What is Web3: Understanding the decentralized web

The internet has undergone remarkable transformations over the years, from the early days of static websites (Web1) to the era of social media and interactivity (Web2). Now, we stand on the brink of Web3, a new frontier that promises to revolutionize the way we experience the digital world.

But what is Web3, really? How is it different from Web 3.0? What are its components and features, and how does it relate to other emerging technologies such as cryptocurrency, non-fungible tokens (NFT), and the metaverse? In this article, we’ll help you understand the concept of the future of the internet.

What is Web3?

Web3 is the next phase of the internet's evolution. It was first coined by Ethereum co-founder Gavin Wood in 2014. The idea behind the concept is to create a decentralized version of the internet.

At its core, Web3 aims to make the internet more open, decentralized, and user-centric. It focuses on security and giving back the power to users to control their data and identity. Unlike its predecessors, it seeks to empower individuals and reduce reliance on big corporations for online activities. In Web3, rather than consumers accessing the internet through Google, Apple, or Facebook, individuals own and govern sections of the web. This means people can become participants and shareholders, and not just customers or consumers.

How does Web3 differ from Web1 and Web2?

Some people refer to Web1 as the “read-only web.” Its successor, Web2, has been called the “read and write” version of the internet. This said, Web3 can be understood as the “read, write, and own” phase of the web. Below are Web3’s key points on what makes it different from its predecessors.

Decentralization: Web3 operates on a decentralized foundation, primarily leveraging blockchain technology. Unlike Web1 and Web2, where centralized servers control much of the internet, Web3 relies on a network of computers, making it resistant to censorship and single points of failure.

Interoperability: Web3 emphasizes interoperability, enabling different blockchain networks and technologies to work together. This interconnectedness was limited in Web1 and Web2, where data was often siloed within individual platforms.

User Control: Web3 promises to give users control over data and digital assets. With Web3, consumers have the keys to their digital spaces, allowing them to transact, communicate, and create without relying on intermediaries.

What are the components and features of Web3?

Web3 and cryptocurrency

Web3 and cryptocurrencies are intertwined. Cryptocurrencies like Bitcoin (BTC) and Ether (ETH) play a pivotal role in Web3 by enabling decentralized transactions, powering smart contracts, and facilitating digital asset ownership. They are the financial backbone of this new internet era.

The Ethereum Foundation noted that “Web3 has native payments” and “uses cryptocurrency for spending and sending money online instead of relying on the outdated infrastructure of banks and payment processors.”

Web3 puts emphasis on ownership of assets, and cryptocurrencies provide the financial infrastructure and incentive mechanism that support Web3. Not only do cryptocurrencies serve as a medium of exchange, but they also allow for a “token economy” so users can earn them for their contributions to the platform.

Since Web3 promises to eliminate third-party control, having cryptocurrencies as a means of payment and exchange is a perfect fit.

Web3 and NFTs

Web3 is the natural home of NFTs since their principles align with each other. NFTs enable ownership and authenticity of digital goods like digital art, music, and virtual real estate. NFTs are also democratizing the digital economy, essentially giving economic power back to creators.

Web3 and the metaverse

The metaverse, a virtual universe where users interact, work, and play, is closely connected to Web3. Blockchain-based assets, NFTs, and digital identities form the building blocks of the metaverse, enabling seamless transitions between physical and virtual worlds. Web3 provides the foundation for creating these interconnected and decentralized virtual spaces.

Other Web3 components and features include:

Blockchain technology: Web3 is built on blockchain, a distributed ledger technology known for its security and transparency.

Smart contracts: These self-executing contracts automate tasks and transactions, reducing the need for intermediaries.

Digital identity: Web3 allows users to have secure and portable digital identities, enhancing privacy and security.

Decentralized finance (DeFi): DeFi platforms on Web3 offer financial services without traditional banks, providing greater accessibility.

Tokenization: Physical and digital assets can be tokenized and traded on blockchain networks, creating new opportunities for ownership and investment.

What other technologies can Web3 feature or relate to?

Web3 has the potential to integrate with several emerging technologies:

Internet of Things (IoT): Web3 can enhance the security and interoperability of IoT devices, facilitating a more connected and decentralized IoT ecosystem.

Augmented reality (AR) and virtual reality (VR): By leveraging Web3's capabilities, AR and VR experiences can become more immersive, interactive, and interconnected.

5G: The high-speed, low-latency nature of 5G networks can enhance the performance of Web3 applications and services, making them more accessible to users.

Artificial intelligence (AI): Web3's decentralized data ownership can enhance AI models’ training while maintaining user privacy. Additionally, AI can assist in content curation, recommendation systems, and personalization on Web3 platforms.

This article was written on September 14, 2023.