The Newbies Guide to Web 3.0
What Is Web 3.0?
Web 3.0 is an emerging concept that encompasses various ideas, related to a decentralized internet, that are now coming to the fore but will be increasingly important in the years to come.
It’s important to understand what we know now, so we can take advantage of Web 3.0 as it grows in significance. Let’s start with a definition of Web 3.0 as it exists today and dig into some of the ideas behind it to examine why it matters so much.
Web 3.0 is the next stage of the internet, where decentralization, digitally native money, autonomous systems, and self-sovereign identity combine to enable new economic models operated by communities rather than corporations.
The Journey From Web 1.0 to Web 3.0
One good way to understand Web 3.0 is to compare it with what came before during the Web 1.0 and Web 2.0 eras.
The Web 1.0 era was populated by static news sites, personal websites, and blogs. Users consumed content and data from these sites, but they didn’t do much else. Communication channels were usually one-to-one interactions, such as email, and few monetization models existed.
The Web 2.0 era was characterized by a shift to user-generated content that could be shared via popular social media sites, marketplaces, and web apps. In this way, communication turned from one-to-one to one-to-many. However, these interactions usually went through centralized entities, such as Facebook, Amazon, or Google, which were able to build lucrative business models around this activity.
Web 3.0 has the connectivity of Web 2.0, but it is achieved in a truly peer-to-peer manner, with no need to go through centralized entities. Instead, decentralized networks built around community-driven incentives enable users to interact directly and to benefit from the economic activity that takes place.
The Benefits of Web 3.0
There are a number of benefits associated with the emerging Web 3.0 paradigm.
User-centered economic models
While the Web 2.0 era was characterized by a small number of tech giants profiting from the activity of thousands of internet users, Web 3.0 enables users to gather in globally distributed networks and generate income directly by providing services the community needs.
Personal data protection
Web 3.0 has been specifically designed not to profit from the exchange of personal information in the way Web 2.0 tech giants have. Users can operate anonymously or pseudonymously, with Zero-Knowledge Proofs used to verify information without it needing to be exchanged.
No single point of failure
The main reason that Web 3.0 is built on decentralized networks is that they are resistant to attack and virtually impossible to shut down because there is no single point of failure. This means, if one part of the network fails, the other parts continue as normal.
Open to anyone, anywhere
The decentralized, public networks that underpin Web 3.0 do not require permissioned access through a central entity. In this way, they can open up economic activity in developing parts of the world, as well as helping dissidents to continue operating within authoritarian regimes.
The Role of Blockchain In Web 3.0
Blockchain networks, such as Bitcoin and Ethereum, are decentralized networks that were purposefully built so they cannot be shut down.
A blockchain is a way of storing information on a decentralized and distributed ledger, while blockchain networks are lots of individual computers coordinating to keep this ledger up-to-date and secure from attack.
The Web 2.0 that we see today is a network of networks, but most of these networks are controlled by centralized parties. Just think of Amazon, Google, and Microsoft’s cloud systems and the vast array of popular applications they support.
Web 3.0 is different because it involves blockchain networks rather than corporate networks interacting with each other through a process known in crypto circles as interoperability.
The Architecture of Web 3.0
The role of blockchain in Web 3.0 changes how applications are built, with the Web 3.0 versions known as decentralized applications or Dapps.
The basic architecture of a Web 2.0 application includes the browser that the user interacts with, front-end code for displaying data in the application, back-end code for retrieving that data and a database for storing it.
The first part of this is the same in Web 3.0, as the user interacts with the browser, and the data is displayed using front-end code. However, one of the main differences is the use of smart contracts in Web 3.0 rather than back-end code. These programs exist on a blockchain and execute automatically if certain parameters are met.
Web 3.0 Business Models
As with everything else in Web 3.0, new business models are emerging as we learn more rather than being fully established. However, some notable examples already exist.
Token ownership
The most obvious economic difference between Web 3.0 technology and Web 2.0 technology is the accrual of value into tokens rather than equity. In Web 3.0, decentralized blockchain networks have a native token or coin rather than shares.
Fees on use
A valuable token will have some utility in the network, such as paying validators for their work in confirming transactions. Tokens may also have governance rights attached to them, allowing the holder to vote for or against protocol changes. Finally, token holders could receive fees related to the protocol’s main activity, such as lending, trading/exchanging or yield generation.
DAOs
Decentralized Autonomous Organizations or DAOs are a Web 3.0 amalgamation of communities, corporations and cooperatives. Like decentralized applications, they exist on blockchain networks and are coordinated via smart contracts. DAOs are usually established to achieve an objective, such as funding projects or investing to achieve returns. If you are interested in joining a DAO click here to learn more.
Where does Bitcoin fit within Web 3.0?
Web 3.0 is the first internet era where truly digitally native currency is possible, and Bitcoin is the preeminent example of this.
In fact, some of the most prominent corporate supporters of crypto have put their full weight behind Bitcoin. This includes Square, the digital payments company, which has established a cryptocurrency and decentralized finance business unit called TBD. Mike Brock, TBD Project Lead, has said he believes Bitcoin will be the native currency of the internet.
There are many more Bitcoin advocates who also believe Web 3.0 has to be built on Bitcoin because it is the most decentralized crypto network. For them, decentralization either exists or it does not, while others argue decentralization is a spectrum on which many networks can exist.
We will have to wait and see but a future that includes multiple interoperable blockchain networks seems most likely right now.