What is Web3? [Beginner's Guide]

Salomon Kisters

Mar 29, 2023

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Web3, also known as the “decentralized web,” is the next iteration of the internet that is poised to revolutionize the way we interact with the digital world. In contrast to the current web, which is largely centralized and controlled by a handful of tech giants, Web3 is designed to be decentralized, open, and user-centric.

Web3 is built on blockchain technology, a distributed ledger system that allows for secure and transparent transactions without the need for intermediaries like banks or governments. In Web3, users have more control over their data, and they can interact directly with other users and applications without relying on third-party platforms.

Some of the key features of Web3 include decentralized identity, where users have complete ownership and control over their digital identities; decentralized storage, where data is stored across a network of nodes rather than on centralized servers; and decentralized applications, which are built on top of blockchain technology and allow for secure and transparent interactions between users.

One of the most exciting aspects of Web3 is its potential to disrupt traditional business models and create new economic systems. With Web3, users can earn digital assets and currencies through activities like content creation, social networking, and gaming, creating new opportunities for entrepreneurship and innovation.

Many claim Web3 to be the future of the internet. It promises to transform the very experience of being online, and it’s all everyone has wanted to discuss recently!

Web 3 Explained

Web 3 is a proposed future internet version built on blockchain networks, a peer-to-peer, record-keeping system known best for enabling cryptocurrency transactions. The beauty of Web3 lies in it being completely decentralized, which means that instead of users accessing the internet through services managed by corporations such as Google, Apple, or Facebook, individuals get to control and administer the internet.

Web3 does not need “permission,” which implies that centralized systems or authorities do not get to choose who gets to access which services, nor does it require “trust”, meaning the virtual transactions between multiple parties do not require a middleman. Because these organizations and intermediaries acquire the majority of the data, Web 3.0 theoretically protects the user’s privacy better than its predecessors.

Decentralized finance, also termed as DeFi, is a rapidly growing component of Web3. It involves performing real financial transactions on the blockchain without the assistance of banks or governments.

On the downside, many large businesses and venture capitalists are pouring their resources into the development of Web3, and it’s difficult to imagine that their involvement will not result in some type of centralized control.

To fully grasp the notion of Web3, one must first understand its forerunners, i.e. “Web1” and “Web2”.

The Evolution of the Web

The World Wide Web is an information system that enables billions of individuals across the world to exchange information, collaborate on different types of projects, and connect over the internet. The web has evolved considerably over time, and its contemporary uses are almost unrecognizable from those at its inception. The evolution of the web is commonly classified into three stages: Web 1.0, Web 2.0, and Web 3.0.

Web 1.0

While many believe 1983 to be the year the internet was born, it wasn’t until the early 1990s that Tim Berners-Lee developed HTML, HTTP, URLs, and web browsers that paved the way for the modern web.

From that time until the early 2000s, we referred to the internet as ‘web1’, or the’ read-only’ stage. This is because, in the beginning, websites were simple, static, and did not allow users to participate in any manner. Business websites were essentially online storefronts that provided customers with material to peruse.

Think of companies like Yahoo or America Online that display news, weather, sports, entertainment, and financial information. It basically placed actual newspapers on a world distribution network that anybody could access.

Web 2.0

Although there is no commonly acknowledged date, Web2 is typically regarded as prevailing in the time period following Web1 up to the present times. It alludes to the time interval on the internet when ‘read only’ became ‘read and write’. Users in web 2.0 may not only access but also provide content.

Websites started integrating services such as online reviews, while the rise of social media platforms enabled users to engage and exchange information with one another. While the first social media platforms, such as MySpace and Bebo, only enabled users to upload photos and connect with friends, their successors such as Facebook, Instagram, and Twitter appear to have taken over the web and evolved immensely to offer a variety of content and services.

However, after some time, the general public became aware of how tech companies were harvesting their personal data and using it to develop personalized adverts and marketing activities. Facebook, in particular, has been criticized openly for violating data privacy regulations, and was fined $5 billion in 2019 - the highest penalty ever imposed by the Federal Trade Commission (FTC.)

On Web 2.0, you have little to no authority over your data or the way it is stored. In reality, corporations collect and store user data without their consent on a daily basis. The companies in possession of these platforms then manage and supervise all of this data. Moreover, when governments suspect that a person is promoting an idea that contradicts their agendas, they shut the servers down or seize bank accounts. With centralized servers, authorities can easily meddle with, restrict, or close down programs.

In addition, governments frequently interfere with the financial and banking system because banks, too, are digitized and centralized. However, at times of excessive volatility, rising inflation, as well as political unrest, the government may shut down bank accounts or restrict access to the money supply. A number of these imperfections in Web 2.0 will be effectively addressed by Web 3.0, which aims to fundamentally challenge and change the way we build and engage with apps from the bottom up.

Web 3.0

Web 3.0, otherwise known as Semantic Web or read-write-execute, refers to the period (started in 2010) that foretells the future of the internet. Technological innovations like Artificial Intelligence (AI) and Machine Learning (ML) have increasingly enabled today’s computers to analyze data in the same way that humans do, allowing the intelligent generation and dissemination of relevant information tailored to a user’s specific needs and requirements.

While Web 2.0 and Web 3.0 have significant differences, decentralization is at the foundation of both ecosystems. Web 3.0 developers seldom design and deploy programs that function on a central server or manage data in a centralized database.

Furthermore, instead of solely using free tech websites in exchange for our data, users can directly participate in the administration and management of the protocols on Web3. This means that not only the customers or products but individuals may also become participants and stockholders in the projects.

Moreover, blockchain technology and the growing use of cryptocurrencies will further open the way for Web3, and incentivize the development of its infrastructure. Digital tokens or cryptocurrencies are widely used in Web3 to symbolize ownership of decentralized networks known as blockchains.

If you hold enough of these tokens, you can exert influence on the network. Holders of governance tokens, for instance, can use their assets to vote on a decentralized system’s future.

What is Web 3 in the Crypto World?

You might have noticed that cryptocurrency is often mentioned whenever anyone is discussing Web 3.0. This is because several Web 3.0 protocols rely significantly on cryptocurrency and the blockchain.

In fact, Web3 will rely heavily on crypto and blockchain technology to secure the future of payments and provide monetary incentives (tokens) to anyone who is involved in the creation, governance, contribution, or improvement of one of the projects in the new ecosystem.

Web 3.0 tokens are virtual assets that aim to create a decentralized internet. Such protocols can offer a variety of benefits, including computing, connectivity, memory, identity, web hosting, as well as other internet-based services formerly provided by cloud service providers only.

The Ethereum-based Livepeer protocol, for example, provides a trading platform for video infrastructure providers and broadcasting services. Similarly, Helium rewards customers and small businesses for providing and validating wireless coverage and communicating device data over the network by utilizing blockchain technology and crypto tokens.

Individuals can earn a living by engaging in the protocol in a variety of technical and non-technical ways. Customers often pay to access the protocol, the same as they’d pay a cloud-based service provider such as Netflix. As with many kinds of decentralized systems, unnecessary and often costly intermediaries are eliminated in the Web3 protocol.

Moreover, non-fungible tokens (NFTs), virtual currencies, as well as other blockchain entities will be actively and closely involved in the development of Web 3.0. For example, Reddit is seeking to make inroads in Web 3.0 by developing a method that uses crypto tokens to allow users to manage sections of the on-site communities in which they participate.

The goal is to encourage users to spend “community points” earned by posting on a certain subreddit. The user then earns points based on how many people upvote or downvote a certain post (it’s basically a blockchain-based Reddit Karma.)

Such points can ultimately be treated as voting shares, giving users who have made large contributions a bigger say in community decisions. Because those points are recorded on the blockchain, their owners have much more authority over them; they cannot be taken away easily.

Conclusion

Web 3.0 is the next generation of the World Wide Web. It was created to empower common people and give them the ability to connect to the internet where they can maintain full control over their data.

While Web2 played a significant role in enhancing the internet’s usability by creating visually beautiful and simple-to-navigate websites and social media platforms, it is plagued by security, privacy, and data control and privacy concerns.

Web 3.0 has arrived to address the shortcomings of the old networks. It has to offer so much, from Semantic Web to Edge Computing to Decentralized Finance. Web 3.0, with decentralization at its foundation, will provide businesses, entrepreneurs, and users with more security, transparency, and regulatory compliance.

We are about to witness the most economically-driven and individualized version of the web with Web3. A growing number of companies are investing in Web3, blockchain, and cryptocurrency, and this might be the perfect time to build your own Web3 platform or project.

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