Web3 is Web 3.0, the third version of the internet. Web3 is the internet built on blockchain, so it is the internet built on a decentralized infrastructure. It is a relatively new concept and its potential is yet to be realized, but the momentum behind Web3 is growing. As the term Web3 grows in familiarity and usage, it is becoming a term to refer to the entire cryptocurrency and blockchain ecosystem. Just as the World Wide Web (www) transitioned from Web1 to Web2, we are now looking at a transition from Web2 to Web3.
the Web1 origin story
The origins of the internet (Web1) were highly decentralized. ARPANet started with a network of independent universities building a shared network. People began to share information on community-hosted bulletin boards.
Pros and cons of Web3
The internet of today (Web2) has become more centralized. Corporations like Google, Microsoft, Apple, and Meta (Facebook) have become central gatekeepers to accessing internet services. When you see the phrase “Connect with Google,” you are accessing a Web2 application. The attractive feature of Web2 is its convenience for the user.
One of the major concerns around Web2 is the collection and monetization of personal data.
Web2 is also composed of “walled gardens,” meaning it is a collection of private platforms that are owned and managed as separate entities.
benefits of web3
By using blockchain, Web3 offers users more control over their data and digital assets.
Web3 offers a more private and secure way to access the internet. The technology of blockchain provides a platform for applications that can be accessed without collecting private information. Blockchain is a decentralized identity system based on encryption. Web3 uses this technology to connect users to applications without collecting personal information.
Another goal of Web3 is interoperability. Users should be able to move their data and digital assets across different platforms. Web3 tries to facilitate communication between decentralized systems and applications. For instance, cryptocurrency is the exchange of value on the internet using a decentralized platform. Web3 facilitates these types of transactions.
One could also argue that Web3 is a more “democratic” version of the internet. Blockchain is decentralized, which makes it less susceptible to centralized corporate power. This decentralized characteristic of blockchain is what makes Web3 more democratic. It is a more open and transparent infrastructure for the internet, because it provides open access to the blockchain platform.
Examples of web3
People are in the process of building a diverse array of Web3 applications.
Decentralized finance (DeFi) is the leading category of Web3 applications. DeFi is a financial system built on blockchain that uses cryptocurrency as the unit of money. Within DeFi, there are the subcategories of decentralized exchanges (DEXs) for trading crypto and lending protocols for borrowing and lending crypto. Uniswap is a leading example of a decentralized exchange and Aave is a leading example of a lending protocol. For more information on this, check out my page on DeFi.
How web3 works
Web3 is composed of decentralized applications (“dapps” or “d-apps”). A decentralized application is a user interface for a smart contract on a blockchain.
How to Use Web3
Digital wallets are a key component in how Web3 works. Individuals with a digital wallet can access any application using their digital wallet address rather than creating an account and password directly on the application. This is the promising outlook for Web3.
When you see the phrase “Connect Your Wallet,” you are accessing a Web3 application. You can think of Web3 as an internet of decentralized applications (dapps).
Hurdles to Web3 Adoption
Digital wallets and Web3 are still not very user friendly. It will be some time before this technology expands into mass adoption.