All you need to know about the Decentralized Web.
I'm trying to make sense of this new and vast field, as I'm considering investing in it someday.
It's the future of innovation, and I'm as futuristic as they come.
It's the democratization of the internet as we know it.
Welcome to Web3.
What is Web3?
Web 3 is simply a decentralized internet powered by blockchain.
Think of it as the decentralized web.
Meaning if blockchain can decentralize currencies (e.g., crypto), then it can decentralize the internet as well.
Read more on blockchain here.
Web3's main goal is to address some of Web 2.0's shortcomings - privacy concerns, censorship, and the lack of transparency in online communications.
But what's Web2?
Web2 is the current Internet as it is, characterized by the dominance of social media, e-commerce, and cloud computing.
And while Web2 brought its own merits in innovation and connectivity, it also has its demerits in data privacy, censorship, and tech monopolies.
Many enthusiasts consider Web3 a radical departure from the current web massively controlled by big tech.
Web3's main principles
Web3 builds on the principles of decentralization, privacy, accessibility, interoperability, and trustless transactions.
Principle | Web2 | Web3 |
Decentralization | Data is stored in centralized servers vulnerable to hacks and cyber-attacks. | Web3 is built on a decentralized system that stores sensitive data. Data won't be controlled by a single entity but rather distributed across a computer network. * |
Privacy | User data is either malfunctioned, corrupted, or solicited by corporations, increasing the likelihood of privacy violations. | Web3 aims at restoring data ownership back to the owner - the user. Guarantees the user the liberty to share their data at their own will. |
Accessibility | Big tech largely controls the data. | Built on a decentralized system that grants anyone access to the network. |
Interoperability | Current blockchains operate in isolation with their own rules, protocols, and smart contracts. This closes the fluid movement of data, assets, and functionalities across different networks, further inhibiting the efficacy of dApps. | There will be seamless communication and interaction between different blockchain networks and dApps, fostering innovation and collaboration across diverse ecosystems. |
Trustless Transactions | Users create their own content and interactions but are still mediated by big intermediaries who control the data flow. These intermediaries are likely central authorities who facilitate and authorize exchanges. | You can make transactions without a third party or intermediary - a key characteristic of blockchain. |
*Why is Web3 unhackable?
For three reasons: Decentralization, immutability, and cryptography.
Decentralization—Blockchain distributes data across many computers, so hackers can't exploit a single point of failure.
Immutability - You can't change data that's already on the blockchain. It's immutable. Unchangeable. Thus, it's hard for anyone to alter the data without the network's consensus.
Cryptography - Blockchain uses cryptographic techniques to store data - the same ones used to make cryptos. Each block in a blockchain is connected to the previous block using a unique cryptographic hash (or ID) which makes it impossible to change past transactions.
Pros and Cons
Pros
Users own and control their data.
Users have greater privacy because they own their data. Imagine owning your social media and deciding who can access it.
Transparency: Because it's on a blockchain, anyone can audit publicly available Web3 transactions.
No intermediaries are required as transactions happen between peers.
Innovation - Just as we innovated with Web2, who knows where we'll be with Web3?
Cons
Scalability—Web3's complex requirements for consensus mechanisms and node validation make it hard to scale. Hopefully, interoperability can fix this.
Security—For every piece of tech that brands itself as "secure," hackers are always attempting to prove the contrary—hacking smart contracts, cryptojacking, etc.
There are "51% attacks" where a chain breaks if malicious miners control more than 51% of it, and a broken chain is susceptible to manipulation. More here.
Accessibility—Current blockchains have high transaction fees and slower speeds, which limits widespread adoption.
Web3 Use Cases
The Metaverse—A huge virtual reality space where users interact in a computer-generated pseudo-world. It is decentralized, allowing users to control their own data and assets.
Cryptocurrencies—Digital currencies created through cryptographic techniques. In Web3, cryptos are the default medium of exchange. Read more about cryptos here.
Blockchain Games—Just like a regular game, only that it's on the blockchain, meaning all your points are permanently stored and seen on the blockchain, and no one can take them from you.
Transparent supply chains—Web3 provides an immutable record of transactions on the supply chain (because it's on the blockchain), so everyone can track their products along the delivery cycle.
Decentralized Finance (DeFI): Imagine performing all your financial transactions without needing a bank. That's DeFi for you.
Non-fungible Tokens (NFTs) are digital, unique assets minted and stored on the Ethereum blockchain. They showcase proof of ownership and authenticity of each asset. Watch this 90-second NFT video.
Decentralized Identity (DID) -Â DIDs help users control their digital identities. Web3 apps use DIDs to confirm your identity.
Decentralized Applications (dApps)—Apps built on blockchain. Since dApps are open source, no entity controls them, plus they use blockchain to store data and smart contracts to automate actions.
Decentralized Autonomous Organizations (DAOs)—These are orgs run by rules in a transparent computer program controlled by DAO members, not a central government.               Â
Closing Thoughts
Web3 is the future of the Internet, or, as Cathie Wood would say, the "unfinished business of the Internet."
Most of it is still abstract right now, so it's hard to comprehend it fully right away.
I think Web3 will be an online democracy for sharing ideas, which, as far as the current status quo is concerned, will bring forth free speech. Given our current standards, the promise of greater control, user privacy, and innovation opportunities all seem too good to be true.
The convos for a decentralized internet have just begun, and we're still in the beginning phases.
Looking at the decades ahead.
And like I always say,
The best is yet to come.
Cheers.
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~T.K.K
References
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