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All you need to know on Web3

So you want to learn more about Web3? 👀 First of all, let’s recap on previous concepts and we’ll let you in on all you need to know about it!

Web1, in traditional storytelling, refers to the internet of the 1990s and early 2000s. It was the internet of blogs, message boards, and early portals like AOL and CompuServe. Most of what people did on web1 was passively read static web pages, and much of it was built using “open protocols” like HTTP, SMTP, and FTP.

Web2 was the next phase of the internet, starting around 2005 or so — the one characterized by social media behemoths like Facebook, Twitter, and YouTube. In web2 (or Web 2.0, as it was usually called then), people began creating and posting their own content, actively participating on the internet rather than passively reading it. But most of that activity ended up being distributed and monetized by big companies, which kept most, if not all, of the money and control for themselves.

Web3, the story goes, will replace these centralized, corporate platforms with open protocols and decentralized, community-run networks, combining the open infrastructure of web1 with the public participation of web2.

What is web3?

🗣 Web3 is the name some technologists have given to the idea of a new kind of internet service that is built using decentralized blockchains — the shared ledger systems used by cryptocurrencies like Bitcoin and Ether. McCormick, an investor who helped popularize web3, has defined it as “the internet owned by the builders and users, orchestrated with tokens.”

Proponents envision web3 taking many forms, including decentralized social networks, “play-to-earn” video games that reward players with crypto tokens, and NFT platforms that allow people to buy and sell fragments of digital culture. The more idealistic ones say that web3 will transform the internet as we know it, upending traditional gatekeepers and ushering in a new, middleman-free digital economy.

But some critics believe that web3 is little more than a rebranding effort for crypto, with the aim of shedding some of the industry’s cultural and political baggage and convincing people that blockchains are the natural next phase of computing. Others believe it’s a dystopian vision of a pay-to-play internet, in which every activity and social interaction becomes a financial instrument to be bought and sold.

Core ideas of Web3

🗣 Although it’s challenging to provide a rigid definition of what Web3 is, a few core principles guide its creation.

👉 Web3 is decentralized: instead of large swathes of the internet controlled and owned by centralized entities, 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: it uses cryptocurrency for spending and sending money online instead of relying on the outdated infrastructure of banks and payment processors.

👉 Web3 is trustless: it operates using incentives and economic mechanisms instead of relying on trusted third parties.

So why are so many people talking about web3 all of a sudden? This boom 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.

And the industry has become a magnet for tech talent, with many employees of big tech firms quitting cushy, stable jobs to go seek their fortunes in web3.

Why is Web3 important?

🗣 Although Web3’s killer features aren’t isolated and don’t fit into neat categories, for simplicity we’ve tried to separate them to make them easier to understand.

  1. Ownership

Web3 gives you ownership of your digital assets in an unprecedented way. For example, say you’re playing a web2 game. If you purchase an in-game item, it is tied directly to your account. If the game creators delete your account, you will lose these items. Or, if you stop playing the game, you lose the value you invested into your in-game items.

Web3 allows for direct ownership through non-fungible tokens (NFTs). No one, not even the game’s creators, has the power to take away your ownership. And, if you stop playing, you can sell or trade your in-game items on open markets and recoup their value.

  1. Censorship resistance

The power dynamic between platforms and content creators is massively imbalanced.

On Web3, your data lives on the blockchain. When you decide to leave a platform, you can take your reputation with you, plugging it into another interface that more clearly aligns with your values.

Web 2.0 requires content creators to trust platforms not to change the rules, but censorship resistance is a native feature of a Web3 platform.

  1. Decentralized autonomous organizations (DAOs)

As well as owning your data in Web3, you can own the platform as a collective, using tokens that act like shares in a company. DAOs let you coordinate decentralized ownership of a platform and make decisions about its future.

They are defined technically as agreed-upon smart contracts that automate decentralized decision-making over a pool of resources (tokens). Users with tokens vote on how resources get spent, and the code automatically performs the voting outcome.

Web3 app example app

🗣 An oft-cited example is Axie Infinity, a video game developed by the Vietnamese game studio Sky Mavis, which uses NFTs and Ethereum-based cryptocurrencies to reward players with real money for achieving in-game objectives.

In the game, players can “breed” characters called Axies, and use them in battles against other players. They can also collect virtual land, in the form of NFTs, and earn a type of digital money called Smooth Love Potion, or SLP, which can be traded on a cryptocurrency exchange. (In an article last year, the writer Casey Newton called it “Pokémon on the blockchain.”)

Axie Infinity has attracted millions of players, including a number of people in the Philippines who make a full-time living from playing the game.

Web3 and the metaverse?

🗣 The metaverse, if you’ve been following along, is the term we’re using these days for immersive digital worlds in which users can socialize, play games, attend meetings, and do other activities together. It’s the vision Mark Zuckerberg outlined when he announced that Facebook was changing its name to Meta. And some crypto proponents believe that web3 is an essential part of the metaverse because it would allow for the creation of metaverses that aren’t controlled by a single company or governed by a single set of rules.

Many objects in the metaverse may also be crypto tokens if the web3 crowd has its way. Your metaverse avatar might be an NFT. Your metaverse house might come with governance tokens or qualify you to join a neighborhood DAO. The mortgage on that house might even be packaged into a mortgage-backed security token and sold on a decentralized exchange.

 

👉 Well, now we’re venturing deep into the land of the theoretical, but some believers think that web3 could become the backbone of a new, tokenized society.

Among web3 fans, there’s been a lot of talk about “decentralized identity” — the notion that, in the future, we could all have a kind of reputation score that consists of a blockchain-based tally of the jobs we’ve done, events we’ve attended and projects we’ve contributed to. These records would essentially become permanent records of our online lives, and other people could look them up to decide whether to hire us, trust us with some tasks or even date us.

👀 So, what is your take in this matter? Have you ever tried a Web3 experience? Let us know!

 

📝 Sources:

https://www.nytimes.com

https://ethereum.org/

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