What is Web 3.0?

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James Crooke Chief Technology Officer | Development

“Web 3.0”, or Web3 as it’s also known to shave off three Twitter characters, has become a buzzword that gets thrown around a lot on social media platforms, just like "metaverse".  There are various takes on what it is, whether it’s needed, if it’s a scam, a bubble or not even a thing at all - here are my thoughts...

 

Firstly, Web 1.0 and Web 2.0

Web 1.0 is often defined as “Read Only” - it was the Internet of the 90s - static websites with not a lot of interaction. Only a handful of organisations were publishing content, it looked dreadful, but at least it wasn’t littered with adverts and annoying cookie banners.

Web 2.0 is often defined as “Read and Write” - it emerged in the late 90s and early 2000s. Web developers allowed users to publish their own content/comments/ratings, and social platforms started to emerge. It also became easier to make your own websites, even without knowing HTML or what a web server was. But still, centralised social media companies (e.g Facebook, Twitter, Youtube) have the control to manipulate, store and sell said user content and private data they have collected on their users to make Scrooge McDuck levels of income.

 

Where did Web3 come from?

It’s up for debate, but it seems the term was originally mentioned by Gavin Wood - co-founder of Ethereum and founder of Polkadot and Kusama - in 2014, he called it Web 3.0. The idea behind it is that today's web is over-centralised in the hands of big tech - Google, Amazon, Facebook, etc. Wood suggests, that just regulating them is not enough, as regulators are often slow and don't have enough power. 

 

So what exactly is Web3? 

Asking what Web3 is, is a bit like asking people in the late 90’s what they think Web 2.0 will look like.

Web3 is the future Internet we’re moving towards and is often defined as “Read, Write and Execute” and in particular using decentralised blockchain-based platforms that will give control to the users themselves; 

  1. No one can store the private data of users
  2. No one can remove/moderate the users' content

Under Web3, the Internet is governed by the collective “we”, rather than owned by centralised entities. The Web3 world has open-source protocols at its foundation and looks to re-architect Internet services and products, so people benefit, rather than entities.

The shift to blockchain technology is to make it open, transparent, decentralised and peer-to-peer. However, for end users, Web3 would probably look very similar to Web 2.0, at least at first sight - similar frontend but a very different backend. 

So the main idea is to build something similar to what we have now, but on the blockchain, decentralised and without "censorship".

When you buy art from a seller on the Internet, the middleman might be eBay - they store all the data about the buyer, seller, auction/sale, the transaction, the feedback, all on their own servers.

When you transact on Web3, there is no middleman. If you buy an NFT, you buy it directly from the other user, the only “middleman” being a decentralised network secured by cryptography and controlled by no single entity.

However, NFTs are only one type of “Smart Contract”. There are many more use cases for executing contracts between parties - Decentralised Finance (DeFi), governance, voting, rights management, we don't really know the full scope yet.

Just like flat-earthers, there are denialists that Web3 is even a thing, or it’s a scam, or a pyramid scheme, or doesn’t have a place - yet even companies like Reddit are currently hiring blockchain engineers to help them transition to Web3.

 

Why do some say it’s a scam?

It’s a little premature to label an entire emerging ecosystem as a scam. Can you build scams using decentralised apps? Yes. But you can scam people with a pen and paper too.

The problem is that blockchain technology is tailor-made to run pyramid and ponzi schemes. That's what you get with technology running in the “Wild West”. There are many legitimate use cases and technologies, but it's drowning in a sea of scams at the moment.

 

How is cryptocurrency involved? 

This is where it gets a bit more complicated - because what exactly Web3 is supposed to be and how it’s going to work is still being defined. 

Decentralised Apps (dApps), using different crypto tokens, are considered to be part of it, as are DAOs, NFTs and even Reddit's community points. So whatever exactly a finished Web3 will look like, crypto will probably have a big part to play in it.

Many people very much involved in the world of tech are very critical of the idea;

 

Do we really need Web3 to supersede Web 2.0?

Blockchains shine when two very specific criteria are met:

  1. The system must be decentralised
  2. Participants are adversarial

Most use cases fail at criteria 1. If multiple organisations or people need a shared system, creating a third-party administrative governing body with an API and a SQL database fits most needs, while having vastly higher efficiency and reliability.   For example, Visa is a worldwide organisation processing millions of transactions per day more than Bitcoin, Ethereum etc.

Even if a system must be decentralised, if the participants trust each other, you don't need a blockchain, you need a consensus algorithm.

Creating a non-governmental currency governed solely by code, like Bitcoin, is a good use case. It must be decentralised, or any government could either control or exert pressure on whoever did.

Creating a decentralised finance application, like Terra have with Anchor Protocol, which is essentially a savings account and lending platform, is another great use case; with no minimum deposits, account freezes, or signup requirements; users can earn up to 20% APY interest on their stable coin assets with no greedy bankers sucking the yield down to 1%.

Almost everything else isn't a good use case. The ratio of terrible to good ideas in Web3 is 10000:1, if not more.

 

To Summarise

I like the idea of Web3 and crypto/blockchain in general but I don't think everything should be decentralised or built on a blockchain.

Just because you can build something on top of a blockchain doesn't mean you should. As always, it’s best to use the right tool for the job. The "regular" web as we know it and blockchain dApps will simply coexist.

 

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