Web3, also known as Web3.0 is the emerging, decentralized internet using Blockchain technology. Web3 gives individual users power and ownership over their data, identity and digital assets where all these data and assets are currently owned and monetized by Web2 giants.
To have a better understand about Web3, we have to understand Web1 and 2 in the first place.
Web1.0 — The early read only web (1990-2004)
Web 1.0 was generally static, read only websites owned by companies. There was almost zero interaction between users. Companies will produce content and individuals will just read them.
Web2.0 — The read and write web (2004-now)
The Web 2.0 period began in 2004 with the raise of social media platforms. Instead of companies producing content to users, platforms are created to share user-generated content (facebook, YouTube etc) as well as user-to-user interactions (comment, chat, messenger etc).
Web 2.0 also introduced the advertising-driven revenue model. While users could create content, they didn’t own it or benefit from its monetization.
Web 3.0 — The read and write with ownership (emerging)
The idea of ‘Web 3.0’ was introduced by Gavin Wood, co-founder of Ethereum shortly after Ethereum launched in 2014. Web3 uses blockchains, cryptocurrencies, and NFTs to give power and ownership back to the users.
Core ideas of Web3
Although the Web3 is not there yet, a few core principles of Web3 are:
- Web3 is decentralized: instead of large percentage of the internet assets controlled and owned by centralized companies, ownership gets distributed amongst its builders and users.
- Web3 is permissionless: everyone has equal access to participate in Web3, and no one gets excluded.
- Web3 has native payments: Web3 uses cryptocurrency for spending and sending money online instead of relying on the outdated infrastructure of banks and third-party payment processors.
- Web3 is trustless: Web3 operates using incentives and economic mechanisms instead of relying on trusted third-parties.
The advantages of Web3
Ownership
In a Web2 example, say you’re playing a game and purchased an in-game items. The digital assets are tied directly to your account. If the game creators delete your account, you will lose these assets. If you stop playing the game, you lose the value you invested into your account and in-game assets.
In a Web3 example, you own the digital assets in an unprecedented way. Web3 allows for direct ownership through non-fungible tokens (NFTs). No one has the power to take away your ownership. If you stop playing the game, you can sell or trade your in-game assets on open markets and regain their value.
Monopoly resistance
Facebook is a good example for monopoly for it’s user-generated content.
Facebook introduced pages in 2007. In the early days, facebook welcome marketers, businesses and content creators to build, engage and grow their audience on facebook pages.
Businesses and marketers started building their audience on facebook pages, some of them even run facebook ads to gain millions of followers in a very short period.
Since 2015, facebook has dramatically decrease the percentage of organic reach on pages. This is ridiculous where businesses now has to promote their content to the audience they’ve built on facebook with insane amount of money and time.
The decrease of organic reach sparked outrage amongst creators on facebook, who felt they were getting robbed of their time and money on a platform they helped create but nothing they can do.
Identity
In Web2, you would create an account for every platform you use. For instance, you might have a Facebook account, a Twitter account, and a YouTube account.
In order to change your display name, you have to do it across every account. Even worst, these platforms can lock you out of your entire online life for whatever reason.
Web3 solves these problems by allowing you to control your digital identity with an Ethereum address and ENS profile. Using an Ethereum address provides a single login across platforms that is secure, censorship-resistant, and anonymous.
Native payments
Web2’s payment infrastructure relies on banks and third-party payment processors. Web3 uses tokens like bitcoin or ether to send money directly in the browser and requires no trusted third party.
The limitations of Web3
Since theWeb3 is still emerging, there are many limitations that the ecosystem must address.
Accessibility
Important Web3 features such as Sign-in using wallet, are already available and free to use for anyone. But the relative cost of transactions (gas fee) is still a blocker for many. For instance, you can connect your wallet and create an account on opensea.io for free. However, to start uploading your digital artwork and sell your NFT on opeansea.io, you need to pay some gas fee around USD 200+ depending on the current ETH price.
Ethereum has already solved these challenges through network upgrades and layer 2 scaling solutions. However, a higher levels of adoption on layer 2 is needed before Web3 is accessible to everyone.
User experience
The technical barrier to entry to using Web3 is currently too high. Users must comprehend security concerns, understand complex technical documentation, and navigate unintuitive user interfaces. Wallet providers, in particular, are working to solve this, but more progress is needed before Web3 gets adopted en masse.
Blockchain speed and scalability
With the massive growth in Web3 adoption, blockchain technology has to keep up with the speed in order to scale. For instance, bitcoin is only able to process 7 transactions per second where Ethereum can process up to 25 transactions per second. The fastest protocol today is Solana which can process up to 29,000 transactions per second and that’s not even close to “fast”.
As we can see, the blockchain protocols are evolving for faster speed and cheaper transaction fee down the road. I personally not really worrying about the speed and scalability in the long run.
Remember the time where we were so proud for having a 128mb flash drive? Less than 3 years later we were impressed by a 5GB flash drive with only half of the price of the 128mb. I believe the same thing is happening for the Web3 ecosystem.
Centralized infrastructure
The Web3 ecosystem is evolving so quickly. As a result, it currently depends mainly on centralized infrastructure (GitHub, Twitter, etc.).
In the end of the day, most of the decentralized data on blockchain end up stored on centralized cloud computing giants such as Amazon AWS, Microsoft Azure and Google Cloud.