations of Web3
Maintaining a decentralized network requires tons of resources, including money, energy, and local space. Bitcoin and Ethereum have a huge number of blockchain nodes as miners, making them the most decentralized networks in crypto.
However, the two networks consist of tens of thousands of high-performance computing devices which consume a great deal of energy. Therefore, Ethereum is shifting its Proof-of-Work consensus to Proof-of-Stake to be more energy-efficient, and due to many other factors.
To interact with Web3 at the moment, users have to use an interface connecting with the Web3 service. Developer teams build and provide user-friendly interfaces as a service, which is similar to a gateway to go into Web3. The interface can be manipulated for wrongdoings or data mining, etc. Therefore, we should pay cautious attention to phishing interfaces or potential hacks.
Security Alert: If you are on the CoinGecko website and you are being prompted by your Metamask to connect to this site, this is a SCAM. Don't connect it. We are investigating the root cause of this issue. pic.twitter.com/7vPfTAjtiU— CoinGecko (@coingecko) May 13, 2022
CoinGecko’s website got exploited by hackers
Users interact with the Web3 via interfaces but where are the go-to places to do so? At the moment, we can surf the internet via website browsers or internet-connected applications on mobile or computers.
To access Web3, we also use similar platforms as we do with Web2. However, the integration is still limited, we have to install 3rd-party extensions or additional applications to dive into Web3, which is a big drawback for non-crypto and non-technical users.
Going down the rabbit hole of Web3 and crypto is a big obstacle for non-crypto people. In the past, educating people to use the internet to transfer money among bank accounts was a big challenge.
As crypto natives, we use blockchain wallets almost every day but sometimes we come across technical problems that need the support of the project. Therefore, improving user experience is the best way to support users to adopt the new technology wave.
Congestion and low Performance
A decentralized network requires a cumbersome verification process. This is a bottleneck dragging the performance of the Web3 projects down. Web2 mostly runs on servers that are easy to manage and have better connection quality control. By contrast, interacting with Web3 might incur glitches and delays.
For instance, the Ethereum network has congestion due to the network being overloaded with transactions. Therefore, it is still a long road for developers to reach a seamless and smooth experience in the world of Web3.
Hack and exploits
Other than the investment losses, users might face potential hacks, exploits and rug pulls across the crypto space. We will not be able to know the day the developer team abandons the project and takes all deposited assets along with them. Furthermore, technical issues are great threats to users because hackers can manipulate the issues for their own sake.
For example, Chainlink (LINK) is a Web3 oracle project that provides data feed and data streamlining to the crypto space. It stopped providing data to the Terra ecosystem when the LUNA token price collapsed. This made protocols (Venus Protocol as an example) on Terra lose millions of dollars of crypto assets.
FAQs about Web3
Web3 vs. Metaverse?
Despite its incompleted state, Metaverse refers to the reality where users can do almost anything. They join hands to build up the world inside the metaverse. The community often uses “Metaverse” as a buzzword to seed the vision of a heaven-like world.
Web3 is known as the new internet era after the Web2 dynasty is dominating the market. Users are allowed to own a piece of the internet using blockchain technology. Therefore, Web3 and metaverse are two different terms but their goal is to make the internet better for the world.
What is Web3 used for?
Web3 has a wide range of applications in various fields such as biotechnology, banking finance, game finance, etc. There are numerous events related to blockchain and Web3 all over the world. Other than that, Web3 is the worldwide playground for investors and builders to deploy their ideas.
The evolution of the Web is moving fast after Web3 was coined. Web3 is the new internet where users join with what they have, for example, capital, knowledge, health, and so on to earn credit. Even though Web3 can tackle the most irritating problems inside and outside the companies, it has limitations. Those drawbacks can drag Web3 away from the main goal. Therefore, understanding the definition of Web3 will help investors navigate in the long run.