What is Web3?

A fad or the next technological revolution?

What actually is the Web?

The internet is practically as integral to your life as the air we breathe. Every day we seamlessly interface with this world for banking, streaming, messaging and socializing. Have you ever wondered how that happens? 

Although it may feel like it, the internet isn’t magic. Every time you use it, you’re actually remotely requesting information from physical computers – servers. 

At the moment, the vast majority of these servers live in chilled rooms – called ‘data centers’ – privately owned by a handful of big companies in Silicon Valley. The majority of stuff on the internet lives in these managed, centralized databases.

However, the premise of Web3 is that our interactions on the internet we know and love will begin to happen in a permissionless, decentralized way. This new web would not exist on centralized servers, but on distributed networks – servers that effectively exist on many different computers around the world, with no one in control of them – thanks to blockchain technology.

History of the Internet

But before we get into the nooks and crannies of Web3, it is important to look at how we got here. The World Wide Web was designed in 1989 by the British Scientist Tim Berners-Lee as a standard way of communicating between computers. While it was possible to send content before the Web, it had to be sent and received by the same application, or ‘protocol.’

However, the introduction of the World Wide Web created an open, standardized protocol for information transmission including standards for formatting, security and navigation. This allowed users to access and transmit communication from different devices using different applications and for them to still be able to read them.

Soon, the Web took off, particularly when Berners-Lee released the code for free in 1993. It has since become widely used. Today, almost every company, shop, government, service and charity has a website.

Web1 - The Readable Web

The internet as we know it did not appear the second Tim Berners-Lee pushed the button. Instead, it went through a gradual process of change and improvement. Broadly, the journey the internet has undergone can be categorized into three main stages, which we label as Web1, Web2 and Web3. 

In Web1, pages appeared largely in a static form. This meant that they were not interactive or able to process movements on change. Web1 was a bit like a library of hard copies of articles. You might read an article, but you certainly can’t leave a comment at the bottom, or write your own article that you think the world may want to read.

In Web1, accessing information was largely done through Netscape, a precursor to the modern browser. Although anyone could run a server, there was soon a concentration of running them in large “dot com” companies. Moreover, communication largely happened through chatrooms like AOL instant messenger – which look a lot like Slack or Discord do today.

Web2 - The Readable, Writable Web

Web1 was an incredible invention. But it lacked the ability for everyone to participate, unless you were willing to write a lot of code and set up your own server. As a result, there was a gradual shift to Web2, from the early 2000s onwards.

Web2 can broadly be described as the internet as you know it today. It’s made up of websites that also function like platforms – users can participate in what appears on the site, and interact with web pages. Users can log in to accounts and be given a personalized experience of the site.

Web2 involves user-generated content. This ability is what pushed the Web into the incredible beast it is today, where anyone can upload anything, and roughly 2.5 million terabytes of data – from cat TikToks to tax returns – is uploaded every single day.

A huge proportion of businesses operating in Web2 store their users’ data and monetize it. This wouldn’t have been possible in Web1, where users weren’t really able to interact with websites at all. 

Web3 - The Readable, Writable, Ownable Web

In response to the Web2 gatekeepers, a new paradigm emerged. 

Web3 seeks to secure and decentralize ownership of digital content, enabling peer-to-peer transactions without the need for a middle-man. In order for this system to function effectively, the roles of trust and permission have shifted from a centralized company to computer code run on a decentralized network of machines. 

This mechanism by which data can be stored in a trustless manner is called the blockchain. Blockchain enables decentralized services that do not depend upon a single, centrally controlled server to operate.

For example, think of a system of online coins for a videogame. In Web2, the game developer would have a database containing each person’s name and their number of coins. Ultimately, the amount of coins you have in that game is totally at the discretion of the company that manages the game. 

Web3, on the other hand, would allow you to own those coins as unique digital assets. No company or individual can take them away from you. 

Coins in a videogame might sound trivial, but, as we will see, this principle of true ownership of digital assets could radically upend almost every aspect of the Web as we know it today.

Benefits of Web3

One of the big benefits of Web3 is putting data ownership back in the hands of users. Because data will be stored and processed in a decentralized manner, you will own all of your data and select which organizations you chose to give access to it (and at what price). It has been famously said in Web2 that “if you don’t pay for the product, you are the product”. Web3 enables users to monetize their own data, rather than centralized companies. 

Moreover, Web3 aims to store data more securely than its predecessors. Currently, centralized data storage means that a hacker would only need to break into a single database to access the data of millions of people. A decentralized web means that each user’s assets are secured individually.

Finally, Web3 aims to create a more democratic playing field in many industries through the power-shift away from gatekeepers. As a Web2 content creator, you are completely at the whim of the platform you publish content on. If one day Facebook or YouTube decides that they don’t like your content, you are left with zero recourse to continue your business and maintain your livelihood. 

Web3 could allow for platforms where creators have complete control of their content. Furthermore, it could allow creators to collectively own and operate platforms in a democratic way. 

Drawbacks of Web3

No upgrade comes without growing pains, and Web3 is no exception.

At the moment, the buzzword and technology of ‘blockchain’ often feels like ‘a hammer searching for a nail’ as thousands of new projects pop up worldwide that replicate already-solved problems using blockchain. Why store data decentrally across thousands of computers if a simple centralized database will do? In many instances, it just doesn’t make sense.

Additionally, the Web3 ethos of decentralization may not be the best organizational structure to get things done. There’s a reason that businesses don’t put every decision to a vote from all employees – it takes forever! Can you imagine a decentralized Apple able to make an iPhone without the visionary leadership of Steve Jobs? Centralization is a far superior organizational structure to achieve certain things quickly.

As is often the case, technology moves faster than regulation, opening up an entire territory of ‘wild west’ behavior. Regulation for Web3 is opaque – or even non-existent – often exposing consumers to tremendous risks that they may not fully realize. Until governments, consumers, and developers agree how best to safeguard this powerful technology that has the potential to redefine asset ownership, the industry is rife with scams, exploits, and countless pitfalls awaiting unsuspecting victims. At the moment, it’s not for the faint of heart.

How does Web3 decentralization work?

In Web2, users transmit data to a server, which will then send data back. In fact, even when a user is sending a message to another user, it will travel through the server. For example, if Hanna wanted to send money to Dylan, the message would go from Hanna to the Server and then from the Server to Dylan.

However, in Web3, the middle man is cut out. Instead, through the use of peer-to-peer communication, users communicate directly with each other. In the above example, the money would instead travel from Hanna directly to Dylan, who would then store it. 

As these interactions become more numerous, they begin to form a chain. This is where we get the term ‘blockchain’. In a blockchain, each individual computer is helping to verify the veracity of other elements within it. Through decentralization, a true ‘web’ of interdependence has been created.

Political Implications of Decentralization

One of the fiercest debates in the digital world is around the role that platforms should play in moderating speech. “No-platforming” is the practice of removing an individual from being able to share their views in a given location on the grounds that the centralized controller deems them to be morally or politically objectionable. This may include alleged incitement to hate crime or racist activity.

Centralized companies like Twitter, Facebook and Google have tended to govern speech on their site in line with their corporate ethos. While some have argued that this is against the principle of free speech, they are well within their rights to do this legally because they are not legally obliged to give a platform to anyone. While I can say whatever I want in the street, I don’t have the right to demand the main stage at Madison Square Garden. 

However, in Web3, the decentralized nature means that there is no corporate authority governing what can and can’t be said. As a result, the only restriction on speech is the law – and even that can be difficult to enforce. Many have therefore argued that Web3 could have an impact on political dissent, particularly in authoritarian regimes. It is yet to be seen how this technology will influence the world political landscape.

Is Web3 really independent of institutions?

One significant challenge of Web3 is that while it decentralizes software, many other ‘gatekeeper’-style bottlenecks still exist that effectively render decentralization impossible. 

In order for people to access Web3 features, they are still going to need internet access, either provided through conventional wired and fiber-optic options or via mobile data. Many governments use this to control their population’s internet access – often in line with their own political agenda. The deployment of Starlink’s censorship-free low-earth satellite internet during the Russia-Ukraine war demonstrates that there are alternatives to government-provided internet access, however they’re not yet widely available. 

Similarly, while blockchain technically allows for the free exchange of money anywhere, in reality the on and off-ramps to using cryptocurrency leave room for government interference. Currently, an American in New York is entirely prohibited from purchasing a piece of art from an Iranian in Tehran. If they attempt to engage in any kind of traditional transfer of money, it will be blocked. 

There would be nothing stopping them making that same transaction in cryptocurrency. However, to get utility from that currency – to buy groceries or pay rent – they would still need to convert it into local, traditional money. And at that point, governments can still intervene.

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