The digital world never stands still, and just as we all thought we’d caught up, there’s something new in town – Web3.
As a basic explanation, the internet we use and know is Web 1.0. Then we’ve got Web 2.0, which refers to user-generated website content, primarily owing to the proliferation of social media.
Web3 is anticipated as the next significant evolution in the way we engage online – but it’s very much a work in progress, so pinning down exactly what it is and how it might work, isn’t particularly easy.
Read on to take a deeper look into the Web3 concept to explain why it’s the cause of so much excitement in the tech space.
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Web3 Explained
Underlying Web3 is moving towards decentralising the internet, which is how cryptocurrencies disrupt financial services online.
No one is in charge to dictate what you can see, say or do online. Instead, it’s about user control and breaking free of search engines that control a frighteningly large proportion of consumer spending.
Web3 works by adding blockchains to the internet, so governments, corporations and regulators don’t control digital transactions and the media, but existing websites are unlikely to disappear.
So, why would anyone be interested in making the cyber world a bit more wild west?
The concept is about how proprietary algorithms and mega-corporations dominate the internet, controlling how we interact and who gets priority visibility. Decisions are often based on marketing budgets and monetising resources for wealthy and influential enterprises.
It’s not all cut and dried, though, since many in the industry question whether Web3 would be as open and accessible as it sounds if rolled out more extensively.
Jack Dorsey, Twitter CEO, says, ‘You don’t own Web3. The venture capitalists and their partners do. It’s ultimately a centralised entity with a different label.’
The Development Of Web 1.0, Web 2.0 And Web3
Tim Berners-Lee created the internet in 1989. Experts and technically skilled people used this new dimension to share information online in a decentralised way.
First named in 1999, Web 2.0 describes the advent of the tech giants – think Facebook and Google when our original internet was adapted, with pros and cons.
The positive was that anyone could share things online and create content without programming or coding skills. The flip side is that profit-making corporations guard access to those tools.
Web3 is looking to stand apart since it’s already ditched the space and the decimal – which may be irrelevant or is more likely an attempt to make a point.
A Decentralised Internet: Web3 In Action
While Web3 sounds like a highly complex adaptation, the theory is simple.
The modern internet infrastructure is owned by private enterprises and controlled by governmental regulation.
This structure is the simplest way to manage the logistics of the internet, so someone must:
- Pay for installing and maintaining web servers
- Fund the development of software on the servers that people wish to use online
- Offer the software for free or on a subscription to cover the costs of providing internet access
Blockchain technology is the big disruptor here, without which Web3 couldn’t work.
It’s new, but a blockchain can store data online, using encryption and distributed computing at its core. This is how users keep cryptocurrency assets and transaction records.
The encryption element means that all the data stored within a blockchain is only accessible to people with the correct authorisation, no matter which computer it is stored on or who owns the hardware.
Distributed computing means that the same file is replicated across many servers or computers. If one PC has a file copy that doesn’t match the others, the data isn’t valid.
This process adds layers of safety, so no one who isn’t in charge of the data can access or change it. Only the authorised person can amend the data.
Even a government or regulator cannot access or change data stored in a blockchain without the encryption keys that prove ownership – even if they shut down the server or one device on the network.
Open-Source Web3 Internet Software
Web3 relies on open-source software – which is inherently trustless and permissionless.
Open-source means the software has no permissions, so any two parties can use it without any third party interaction or intervention.
That can’t happen in the same way on Web 2.0 because the owner of the platform or site always has the potential to intervene or reserve the right to approve an action.
A direct Bitcoin transfer (not a transfer to a wallet on a centralised server) is an example of a trustless Web3 transaction.
The blockchain algorithm and encryption control each transaction step, and it is all but impossible for anything to disrupt it.
However, the issue is that, while transactional liberties may be aspirational, the lack of oversight and control could cause legal and safety challenges.
Web3 would circumvent government attempts to control digital communications, which could protect freedoms but throws up several questions about user protections.
Web3 Concepts: DAO And DApps
Web3 might sound like a lawless, dangerous place, but the reality is that blockchains contain many rules and regulations coded into the structure.
A Decentralised Autonomous Organisation (DAO) is a Web3 group, which could be a collective of individuals or something more formal such as a company, abiding and bound by those blockchain rules.
For example, you might have a DAO shop, where all the prices and payment details are stored on the blockchain. Then, DAO shareholders vote about price changes or whether to withdraw or invest profits.
The security is that no individual DAO member can change the rules with unanimous permission, so even if somebody else owned a physical server, they couldn’t manipulate the process or take the profits.
Behind a DAO, and the whole Web3 structure, are distributed applications (dApps) powered by the Ethereum blockchain.
If the concept takes off, dApps will be like an app store for Web3, but third-party developers must build new dApps over the blockchains.
There are existing dApps, including cryptocurrency-swapping dApps, and dApps where digital investors can trade non-fungible tokens – the others, at this stage, are games with a significant variance; users get paid to play them.
Web3 And How The Internet Is Changing FAQ
Is Web3 linked to the Facebook transition to Meta?
Yes and no. The metaverse, in digital tech, means the interactive user interface where we interact, communicate or provide information.
Aside from the Facebook branding change, a metaverse is an idea to incorporate virtual reality and augmented reality to create a social media virtual universe where we can walk and talk.
Web3 dApps don’t need to involve the metaverse, but the immersive nature of the metaverse will likely become a big part of new dApps as they develop.
Are there example Web3 applications already in use?
Yes – several dApps are live. Bitcoin is one example since it has decentralised protocols and has been about for over a decade. However, the ecosystem isn’t wholly decentralised.
Other examples include:
- Sapien and OpenSea: both built on the Ethereum blockchain. One is an NFT-trading marketplace, and the other is a social network.
- Steemit: a blog and social media platform based on blockchain principles.
- Augur: created for exchange trading through a decentralised market.
What is the advantage of Web3?
The benefit is that the decentralised nature of Web3 will allow users to remain in total control of their online data – no matter which platform or dApp they are on and where that data is stored.
Cryptocurrencies use a concept based on encryption keys, the equivalent to a physical key that unlocks your user rights to the data set that contains your ownership of your crypto assets.
In the same way, Web3 is intended to mean that users aren’t subject to data theft or manipulation by enterprises.
They will enjoy better reliability since decentralisation means that one single-point failure (like social media server downtime) will have zero impact.
Are Web3 dApps safe?
dApps are highly resistant to cyber-attacks and have better security than most conventional apps.
The caveat is that dApps must be designed with specific security provisions to cater to the different operating structures.
What are the risks and concerns about Web3?
There are as many Web3 sceptics as advocates, so it’s not without potential concerns.
Some believe that blockchain won’t solve real-world issues, and Web3 is a marketing ploy to rebrand crypto to the benefit of investors.
Others believe that Web3 will make it highly probable that users may lose a private key – and therefore, access to their entire digital identity and wealth.