What is Web3? The Decentralized Internet of the Future Explained

During the first few years of the world wide web, now called web 1.0, most websites were read-only web pages. This means that pages had no interactivity, they were just meant to be read. The problem with the first version of the web was that creating your own web page and contributing to this version of the web, took a considerable amount of technological know-how. In a traditional company, shareholders vote on changes in the business, which falls on the CEO to implement. In a DAO, token holders get to vote on any proposed changes which are implemented into the DAO’s code instantly via a smart contract if the changes are approved. Because DAOs are democratized, everyone has access to the DAO’s source code.

Presumably, web3 builders will implement cyber security measures that will target fraud and hacks. In fact, though crypto-related crime is at an all-time high, it is growing at a much slower rate than what is fm gallery overall crypto adaptation which was at $15.8 trillion in 2021. We’re still witnessing the early stages of whatever web3 might become, so we might find ourselves presuming a lot of things about web3.

A DAO in theory is a group or a company that follows a set of rules through a Smart Contract that is coded inside the blockchain. This contract itself works in an unbiased way and must be followed by every member of the DAO. However, this code is also automated and in theory should take care of all the processes including legal, social, promotion, hiring, etc. Alternative social media designs have been percolating for years, with little sign of mass adoption.

Particular interest spiked toward the end of 2021, largely due to interest from cryptocurrency enthusiasts and investments from high-profile technologists and companies. Web 1.0 and Web 2.0 refer to eras in the history of the World Wide Web as it evolved through various technologies and formats. Web 1.0 refers roughly to the period from 1991 to 2004, where most sites consisted of static pages, and the vast majority of users were consumers, not producers of content. Web 2.0 is based around the idea of “the web as platform” and centers on user-created content uploaded to forums, social media and networking services, blogs, and wikis, among other services. Web 2.0 is generally considered to have begun around 2004 and continues to the current day. Web3 will offer powerful decentralized services which are more resistant to censorship and fraud, as there is no single point of failure.

For instance, non-fungible tokens already provide creators with better and more equitable compensation by allowing them to directly profit off their work through built-in royalties. While technology has not quite evolved to the stage where this part of his concept can be entirely fulfilled, other aspects — in particular, those relating to decentralisation — have. For example, encryption will keep your information private as you transfer ownerships and assets on the blockchain, said Huang. The big focus of Web3’s meaning is decentralization—making online communities owned by everyone, with transparent information sharing. So when you ask, what is Web3 (Web 3.0), the answer is really that it’s just the next evolution of the internet, growing out of Web 2.0.

It’s rife with speculation.

Web2 marked a seismic shift in how we interact with the internet, as users became more interested in sharing information instead of just consuming it. Everything from social networking to blogs to wikis to podcasting are all Web2 innovations. The transition to the Web2 era was memorably marked by Time magazine naming “You” its 2006 “Person of the Year”, complete with a reflective surface for the reader to see themselves.

Overall, Web2 has greatly expanded the potential of the World Wide Web and has made it into a much more interactive and user-friendly environment. Further, crypto wallets will remove the need to rely on centralised, third-party electronic payment systems, which require users to provide sensitive information and personal data. Many participants in this space believe this will help with financial inclusion for unbanked populations, as decentralised services do not rely on traditional credit scores. Today, all of the infrastructure that the popular sites and hangouts we spend time on online are usually owned by corporations and, to some extent, controlled by regulations set out by governments. Kauri One is one of those promising projects bringing blockchain technologies with real-sector business and bank systems, spurring the development of the crypto industry and facilitating its adoption worldwide.

While this explainer will tell you all about Web3, I will also take the time to explain other related concepts including Web 1.0 and the Metaverse. However, if you would rather just skip to the definition, use the table below to do so. Ben Schreckinger is a national political correspondent for POLITICO.

During this time, only a few content creators work on the internet. A fundamental concept of Web3 is the ability to have a digital identity that is separate from your real one. While that is amazing for privacy, the same anonymity can be again be used for illicit purposes. Moreover, the lack of oversight when it comes to Web3 is concerning for not just people but for governments. Since Web3 is only a little more than a concept, we will see how much actual freedom it ends up getting from governments and companies. A trustless network means that two parties involved in a transaction will not need to trust each other to commence it.

In other words, they still operated as centralized platforms, but they offered different policies. Bitcoin – The original cryptocurrency has been around for more than ten years, and the protocol itself is decentralized, although not all of its ecosystem is. Other important concepts that are often used in relation to the technical infrastructure of web3 are that it is open, meaning largely built on open-source software, trustless and permissionless. Web3 is safe to use as long as you take precautions to protect your private keys and password. Be sure to never share your private keys with anyone and only use trusted websites and services. There is no central authority controlling Web3, so it is as safe as the individual nodes that make up the network.

In Web 2.0, you have to trust the owners of the service you’re using to respect your privacy. And, realistically, Web 2.0 Big Tech companies have shown time and again that they’d rather sell your data than protect it. There’s no central “Ethereum corporation,” for example, that has privileged access to all of the data sent through its network, or that’s following you around the Web with trackers.

Web3 Innovator Sastanaqqam and Business Strategy Leader Brightnode Partner to Advance Tokenomics

A permissionless network eliminates the need for users to seek approval from anyone before performing transactions. So you can easily send and receive currency across to people without having to seek permission from any third party. The Decentralised Autonomous Organisation is a web3 concept describing a group, company or collective that are bound by rules and regulations coded into a blockchain. For example, in a DAO-based shop, the price of all of the items, as well as details on who would get pay-outs from the business, would be held on a blockchain. Shareholders in the DAO would be able to vote to change prices or who gets the money.

NFTs can operate on a smaller scale than coins because they create their own ecosystems and require nothing more than a community of people who find value in the project. For example, baseball cards are valuable only to certain collectors, but that group really believes in their value. The idea has evolved since then, and new use cases have started https://cryptolisting.org/ popping up. The Web3 streaming service Sound.xyz promises a better deal for artists. Blockchain-based games, like the Pokémon-esque Axie Infinity, let users earn money as they play. So-called “stablecoins,” whose value is pegged to the dollar, the euro, or some other external reference, have been pitched as upgrades to the global financial system.

Platforms like Twitter and YouTube turned everyone into a potential content publisher. What once required specialized knowledge and connections was now a few mouse clicks away. Sensing the opportunity in the rapidly growing market, corporations staked out their territory in Web2, leading to a more centralized internet.

CES 2023: The Metaverse And Web3 To Take Center Stage In Central Hall

However, with the lack of any certain mainframe, regulating Web3 can be difficult. This can lead to an increase in cybercrimes such as the ones described above. Some other concepts fundamental to Web3 include it being Trustless and Permissionless. Meanwhile, China is trying to develop its own path-breaking AI applications. Trustless means that interactions and transactions can take place between two parties without the need for a trusted third party. This was not necessarily the case on web2 or below because you would have to be certain that whoever owned the medium you were using to interact or transact was not manipulating your communications.

• For example, in a DAO-based shop, the price of all of the items, as well as details on who would get pay-outs from the business, would be held on a blockchain.
• This is due to the heavy involvement of machine-to-machine communication and decision-making that will be needed to run many web3 applications.
• In other words, they still operated as centralized platforms, but they offered different policies.
• Contrast this with Web 2.0 where you communicate back and forth with servers that have centralized ownership behind closed doors.
• However, most of all, this gives them control over you as a user.

Web page owners can see metrics on how popular their posts are through clicks and comments. It also gave rise to social media and made content creation accessible to people who wouldn’t have the technical know-how in web 1.0. Over decades, the web has grown and gained new concepts, websites developed infinite possibilities, and users quickly started using entirely different infrastructures, even if they did not realize it. The Web has evolved dramatically over the years, and today’s applications are virtually unrecognizable from their most primitive days. The web as it is now is truly amazing in a lot of ways, which started with just a simple idea. This version allows people to interact with what they see online through comment sections, social media and more.

Like in the early days of Web 1.0 there are numerous applications spread all over Web3. While not obvious at first, the narrative around Web3 is genuinely shaped and molded by the blockchain and crypto phenomenon as a whole. Link this up with AI, machine learning and virtual reality and the Web3 experience becomes entirely immersive. In the mid 2000, the idea of the web as a platform was born and the evolution towards Web 2.0 started. Far more users began to produce digital content, which they uploaded on social media platforms, blogs, or video sharing sites. Websites started to serve dynamic content and the bland web pages of Web 1.0 were replaced by Web 2.0’s interactive, socially connective and user-involving platforms.

The larger the community is, the higher the potential value of the project. You can start by observing or joining Discord and Telegram groups to learn more about how NFT project work. The moment Facebook announced the development of Meta, many companies and individuals have started to join the Metaverse for many purposes. A lot of users speculate that Artificial Intelligence has a role to play in Web3. Since the concept of Web3 involves some aspects that require automatic decision, we just might see AI involved in the process. Since Blockchain is focused on security through encryption, the data is assigned a security key.

How might this all fit into the metaverse someday?

But the web3 boom also reflects the amount of capital, talent and energy pouring into crypto start-ups on the heels of a yearslong crypto bull market. Venture capital firms have put more than $27 billion into crypto-related projects in 2021 alone — more than the 10 previous years combined — and much of that capital has gone to web3 projects. Some big tech companies, such as Twitter and Reddit, have also started experimenting with their own web3 projects. If the user chooses to use the same wallet across multiple dapps, their identity is also seamlessly transferable across apps, which lets them build up their reputation over time.

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Important Web3 features, like Sign-in with Ethereum, are already available for anyone to use at zero cost. But, the relative cost of transactions is still prohibitive to many. Web3 is less likely to be utilized in less-wealthy, developing nations due to high transaction fees. On Ethereum, these challenges are being solved through network upgrades and layer 2 scaling solutions.

A new way of building companies

As more people came online, a handful of top companies began to control a disproportionate amount of the traffic and value generated on the web. While users could create content, they didn’t own it or benefit from its monetization. Some visions are based around the concept of decentralized autonomous organizations . Decentralized finance is another key concept; in it, users exchange currency without bank or government involvement.