Whether you’re a trader or investor, entrepreneur or employee, technology has reinvented the economy over and over. Web3 might be the next big thing, although it’s still more of a theory than a reality. And if it’s already hard to understand blockchain, metaverse, and NFTs, a WEB 3.0. definition doesn’t make it any easier.

How do you define this abstraction at such an early stage? When the Internet came out in the 80s, did anyone expect it to become what it is today? When Bitcoin started in 2009, who would expect it would evolve into standard payments, DeFi apps, or NFTs?

In about a decade, each of these transformed the world. New trading opportunities, business models, and careers that didn’t exist before. Now, what happens when you put together the Internet and blockchain innovations?

This synergy creates the WEB 3.0. definition—and what makes it so anticipated.

What Is Web 3.0?

Web 3.0. (or WEB3 for short) is a broad term to include all Internet technologies that result from blockchain applications.

Gavin Wood (co-founder of Ethereum and Polkadot) coined Web 3.0. in 2014 as a “new iteration of the Internet” on blockchain Infrastructure. It would include both the replacement of existing websites and all new platforms that come from this synergy.

For a clear, specific WEB 3.0. definition, let’s instead define each component briefly:

  • The WEB is the Internet infrastructure that allows distributed devices to interact with each other. It includes both the hardware (servers) and software (protocols, website primitives).
  • The 3.0. version suggests a higher level of interaction (more on that later), “read-write-own.”
  • The general blockchain is a decentralized public ledger distributed across devices. It’s a live database that users can consult and expand but not change.

The WEB 3.0. Structure

For a detailed explanation, it helps to understand Web 3.0. with this structure:

  1. Infrastructure
  2. Decentralized Applications (dApps)

2.1. Foundation dApps

2.2. Implementation dApps

2.3. Innovation dApps

The infrastructure includes the distributed devices (network) and layer protocols. For example, the layer-1 blockchain Ethereum has smart contracts (autonomous, decentralized, ETH-powered code). Which makes possible dApp development.

The WEB 3.0. Extensions

Foundational dApps (primitives) are similar to WEB3 infrastructure. They offer basic features and work as “building blocks” for complex, user-oriented dApps. e.g.:

Implementation dApps are traditional applications that either replace or expand with blockchain features. e.g.:

  • Binance was just a centralized exchange until they launched the BSC blockchain. They now offer NFT trading, ERC-20 token swaps, yield farming, WEB3 wallets…
  • Meta (previously Facebook) wanted to expand social life with virtual and augmented realities. Anything metaverse related depends on WEB3 infrastructure.
  • If video games like World of Warcraft created NFT game economies, that’s another implementation example.

Innovation dApps (dApps per se) apply new features that didn’t exist separately on the Internet or blockchain. And while it’s the broadest category, domain trading platforms are a good example.

These introduce features that didn’t exist before WEB 3.0.:

  • Trade traditional and NFT domains while tracking live prices
  • Fractionize expensive domains so they’re more accessible for smaller traders
  • Tokenize domains to trade for either fiat or any cryptocurrency

As for Web 3.0., what new features come up from this Internet-blockchain synergy?

Web 1.0, Web 2.0 and Web 3.0 Definition

The goal of web 3.0. is to create a network that’s trustless, ubiquitous, transactional, identity-focused, and decentralized. This may sound abstract at first, also because the WEB 3.0. definition is still work-in-progress. How do you envision something that doesn’t yet exist?

You can get an idea of what to expect by looking at the transition from Web1 to Web2. Here’s an overview of the three World Wide Web iterations:

  • Web 1.0. started in the 80s as a content-delivery network and looked like this. This Internet consisted of static, read-only pages with almost no user interaction. Web1 users were consumers, and while you could create free websites, they weren’t worldwide accessible like today.
  • Web 2.0. started in 2004 as a user-generated content network. It allowed users to read, write, and interact with existing content. Web2 users are today’s users, who buy online (Amazon), build websites (WordPress), comment on social media (Twitter), among countless activities.
  • Web 3.0. started in late 2016 but hasn’t been developed nor adopted yet. While we’ve defined it already, you could call it a decentralized content network, ranging from financial services (Uniswap) to social media (Steemit).

On the transition from Web 1.0. to Web 2.0., interaction makes the difference. Users got more creative freedom while browsing the Internet, which expanded its features tremendously.

For example, modern search engines make it easy to find websites by typing any words. Back in Web1, the only way would be to either type the exact domain or search in some ‘digital yellow pages.’ As for Web3, you might find the right websites without typing them at all.

Key Web3 Distinctions

We’ll later define what technologies make these innovations possible. When it comes to differences:

  • Web3 is about the users: Web1 started with only a few contributors. This changed with Web2, although there’d still be providers controlling user content (data privacy, accounts, content moderation, terms of service…). In Web3, you would both create content AND decide how to manage your creative platform.
  • Web3 is about interaction: In general, Web1 was read-only. Web2 is read-write. Web3 is becoming read-write-own via decentralized autonomous organizations (DAOs) and non-fungible tokens (NFTs).
  • Web3 is about decentralization: The Internet was easy to define in Web1 because only a few controlled it. In Web2, the Internet became a distributed node network but still depended on servers. Web3 websites wouldn’t be kept on a server, but in your digital wallet and physical device.

For example, any domain you buy is an NFT you can store in an Ethereum wallet. Anyone can visit the website, but you control it from whatever device has your wallet signed up. Assuming you don’t share your private key, only your phone.

What Does Web 3.0. Look Like? The 5 Properties

Web 3.0. has at least five improvements that previous webs don’t:

Decentralized

Decentralized networks (AKA public blockchains) distribute the workload and governance among their users. Unlike centralized networks (which may be distributed), all users interact within the same hierarchy level.

The goal is to empower communities based on their engagement while preventing anyone from dominating. Not director boards, not angel investors, but any contributor who wants to participate.

Of course, no Web3 is 100% decentralized. It depends on your dApps rules and the underlying blockchain.

Bitcoin may have a decentralized DAO. But mining certainly isn’t. Whoever has the highest computing power (see proof-of-work) wins most of the blocks.

Identity Focused

Owning Bitcoin in 2011 wasn’t that different from owning digital money. Today, owning crypto might mean digital art, virtual land, voting power, a website domain, or some in-game assets. Web3 currencies have redefined ownership.

Web3 can tokenize any digital asset as NFTs, which hold value in crypto and (indirectly) fiat. And because of the potential utility on Web3 platforms, NFTs have boomed in the past two years. Not to mention the $69m picture.

Maybe you think buying NFTs today is as useless as buying domains in the 90s. Those who did, however, are today’s largest tech companies. Not only do NFTs have investment potential and Web3 utility, but unlike domains, you can own them without paying annual fees to a company.

Just like buying NFT domains.

Transactional

Private ownership falls under the definition of capitalism. If Web3 is identity-focused, it’s by consequence transactional. Pay-to-own makes sense, but does that mean that Web3 isn’t free?

Consuming and sharing are Web2 features, which remain free. As for Web3, there are two directions:

  • Over-capitalizing digital assets. You can still use them but need to pay for ownership rights.

e.g., Axie Infinity is a video game where players earn crypto rewards fighting with NFT creatures. The creature picture isn’t a “secret:” you can view or download it. But to use it in the game, you need the NFT on your Web3 wallet.*

  • Re-capitalizing digital assets. Users regain control of ‘assets’ taken for granted, such as collected data, ad watch time, or reviews.

e.g., Users can earn BAT tokens (Basic Attention Reward) on Brave Browser. Based on your browsing activity, relevant ads will show up organically and non-intrusively. Not only it’s a better-performing browser but also rewards users.

Only Brave (and Opera) can run blockchain domains like .btc and .eth, which you can trade from <$100 to $10,000.

So while Web3 adds price tags to seemingly worthless pictures, it also creates a new way to monetize your time, content, and skills. Whether it’s a play-to-earn game, a virtual land earning from AR ad space, a domain rented to a website or any metaverse business.

Ubiquitous

Explaining ubiquity to everyday people is like explaining water to a fish. It’s so often used that we don’t notice, and Google is the easiest example:

You can also “connect” to any website newsletter with your Gmail address.

Google is everywhere and widely used. Not because it’s essential, but because it makes everything easier. Once you’re connected:

  • You can skip username and password fields
  • You can recover your lost password
  • You can instantly access any app from Google

What’s the Web3 wallet corollary?

  • Skip logins and directly connect with the wallet
  • Recover your lost Google account with your wallet
  • Connect to any dApp from the same blockchain

Trustless

Traditional platforms are trust-based. Even though there are terms of service, the user has to trust that the owners will follow them. But as administrators, people can hide information and change rules without notice.

Web3 platforms can be trustless when built on public blockchain layers. For example, Solana, Bitcoin, and Ethereum. Peer-to-peer trading is possible because:

  1. The blockchain is transparent
  2. Users hold assets on private wallets
  3. Users can agree on how to run their blockchain on DAOs

As for the limitations of trustless finance:

  1. If you lose your private keys, nobody can recover your wallet.
  2. DAOs benefit the whole, so there may be rules you disagree with.

WEB3 Technologies

The features of Web 3.0. have more applications beyond investing. It can apply to finance, entertainment, VR e-commerce, and any sector that can benefit from decentralized websites. But how can Web3 extend this far?

Four technologies in development make possible both its features and use cases:

Internet of Things (IoT)

IoT extends ubiquity ‘beyond the screen.’ This comes down to Augmented Reality (AR) and smart devices. And what makes IoT possible is Web3 blockchains.

To demystify IoT, let’s reimagine the Google example. If Google implemented IoT, we may see things like:

e.g., AR for locals on Google Maps. As you walk on the street, your phone detects a nearby restaurant you may like. You get a notification alert with their daily special.

e.g., AR for ad space. Advertisers might pay for playing ads on virtual spaces like Maps. Or rent ad space on Times Square, which you can only see from your camera (like Pokémon Go).

e.g., Google devices. Fit watches, doorbells, speakers, cameras, thermostats. All controllable from your mobile account.

3D Graphics

While Web2 added interaction, it wasn’t nearly as immersive as real-life interaction. Not only does Web3 improve immersion but allows interactions that wouldn’t be as easy physically:

e.g, Meet office coworkers for virtual presentations

e.g., Visit websites and games in 1st person without interfaces

e.g., Explore in real-time other cities miles away

e.g., Visit malls, hotels, or real estate without traveling yourself

Blockchain applied to 3D tech (VR and AR), creates this 3D Internet, also called Metaverse.

Semantic Web

As the Internet becomes broader, it becomes harder to find what’s relevant to you. The semantic web would be a decentralized data network that updates in real-time to keep up with your preferences. But that’s not how our Web2 works:

Search engines show us either literal or popular pages, which may not be what you looked for. AIs can’t show relevant pages until they learn human language. The problems are:

  • Our language changes faster than SERP updates
  • Our data is locked by companies for security reasons

Because Web3 is trustless and open-source, this data becomes accessible and updates in real-time (like blockchains). Users get relevant page results and marketers get reliable organic traffic.

Artificial Intelligence

Web 3.0. comes down to hard-coded blockchain rules. But community consensus isn’t black or white. How do you create a trustless platform that benefits everyone while allowing flexibility?

That’s the role of Blockchain AI:

  • Consensus algorithms to decide who makes what decision
  • Smart contracts to run platforms without developer intervention
  • Periodical updates. Users can suggest and vote for code improvements. Especially to remove bugs and unintended features.

Web2 platforms may have AI features, but not governance-wise. On Web3, users can both interact and manage the platform.

WEB 3.0. Real-World Applications

While Web 3.0. is more of a theory than reality, it’s already used in at least four ways:

Financial Services

Web3 Finance (DeFi) has become a $77B market since 2020. Some investors have gone bankless, as traditional finance doesn’t offer as many perks. For these reasons, decentralized finance is gaining popularity every year:

  • Accessibility. DeFi services are worldwide accessible as long as you have a Web3 wallet. You don’t need a financial check or credit score because most services are collateralized.
  • Flexible. Traditional finance has many restrictions set by the SEC. Not to mention each country’s regulatory differences. Decentralized finance can bypass most restrictions while maintaining security.
  • Cryptocurrency-backed. Many governance tokens have a deflationary design that might hedge against fiat currencies. The project might ‘burn’ coins every time someone sells them, or when trading them for a service. As there are fewer tokens circulating, they become more valuable.

Today, you can find Web3 exchanges (Uniswap), marketplaces (Opensea), lenders (Aave), aggregators (Yearn Finance), even fiat DeFi (Terra).

VR Commerce

Ecommerce VR is more than just 3D online shopping. For e-product sellers (books, plugins, courses…) it offers new product opportunities. As for physical products, VR can help reduce the inherent e-commerce risks:

  • Virtual inventory inspections to make sure they meet quality standards
  • Virtual samples for visitors can boost listing conversions and lower refund rates
  • New ways and channels to advertise your brand

The value of VR in e-commerce relies on how accurately it can reflect the real assets. Right now, it might exist in the form of interactive websites. Next decade, maybe VR glasses. Either way, big brands have started implementing VR already.

Mind that commerce can be as broad as creating a VR marketplace, in-game commerce, or owning land for rent. The more traffic, the more valuable.

Decentralized Websites

Any transactional website can upgrade to Web3 regardless of the niche. Those that do will be able to accept more international customers, provide fast payment methods, and regain control from web providers. To do so, there are NFT domains, Web3 apps, and decentralized browsers.

The ideal Web3 website grants full control to the owner and users:

  • NFT domains and hosting have no renewal fees. They’re held in your private wallet and are tradeable.
  • Web builders can share control to engage communities. Feature voting, product suggestions, terms of service updates, loyalty rewards. Users like to influence brands they like.
  • Decentralized browsers can bypass country restrictions while improving your privacy.

Digital Entertainment

Digital entertainment makes ownership (and thus monetization) so complicated. Users can download assets without buying, reupload copyrighted media, and crack any paid software. And if you somehow avoid these problems, there may be dozens of account-sharing groups.

Web3 media can create NFTs, which are unique tokens attached to an asset. A Cryptopunk is a unique ERC-721 token in your wallet attached to a picture. NFTs help creatives protect their work while rewarding loyal followers.

Web3 entertainment includes play-to-earn games (Illuvium), fan clubs (Manchester City), art marketplaces (Bakery Gallery), and music (Mint Songs).

Web 3.0.: Is the Future Already Here?

While Web3 has already started, it will take years to complete. Semantic web, AI, IoT, and VR have been in development since before Bitcoin, so it won’t happen overnight. As for when Web3 will replace Web2, it can take around a decade.

But you don’t need to wait that long. The first expression of Web3 has already made the Internet better. Whether it’s private wallets, public governance, or metaverse NFTs.

Whatever direction it follows, Web3 starts the same way Web2 did. A domain. Whether it’s a traditional or NFT domain, they all support Web3 features

FAQ

What Are the Risks of Web3?

You need a wallet to use Web3 apps, which is risky the bigger the balance. Dapps trade cryptocurrencies, which can be volatile. As for security, many fraudulent websites can steal your funds once you connect your wallet.

To make matters worse, there’s no-one able to help if you make a costly mistake. Web3 apps are still new, and regulators haven’t included them legally yet, which adds to the risk.

How Do You Access Web3?

You create a Web3 wallet like Metamask from any device. After you save the private key and seed phrase, you can start using all Ethereum dApps. If the website uses BSC or others, you’ll need to add the network manually.

Likewise, you can use Bridge apps to transfer funds between blockchains.

What are some misconceptions about Web 3.0.?

It’s easy to confuse Web 3.0. with blockchain, dApps, or metaverse. That’s because Web3 is the environment that includes all these. Blockchains are the foundations, dApps the use cases, and metaverse the 3D extension of Web3.

Leave a Reply

Your email address will not be published. Required fields are marked *