Decoder: What Is Web3?

Cryptocurrencies, NFTs, the metaverse, etc are all components of Web3. These terms have been dominating tech news in the last two years and Web3 startups like Coinbase, Binance, OpenSea, and Polygon, providing services ranging from crypto exchanges to NFT marketplaces, have been raising hundreds of millions of dollars in venture capital at billion-dollar valuations. So clearly there is something there. In today's Decoder article, we look at what Web3, or Web 3.0, is all about.

The first version of the internet that was publicly available to use, the World Wide Web, is referred to as Web 1.0. Dating back to the early 90s, it was largely made up of static web pages connected by hyperlinks.

Then came Web 2.0, the age of the internet as a platform. We saw the rise of e-commerce and social media sites like Facebook, Twitter, and Instagram. People gained the ability to interact with online platfoms and publish content of their own. Smartphones and cloud computing were major drivers of growth here.

As many people see it, the problem now is that internet users are required to surrender their personal data to use "free" services provided by tech giants like Google, Microsoft, or Amazon. Shopping, social media, blogs—all of it collects information about our preferences and the way we use these services, which is then sold to third parties and used to serve up targeted ads. Thats the problem Web3 aims to solve.

The term Web3 was coined by Gavin Wood—one of the co-founders of the Ethereum cryptocurrency—as Web 3.0 in 2014. Since then it’s become a catch-all term for anything that has to do with the next generation of the internet being a decentralized digital infrastructure.

Wood, and those who support the Web3 concept, claim that Web 2.0 is controlled by big tech (Facebook,Google,Apple,Amazon,etc), which in turn is beholden to regulators who may or may not be effective at maintaining public trust in the internet or data security. In a 2021 interview with Wired, Wood said the current web requires trust in institutions that we can’t hold accountable: 

"Maybe [companies] tell the truth because they're scared that their reputation will take a big hit if they don't. But then, as we saw with some of the Snowden revelations, sometimes companies don't get an opportunity to tell the truth," Wood told Wired. "Sometimes, security services can just install a box in their back office, and they're told, ‘You don't need to look at this box, you're not allowed to say or do anything about this box, you just have to sit quietly.’”

Proponents envision Web3 as an internet that does not require us to hand over personal information to companies like Facebook and Google in order to use their services. The web would be powered by blockchain technology and artificial intelligence, with all information published on the public ledger of the blockchain.

Similar to how cryptocurrency operates, everything would have to be verified by the network before being accepted. Online apps would theoretically let people exchange information or currency without a middleman. A Web3 internet would also be permissionless, meaning anyone could use it without having to generate access credentials or get permission from a provider.

Instead of being stored on servers as it is now, the data that makes up the internet would be stored on the network. Any changes to, or movement of, that data would be recorded on the blockchain, establishing a record that would be verified by the entire network. In theory, this prevents bad actors from misusing data while establishing a clear record of where it’s going.

Just as cryptocurrency blockchains are built to prevent "double spending," a blockchain-centric internet would, in theory, make it harder to manipulate and control data. Since data would be decentralized, no gatekeeper would have control of it, meaning they couldn’t bar anyone’s access to the internet.

On paper, that would give a lot more people access to the internet than before, and AI would be employed to curtail bots and click-farm websites. An example of a Web3 application might be a peer-to-peer payment app that works on a blockchain. Instead of using a bank, people could pay for a good or service using a decentralized app (Dapp) made for payments.

Before a transaction is finalized, it would have to be verified by the network and then coded into the digital ledger of the blockchain. A payment system like this could benefit people who can’t open bank accounts, don’t have access to them, or are barred from providing certain services by large payment providers. 

Web3 is still largely theoretical and has a pretty steep learning curve. Currently, anyone who wants to has to educate themselves on blockchain and cryptocurrency technologies. That’s a step not everyone wants to take just to use another version of what they already have, especially if they can use apps like private browsers to get around privacy concerns.

There are also the issues of anonymity and censorship. If the entire internet ran on Web3 blockchain architecture, and everything was indelibly written into the blockchain, nothing would be anonymous. That would be fine for some, but not those who need to remain anonymous for their safety.

If no one could be blocked from the internet, that would be egalitarian in theory, but the spread of harmful misinformation and hate speech would need to be controlled in some way. Since the internet we have now is already so bad at controlling these issues, it's hard to say if Web3 would be better or worse.

Article first appeared on PC Mag

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