Web 3.0, or Web3, may be a new topic for many, but as more people advocate for the technology and even invest in Web3 startups, it can be important to understand how it works and how it can be used. In its most basic form, Web3 is the next generation of the World Wide Web we know today, which is known as Web2. To best understand Web3, it can be good to first understand Web1 and Web 2.
Web 1.0 & Web 2.0
Web1 is the earliest form of the web, pioneered in 1990 by Berners-Lee. He based the development on three fundamental technologies: HTML, URL, and HTTP.
- HTML – the background code of the internet, formatting the items seen on the screen
- URL – the unique address for a specific web resource
- HTTP – links resources over the web and allows a web user to retrieve the web page
Web1 enabled peer-to-peer communications like email, and real-time news retrieval. The web pages were static, meaning they could not be changed easily. Website advertisements were banned, and the internet was designed to be used by companies rather than individuals. Web1 was commonly known as Read-Only, as there were few content creators, and countless content viewers. Then, the drive for user-generated content ushered in the new iteration of the web: Web2.
Web2 is the internet as we know it today. In 2004, the first Web 2.0 conference popularized the term Web2 and played a role in the adoption of the technology. Based on the same three fundamental technologies of Web1, Web2 introduced comments on web pages, enabled social connectivity, and implemented interactive web pages. Anyone who wanted to create web content could be reached by an audience of millions of people around the world. This helped propel the growth of social media networks, forums, blogs, personalized websites, and helped the world to connect with one another as the technology costs decreased over time and access became cheaper.
Web3 was first coined in 2014, by Ethereum co-founder Gavin Wood. Digital currencies, or cryptocurrencies, were beginning to emerge like Bitcoin (BTC) and Ethereum (ETH). The original intention of Web3 was to turn back to concepts Berners-Lee discussed during the creation of Web1: decentralization and bottom-up design. These two concepts shunned a central authority monitoring content posted on the web and aimed for open-sourced technology, able to be viewed by everyone instead of controlled by a small group running the backend. Wood believed Web2 required too much trust for people to participate and wanted to bring ownership to the users instead of a central authority.
Web3 is based off certain defining features but has yet to lock down a standardized definition. The technology is still new and continual development could mean the definition of Web3 will likely change before widespread adoption. Some of the features include decentralization, trustless and permissionless, and artificial intelligence (AI) and machine learning (ML).
The creation of blockchain helped enable decentralization to thrive. In Web2, unique information is stored at a fixed location, generally a single server. This limits access to the internet, as certain aspects of the internet are owned by central entities, like Meta owning and serving as the central entity to Facebook, Instagram, and WhatsApp. Meta manages that “swath” of the internet and monitors for content that does not adhere to their terms and conditions. Decentralization helps spread the swatch over multiple locations and servers simultaneously and allows ownership to be distributed among those who build the swath and those that use the swath. The distributed ownership of open-source software is designed to reject the concept of a central authority and help bring power and ownership back to the users.
Trustless and Permissionless
Web3 is also built on the idea that everyone should have equal access to the internet, regardless of authorization or permission. Decentralization helps enable this aspect of Web3, as access is simultaneously spread among the different blocks of the blockchain. The lack of central authority helps prevent censorship and encourages widespread access to resources and web pages. Another key feature of Web3 is a personal identity, which could carry over from resource to resource, like having one profile or account for multiple social media platforms instead of creating different accounts on each one. Unique digital identities could transcend the prior barriers of unique permissions and regulations in the currently centralized Web2.
Artificial Intelligence (AI) and Machine Learning (ML)
Another potential aspect of Web3 is based on AI and ML. In Web3, computers aim to be able to understand information at the same level as humans. Machine Learning takes this level of understanding and helps computers learn and improve their functions to improve their accuracy. These aspects are already being tested in Web2 but is expected to become a fundamental part of Web3.
Benefits and Limitations of Web3
Web3 seeks to expand the boundaries of the internet that we know today, which comes with unique benefits and limitations. Ownership, accessibility, and simplification have the potential to improve user interactions and experiences. Decentralization could help give users greater control over their personal information and limit monopolies over certain parts and areas of the internet. Web3 can sound like an ideal online world but comes with limitations and concerns for potential users.
The lack of a centralized authority can come with risks of legality and regulations. Not having a specific body that monitors and enforces rules can lead to cybercrime, hate speech, and misinformation. Additionally, the physical and social costs for Web3 are still high, which could temporarily limit access. High transaction fees and a necessary level of technical education necessary could limit the number of people who can use the technology. However, a similar education wave came during the transition from Web1 to Web2 so there is reason to believe the education may come and costs can decrease as the technology becomes more readily available.
Web3 may also require new mental models of learning, as it is purely different from the internet we know it today. More education may be necessary before Web3 can obtain mass usability. The base infrastructure of Web3 is also still being developed, but reliable building can take time.
The internet we know today may not be around forever, similar to how it has evolved from its earliest forms in the 1990s. Built on the pillars of decentralization and open-source ownership, Web3 has the potential to overtake Web2 at some point in the future, but it may require mass education to inform the technical expertise needed. Despite its limitations, Web3 is in the beginning stages of transforming the World Wide Web in a way that could enable new ownership and decentralization not currently seen in Web2.
The information presented here is for general informational purposes only and is not intended to be, nor should it be construed or used as, comprehensive offering documentation for any security, investment, tax or legal advice, a recommendation, or an offer to sell, or a solicitation of an offer to buy, an interest, directly or indirectly, in any company. Investing in both early-stage and later-stage companies carries a high degree of risk. A loss of an investor’s entire investment is possible, and no profit may be realized. Investors should be aware that these types of investments are illiquid and should anticipate holding until an exit occurs.