What Is Web3? Everything You Need to Know

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Web3, or Web 3.0, refers to the third iteration of the World Wide Web. It represents the next phase of advancement in computing technology, building upon and moving beyond the capabilities of Web 2.0.

This vision for a new internet is championed by many who feel the current web is overly centralized, controlled largely by a handful of powerful corporations often referred to as "Big Tech." For these advocates, decentralization is the key solution. Other core concepts intertwined with Web3 include the Internet of Things (IoT), the Metaverse, Artificial Intelligence (AI), and Blockchain technology.

The Evolution of the Web

The web is a complex system of hardware and software working together to form the global network of computers we call the internet. Technology evolves rapidly, sometimes at an exponential pace.

It began with ARPANET in 1969, running on hardware like the Honeywell DDP-516. This 16-bit minicomputer had just 24KB of memory and a 2MHz CPU. Over the decades, hardware improvements have enabled massive software advances. Today, we have CPUs with dozens of cores running at GHz speeds and virtually unlimited system memory. This evolution didn't happen overnight; it was a gradual process, and the web evolved with it.

Web 1.0: The Static Web

The first generation of the internet consisted essentially of static web pages. Information was delivered to users who requested it, with little to no interaction or user-generated content.

Web 2.0: The Social Web

The second generation introduced user input. This era birthed the social web, where users became creators, generating data that served other users. It also brought us programmable web APIs and more complex, interactive services.

Web 3.0: The Next Frontier

A third generation is now taking shape. Its final form will depend on the maturation of several currently developing technologies. Modern smartphones are more powerful than the world's fastest supercomputer from 1975, making this evolution possible. Web3 is not the Metaverse itself, but the Metaverse will likely be a part of it. The Metaverse focuses on user experience through virtual and augmented reality systems, while Web3 concerns the underlying architecture and functionality of the future internet.

The most likely scenario is that augmented reality will act as a bridge, merging Web 2.0 with the Internet of Things and Artificial Intelligence to create a seamless Web 3.0 experience.

How Web3 Relates to Other Technologies

Web3 vs. IoT

The Internet of Things (IoT) is not Web3, but it is a potential foundational component. IoT refers to a network of physical machines and devices that operate independently but can communicate with each other via radio waves.

These devices connect homes and workplaces to networks, enhancing daily life and improving efficiency. Examples include smart home assistants like Amazon Echo and Google Home, as well as automated smart factories.

Web3 vs. AI

Artificial Intelligence is another frontier advancing at a remarkable rate. Decades ago, hardware limitations restricted AI's potential. Today, abundant memory and processing power enable even smartphones to run impressive AI features.

Cloud-based AI systems leverage massive computing power and high-speed broadband to form a new layer of internet infrastructure. Modern data science and AI are integral to the vision of Web3.

Web3 vs. Blockchain

Blockchain is the decentralization technology that enables crypto networks like Bitcoin and Ethereum. While many crypto enthusiasts are excited about its role in building the next web, some important points must be considered.

First, blockchains can be resource-intensive. The Bitcoin and Ethereum networks, for example, consume more energy than many countries. Powering the entire web on a single blockchain is not currently feasible.

However, blockchain remains a highly reliable means of recording transactions between parties. For a future Metaverse where companies build virtual assets, blockchain and cryptocurrencies could provide the necessary trustless framework.

The Big Tech Problem

A major criticism of the current Web 2.0 model is its centralization. A small group of companies—often abbreviated as GAMAM (Google, Amazon, Meta, Apple, and Microsoft)—wield enormous control.

These platforms can arbitrarily lock accounts, terminate contracts or subscriptions, sell user data, or destroy businesses through opaque policies and administrative issues. This has made many developers wary of building on these centralized platforms.

While these platforms offer significant benefits, the fate of businesses and communities built on them ultimately rests in the hands of a few corporate executives. This has led to calls for a decentralized architecture for the next internet—one where creators truly own their work and control how it is used.

Many propose a new, blockchain-focused internet infrastructure modeled on crypto networks, with core tenets of decentralization, open-source development, and freedom.

Tokenomics and Decentralization

Data centralization is a key Web 2.0 problem, as many developers feel excluded by platform owners. Decentralization offers a solution, with crypto tokens ensuring all contributors to a project receive a fair share of the value they create.

Transitioning to this new model won't be easy. Incumbent Big Tech companies control armies of brilliant developers. Furthermore, politicians and governments have repeatedly shown motivations that may not align with public welfare, and growing global regulation of crypto networks indicates a desire to maintain the status quo.

A possible outcome is that even with a different ownership structure, some fundamental patterns of power and wealth concentration may persist.

The Tokenized Enterprise

Imagine if Google open-sourced its search algorithm and paid you a G-Token every time you viewed or interacted with an ad. Now imagine Facebook also paid you a share of its ad revenue in Face-Tokens simply for browsing and posting.

While these scenarios seem unlikely given the corporate nature of these giants, they are not impossible. The tokenized enterprise is a viable concept—essentially a cyber-cooperative supported by blockchain technology.

Cooperatives and mutual corporations might sound old-fashioned, but they are powerful business models. For example, two of the largest retail chains in Switzerland are cooperatives and are highly successful. This demonstrates the potential for decentralized Web 3.0 businesses.

Key Features of Web3

Here are some of the most promising speculative features of a Web3 environment:

Technical and Social Challenges

The various technologies comprising Web3 are still evolving, meaning significant hurdles remain.

Technical Hurdles

Potential Social Dangers

A highly decentralized Web3 also presents potential social dangers due to the difficulty of regulation:

Notable Web3 Applications

The Web3 ecosystem is already growing, with notable projects including:

The Future of Web3

With the cost of bandwidth, storage, and computing power falling towards zero, the next iteration of the World Wide Web is inevitable. Its exact form, however, is still unknown. Blockchain, IoT, and AI will almost certainly be part of it.

The internet could certainly become more community-governed, and tokenized enterprises could allow developers and content creators to earn more from their work. However, we must not forget the lessons of history concerning human greed. There will likely always be entities seeking to concentrate power and wealth for themselves. The challenge of Web3 is to build a system resilient enough to prevent it.

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Frequently Asked Questions

What is Web3 in simple terms?
Web3 is the idea for a new, decentralized version of the internet where users have more control over their data, identity, and online interactions, often using blockchain technology to remove the need for central authorities.

Is Web3 the same as cryptocurrency?
No, they are not the same. Cryptocurrency is a digital asset often used as a medium of exchange. Web3 is a broader vision for the internet that uses cryptocurrencies and blockchain technology as foundational elements for building decentralized applications and economies.

What is an example of a Web3 application?
A Web3 application, or dApp (decentralized application), runs on a blockchain instead of a centralized server. Examples include decentralized finance (DeFi) platforms for lending and borrowing, NFT marketplaces like OpenSea, and decentralized social media networks.

Do I need a crypto wallet for Web3?
Yes, interacting with most true Web3 applications typically requires a cryptocurrency wallet. This wallet acts as your digital identity and allows you to store assets, sign transactions, and prove ownership on decentralized networks.

What are the main criticisms of Web3?
Major criticisms include its current lack of scalability, high energy consumption of some blockchains, potential for use in illegal activities due to difficulty regulating, and the argument that it may simply recreate existing power structures in a new form.

How can I get started with Web3?
You can start by installing a Web3 browser extension like MetaMask, exploring dApps, purchasing a small amount of cryptocurrency, and learning about key concepts like wallets, NFTs, and decentralized governance. It's important to research security best practices before investing significant funds.