Web3 represents the next generation of the Internet, focused on shifting power from large technology companies to individual users.
Web3 is a term we hear a lot these days. In this case, the term refers to the next version of the Internet that supports decentralized protocols. It aims to reduce dependence on big tech companies like YouTube, Netflix and Amazon. But what is it and why is it on everyone's mind?
So what is Web3?
In order to understand what Web3 is, it is worth looking back a little at what happened before.
The first version of the Internet, Web1, arrived in the late 1990s and consisted of a collection of links and websites. At that time, websites were not very interactive. It was all about being able to read things or post simple content that other people could view.
This was followed by Web2, which many call the "read/write" version of the Internet. This term refers to the computer code that allows you to open and edit files instead of just viewing them. This version of the Internet allowed people to not only consume content, but to create and post it themselves on blogs like Tumblr, online forums, and marketplaces like Craigslist. Later, the emergence of social media platforms including Facebook, Twitter and Instagram took content sharing to new heights.
After a while, the public became aware of how their personal data is collected by the tech giants and used to create customized ads and marketing campaigns. This is especially true for Facebook, which has been in the spotlight countless times for violating data protection laws. In 2019, it was fined $5 billion, the largest ever imposed by the Federal Trade Commission (FTC).
Although Web2 has brought amazing free services to the world, many people are tired of this "walled world" created by the big tech companies, where they want more and more control over our data and content. And this is where Web3 comes into play.
How is it different from the previous ones?
Web3 can be understood as the "read/write/own" phase of the Internet. Instead of just using free technology platforms in exchange for our data, users can participate in managing and operating the protocols themselves. This means that people can become participants and shareholders, not just customers or products.
In Web3, these shares are called tokens or cryptocurrencies, and represent ownership of decentralized networks known as blockchains. If we have enough of these tokens, we can have a say in the given network. And holders of control tokens can spend their wealth to vote on the future of a decentralized lending protocol.
What can be done in Web3?
Web3 enables the spread of cooperative management structures for previously centralized products. You can make a token out of anything, be it a meme or a work of art.
One of the greatest examples of this paradigm shift is the gaming industry. Gamers get annoyed a lot by the bugs that the developers leave in their favorite video game or how the latest patch has broken their favorite weapon.
Web3 allows players to invest in the game itself and vote on how things should work. Web2 giants such as Meta and Ubisoft create virtual worlds powered in part by Web3. NFT tokens will also play a huge role in reshaping the gaming industry by allowing players to become permanent owners of collected items.
What is against Web3?
The main criticism of Web3 technology is that it falls short of its ideals. Ownership of blockchain networks is not evenly distributed, but is concentrated in the hands of early adopters and venture capitalists. Recently, a public spat erupted on Twitter between Block Inc. CEO Jack Dorsey and various venture capitalists regarding Web3, bringing the debate to the fore.
At the heart of the criticism is the idea of "decentralization theater," where blockchain projects are decentralized in name but not in essence. Private blockchains, venture capital-backed investments or decentralized finance (DeFi) protocols in which only a few people hold the keys to hundreds of millions of dollars are all examples of decentralization theater.
And despite the supposedly leaderless community of protocols, there are clear key figures. Ethereum co-founder Vitalik Buterin still wields enormous power over the network, even though he is no longer involved in development.
Things aren't much better within decentralized financial protocols either. Voters are often absent, often relying on centralized infrastructure. Creating blockchains is still difficult to get into, making it seem like arcane magic that only the most specialized engineers can pull off.
But despite the problems, Web3 has a lot of potential. Whether it is too idealistic to put into practice will be decided by ordinary users in the coming decade.
For more content, follow us here, on Twitter, or visit our blog.