What is Web3, and why it matters.

An overview of Web 1 and Web 2, challenges, and the role Web3 plays.

Dec 16, 2021

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Web 3 is a term that’s been coined for a few years now, although it seems that this year is really when it has been widely adopted.

But what exactly is Web 3?

Let’s start by saying there is no official universal definition, but there are some main traits that characterize this new stage we are embarking on. I’ll dive into it, aiming to explain this concept in simple layman terms.

However, first things first. If there is a Web 3.0, there’s got to be a Web 1.0 and Web 2.0.

What determines the different versions?

Just like the evolution of humanity has gone through different periods, marked by major events and changes, the Internet has a similar evolution.

In a nutshell, Web 1.0, 2.0, and 3.0 mark different eras in the history of the Internet. This transition is normally marked by paradigm shifts introduced by a combination of changes and disruptions that mark a clear before and after.

Let’s take a walk through history in order to understand what Web 3 is and why it’s different.

Web 1 - Read only (around 1990 to 2004)

This is the first version of the Internet, with static websites, much like a big Wikipedia page, where people will mainly read and consume information.

As part of the shift from print media to digital, it seemed that the main content creators during Web 1 were mostly journalists, professional writers, and reporters.

Web 2 - Read and write (2004 to now)

This is basically the Internet as we know it today. If you are less than 30 years old, this is likely the only version you are familiar with.

We are talking about a much more sophisticated user experience and features, with diverse web applications, mobile versions becoming available, with social media platforms and e-commerce taking off and dominating, enabling business models that we haven’t seen before.

Here, we don’t only read anymore. We also create content and share it online, much like me writing this article right now, or you posting a picture on social media. Therefore, we no longer just play the role of consumers, we have also become content creators.

In terms of information flow, we don’t just get information from websites anymore, here the websites have started collecting information from us.

Web3 -Read, write, and own (currently transitioning to this)

This is the era of decentralized applications powered by blockchain.

To quote Chris Dixson, “we are now at the beginning of the Web 3 era, which combines the decentralized, community-governed ethos of Web 1 with the advanced, modern functionality of Web 2”.

What is added to the previous “Read and Write” paradigm from Web 2, is the introduction of the keyword “own”: we can now have full ownership over our content, data, and assets.

This is enabled by attributions of blockchain and cryptography. We will look at how this is done, but let’s first take a look at why this matters.

Why is this relevant?

Well, because of the problems and challenges we face with Web 2.

Essentially, Web 2 is a zero-sum, extractive system.

See, Web 2 is mainly run by the likes of Facebook, Amazon, Google, Apple, Microsoft, etc… These are siloed, centralized corporations, and all value created is accrued to them. Or put another way, capital is accumulated at the top.

Now here there are 2 main problems, that we are all quite familiar with:

As we also become “content creators” and share our content online, we don’t own it. All this information is stored in centralized servers on the platforms that we use, which means the companies behind these platforms can do whatever they want with this.
The information that these large corporations collect is not limited to the content that we create. They collect our private data, track our browsing history and location, observe our behavior, etc.
Think of Facebook, Youtube, Google, etc… their business model is that you get something for free, and they use your data to serve you with better content which in turn will help them make more money by selling this data to advertisers.

As these companies monetize our data, Web 2 has effectively become also an age of targeted advertising and lack of privacy.

How do all these affect you in a more practical way? Well, Twitter can delete your tweets, Instagram can shut down your account, Facebook can use your pictures… you get the gist.

A look into the platform life cycle

The key problem with these Web 2 corporations is rooted in their business model.

At first, platforms will focus on onboarding as many users as possible, as well as 3P complements such as creators, developers, businesses. They do this, to build and strengthen their network effect.
As these platforms grow, moving up on the S-curve, their power over their users and 3P grows steadily.
As they hit the top of the curve, in order to continue growing, they need to extract data from users and compete with 3Ps, instead of cooperating. Effectively, this is not a positive-sum game anymore, but a zero-sum one.

How does Web 3 solve these problems?

Web 3 is the Internet powered by blockchain, which means that we can leverage on the new functionalities that blockchain technology unblocks together with cryptography, which empowers a different way of doing and building things.

Some of the most important attributes are:

Ownership: users can own their own creations or a piece of an asset represented in tokens (NFT, read more here). This is how for example creators can retain ownership rights and forever claim resale royalty.

Governance: power is given back to the communities, where users can participate in governing by owning governance tokens from projects.
Decentralization: apart from governance being decentralized (meaning there is no CEO, president, or board members of a large corporation making decisions), data, instead of being centralized in a server, it’s now also distributed on thousands of computers around the world that are part of that network.
Identity & Data Privacy: today, if you sign up for a social media platform or any other application, you need to provide your data and identify yourself. In Web 3, because of its permissionless nature, you don’t need to do that anymore.
Capital distribution: Web 3.0 is designed in a way in which users and contributors to the platforms get financially rewarded as the network grows.

Some examples of Web 3 projects that aim to replace/compete with Web 2 companies…

Final Thoughts

To be honest, it’s not that Web 2 corporations are necessarily evil, and we are victims of the system. We have come a long way thanks to the innovations they drove, and we have benefited in many ways.

However, as technology evolves and new possibilities become available, there will inherently come new problems with it as well. Eventually, these problems will become bigger and bigger, requiring new disruptions to happen to change and/or improve upon what we have.

I believe this is what’s happening with the rise of Web 3. It is still being shaped and built, but we are definitely transitioning towards it, and we should play our part by keeping up with the trend.

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