The Dawn of Web 3.0: Why It Matters?
Understanding Web 3.0 in a much simpler version
I often find it challenging when someone tries to educate me on a topic I am not familiar with. Either the simplification is not done enough to make an average being understand such content, or the matter is certainly rocket science.
However, Web3 is not rocket science. We can express the meaning of Web3 in a much simpler way. In this article, we will explore the following questions.
- What are Web1.0 and Web 2.0?
- How has Web 2.0 changed the Internet?
- What is Web 3.0, and how is it different from Web 2.0?
- How can Web 3.0 shift the world order?
Web 1.0:
Thanks to the works of Tim Berners-Lee, we can consume and interact with the Internet. However, the Internet that you see today was not like that in its earlier days. Those earlier days mark the period(1990–2004) of Web1.0.
Web 1.0 was essentially only one-sided Internet. People like you and me, who are not developers, could only consume the data on the Internet. Creators were the developers in Web 1.0. The interaction was almost none. That’s why Web 1.0 is often referred to as the Era of Static pages and was read-only.
Because the pages were not dynamic, it was non-interactive.
Web 2.0:
With the emergence of Social Media, Web 2.0 marked the beginning of the new Internet in 2004. We are already experiencing the Web 2.0 version in its current form, an interactive social web. Unlike in Web 1.0, in Web 2.0, you do not have to be a developer to create and share the data.
Therefore, Web 2.0 is referred to as a read-write web.
In Web 2.0, companies provided platforms to users so that users like you and I can share user-generated content, engaging in user-to-user interactions.
Such interactions allowed more and more users to come online. However, only a few companies started controlling Web 2.0, resulting in a disproportionate market share, and control of traffic and value generated across the Internet.
How has Web 2.0 changed the Internet?
The growth of Web 2.0 paved the way for the monetization model of the platforms, which is primarily an advertising-driven revenue model. Applications have started developing more and more; if you have an idea, you can share it with the world through Web 2.0 via uploading a video or interacting with users, or commenting on the platform.
While you can create content, you don’t own it or benefit from its monetization.
What is Web 3.0
Web 3.0 has three crucial elements at its core: trustless, permissionless, and decentralized system. The term ‘Web 3.0’ was coined by Ethereum co-founder Gavin Wood(also the founder of Polkadot) in 2014. We might not know, but most of the Internet we are aware of and use today is controlled by a few private companies.
We primarily rely on trusting them to act in the public’s best interests. With Web 3.0, you can read, write and own the Internet.
Blockchains, cryptocurrencies, and NFTs are the tools that provide authority back to the users in the form of ownership.
How is Web 3.0 different from Web 2.0?
In web 2.0, when you act on Internet, you do not know what happens with the data as you do not have control over them. Private companies often track and collect user data without your consent; by now, you must have experienced many data breaches in Web 2.0.
These breaches happen because data are owned and controlled by centralized entities. Thus, hackers find it easy to attack one source of the entity.
The government finds it relatively easy with centralized servers to interfere, control or shut down applications as they require. We have seen various cases of a sudden shut down of servers when state authority demands such actions.
Recent examples include the ban of hundreds of bank accounts of protesters; the Canadian government demanded this ban.
These are the shortcomings that Web3 has the potential to solve.
How Web 3 .0 can shift the world order?
Web3 is a transition from Data Aristocracy(run by Centralised servers) to Data Democracy(run by P2P networks). The arrival of computers and then the Internet marked the foundation of communication between two computers.
I believe that is what birthed a system of Centralised servers.
When a computer communicates with another computer over the Internet, it creates a data package. When this data is sent, a copy of the data is also stored in another computer.
When this copy of data is stored, the whole point of privacy and ownership of data loses its value because this happens behind the scenes of Centralised servers.
When you send data to another computer on any Internet-based service, these centralized servers handle the data management, from copying to storing and sharing. You do not have a clue how this data is managed and used. However, big firms create these voluminous terms of use and privacy policy documents, an eyewash to most consumers.
In simple terms, Web 3 replaces a centralized server with a decentralized one, which could happen only with a Blockchain application.
The information shared here is equal at all levels, and the fun part is you know what exactly is shared.
But is it not a contradiction when you say your data is shared and it’s a blockchain where you can own data?
No, because cryptography maintains data privacy. You have complete control of what data you can share with others and vice versa. Thus privacy is preserved along with transparency.
The interesting part is why P2P works. ?
It works because of an economic incentive-based system. This financial system ensures that all the participants in the network behave and function correctly.
When you participate in a data transfer, you get incentivized with a token that has an underlying value. E.g., the Brave browser. You get Brave tokens when you browse applications on this browser.
Web 3.0 allows avoiding the management of the data in the centralized server, which is based on the traditional corporate hierarchy; this hierarchy runs as a top-down pyramid, as shown in the top of image.
Here, generally, a legal entity is registered in some state-authorized jurisdiction. The people working for the organization are managed and bound by legal contracts in writing and thus obey the agreement. The relationship lacks trust, and therefore they are written in a contract.
Suppose at any time they violate the conditions of the contract. In that case, the people at the top of the pyramid can appeal for legal intervention through the courts’ jurisdiction.
With Web 3, the management of the organization/society through Blockchain consensus where people work towards the same goal direction is achieved by a Decentralised Autonomous Organization (DAO), as shown in the bottom part of the image above. No single centralized entity controls or regulates the organization.
The stakeholders of this organization do not trust each other or know each other for the most part. The fun part is that people in this DAO do not have any legal agreement or binding. Yet, they proceed towards the same goal of achieving a milestone.
I wonder how?
Everything about who is allowed to do what and when is defined in the protocol; these protocols are also open source. The economic incentives for network participants are also defined, which plays a vital role in running a DAO.
The network token as an incentive ensures the network function toward a trustless and permissionless system. The role of the network is essential to secure the network by incentivizing the network participants.
The engine of Web 3.0 is the Smart contract. Unlike a legal agreement, a Smart Contract is a digital contract of rules composed of a line of programmable codes that state who is allowed to do what and when.
A smart contract automatically gets implemented when the majority network agrees that predetermined conditions are met.
What does it mean?
It means that we are readily cutting down the transaction costs of monitoring, auditing, and enforcing agreements.
However, the application of Web3 is still not very known, and those who say they know are probably speculating for the most part?
When the Internet came in the 1990s, nobody knew how they could monetize it until the next decade, which marked the tech-era. It took almost ten years to see the monetization module of the Internet, and that is how Web 2.0 gained popularity.
Similarly, as Web3 enters this decade, we have a lot of speculation and theories about the potential use of Web3 and its monetization.
Some of the current examples include: Diaspora- a Non-profit Decentralized social network, Augur: a decentralized Trading market, Opensea: a marketplace for NFTs, and Steemit: a Blockchain-based Blogging platform
Closing thought:
Web 3.0 is a product of blockchain, a technology. However, not very new; the emergence of Web 3.0 is being adopted at an increasing rate. It is only with time that we will be able to know what Web 3.0 holds in the future.
Till that time, we can only speculate and contribute toward a healthy governance structure of Web 3.0.
Governance mechanism plays a crucial role in Web 3, another topic for an article. I will be soon writing a report on the importance of Governance in Web 3.0. Stay tuned for my next article.
Disclaimer: None of the content, in part or whole, articulated here is any financial advice. This article is about personal investment philosophy and a medium to generate awareness in the financial journey. Please consult your financial advisor before making any financial decision.
Apologies for the above disclaimer!
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