Web3 Explained: A Decentralized Internet Is on the Horizon

Web3, also known as the decentralized web. It is a vision for the future of the internet that is gaining traction among tech companies, experts, and internet users. Web3 is a model for building and accessing decentralized web-based systems and applications, meaning they do not rely on a single point of control or authority. Instead, they rely on a network of computers and users to validate and verify information, allowing for increased security, transparency, and inclusivity.

In this article, we will break down Web 3.0’s history, vision, and how blockchain and cryptocurrency play a key role in its implementation.

Let’s start by understanding how the internet has evolved over the past few decades.

The History of the Internet

Although there is no clear distinction in terms of exact dates, and with some overlap between them during the transitions, we can think of the internet as developing in three phases: Web 1.0, Web 2.0, and Web 3.0. In this section, we’ll understand how these phases evolved.

Web 1.0 

Web 1.0 refers to the beginning of the internet in the late 1980s, when there was just a set of static HTML webpages that could be read and browsed but could not be interacted with. The content on these web pages was typically created by a few participants and was consumed by the masses. Thus, it is often referred to as the “read-only web.”

Web 2.0 

The early 2000s marked the shift toward the more dynamic Web 2.0 — the “read, write web.” In contrast to Web 1.0, during which time the internet was mostly used for broadcasting information, Web 2.0 ushered in a more collaborative environment. 

The emergence of collaborative platforms like social media and service-based apps such as Uber and Netflix helped streamline much of human communication. We could suddenly interact with people living across the world in meaningful ways. 

While Web 2.0 brought us together, the increase in our digital interactions meant an increase in digital data generation. And because centralized platforms facilitate these interactions, corporations like Facebook, Twitter, Google, and Amazon gained access to user data. 

Due to this access, it suddenly became a race to the top for corporations to create a network effect in an advertising economy reliant on user data. In this economy, more data means more power and revenue — which the user sees no part of. 

And that’s why the vision of a fairer, more democratic, decentralized internet came into the picture.

The Next Phase: What Is Web 3.0?

With Web 3.0, we visualize the next phase of the internet — the “read, write and trust web.” Web 3.0 is a conscious effort to build an internet that works for everyone via peer-to-peer transactions, user-controlled data, relevancy, privacy, and monetization. Blockchain technology, along with advancements in machine learning and the IoT, has an important role in the implementation of this vision. 

Machine learning algorithms are already changing how we live today by linking data, understanding relationships between data points, and making autonomous decisions close to what a human would make. When you combine that with the capabilities of blockchain technology, Web 3.0’s goal to make an interconnected, intelligent internet becomes clearer.

In the next section, we’ll look at the possible implementations and changes expected in Web 3.0 and how they differ from Web 2.0.

The Vision Behind Web 3.0: Majority-Based Consensus

Data Democracy

Web 3.0 attempts to democratize data. It proposes an architecture that shifts from the current centralized computer to decentralized data structures.

A decentralized data structure refers to a group of computers connected to each other, with each computer playing a specific role — whether as a node, verifier, developer, or simply a participant in the network. All computers in the network have the same access to information, and data is transparent to the network with secure time-stamping and immutability. 

Security and Privacy

Since data distribution across many computers can bring up privacy concerns, Web 3.0 solves this problem through cryptography. Data stored on the network is encrypted; therefore, only the node with the correct key can access it.

Secure digital identities — a novelty of Web 3.0 — also promote data privacy. Digital identities will be anonymous, fully encrypted, and cross-platform. In addition, advertising will be based on user consent tied to these digital identities, which means that unlike Web 2.0, users might be asked if they want to see ads or not.

Using blockchain technology also enhances data security, as there is no single point of failure. Because a copy of the data ledger is present on all the nodes in the network, executing a hack would entail that the hackers have access to a large number of nodes concurrently. While not impossible, it’s extremely difficult and expensive to breach that level of security. 

Verifiability and Governance

Our current governance system uses legal contracts to guarantee the delivery of goods and services. However, enforcing these contracts is a long, expensive process, with intermediaries at every step of the way. So, even though having a legal agreement does protect you, this system is inefficient and is prone to errors and delays.

Using smart contracts, web 3.0 can tackle this issue through a trustless governance system. Smart contracts are open-source pieces of code with conditions that both parties mutually agree on at the time of its commencement. Once the predefined conditions are met, the contract is automatically executed. 

Using smart contracts makes services verifiable and easily enforceable. For example, by integrating blockchain tech and IoT-enabled sensors, you can verify if an asset has been moved in a multi-part supply chain. 

Similarly, you can receive services from anywhere in the world, paying for them directly and automatically based on the milestones set by the contract. If implemented correctly, this would radically cut the monitoring cost of agreements and transaction auditing. 

Economic Models

Web 3.0 aims to build a new global economy that is sustainable and scalable by removing the divide between users and service providers. Blockchain-based technology will allow users to manage and settle transactions in real-time without intermediaries. Moreover, economic incentives and penalties ensure that all computers in the network behave correctly and remain honest.

To understand how this works in the real world, let’s take the example of decentralized finance. DeFi enables a lending, borrowing, and staking ecosystem that mirrors traditional financial instruments available through banks.

The key advantage is that DeFi eliminates the need to be in a certain geographical location or to have access to traditional banking services. Network actors like miners and stakers verify the transactions and are incentivized to keep the network running.

Similarly, we now have nonfungible tokens or NFTs, that help protect intellectual property and, at the same time, allow anybody to participate in auctions — which was previously possible only through private sales or contacts.

Blockchain also allows us to place value on individual user contributions, which, in turn, incentivizes participation in the network. An example is the Brave browser, which we will discuss below.

As we explore this new technology, new business models will emerge that are possible only due to the degree of freedom that blockchain’s immutable technology provides.

Advantages of Web 3.0

There are several advantages of web3, also known as the decentralized web:

Increased Security

Because web3 systems do not rely on a single point of control, they are less vulnerable to hacks, breaches, and other cyberattacks. This makes them a more secure option for storing and sharing sensitive information.

Greater Transparency

Decentralized systems allow all users to access the same information, making verifying the accuracy and authenticity of data easier. This can increase trust and accountability in online transactions and interactions.

Enhanced Privacy

Web3 systems often use encryption to protect users’ personal information, providing an extra layer of privacy compared to traditional web systems.

Inclusivity

Decentralized systems allow for greater participation and access for all users, regardless of their location or resources. This helps create a more equitable and inclusive online environment.

Improved Scalability

Because decentralized systems rely on a network of computers to validate and verify information, they can potentially handle a larger volume of transactions and interactions than traditional web systems.

Criticisms of Web3

While there are several advantages to this model, there are also several criticisms that have been raised. Some of these criticisms include the complexity of decentralized systems, limited functionality compared to traditional web systems, the lack of regulation, potential performance issues, and lack of awareness among internet users.

Complexity

Decentralized systems can be complex to set up and use, making them less accessible for the average internet user. This can limit their adoption and use.

Limited Functionality

Some decentralized systems may have limited capabilities compared to traditional web systems, which can hinder their usefulness and appeal.

Lack of Regulation

Because a single entity does not control decentralized systems, they may not be subject to the same regulations as traditional web systems. This can create uncertainty and potential risks for users.

Performance Issues

Decentralized systems may experience slower performance than traditional web systems due to the added complexity and reliance on a network of computers.

Lack of Awareness

Many internet users are unfamiliar with decentralized systems and their benefits, which can limit their adoption and use.

Tools To Use Web 3.0

There are several tools that can be used to access and interact with web3 Some of these tools include:

Web3 Browsers

These are specialized browsers that are designed to access decentralized applications (dApps) and interact with the decentralized web. Examples include Brave, MetaMask, and Cipher.

Decentralized Exchanges

These are platforms that allow users to buy and sell cryptocurrencies and other assets in a decentralized manner without needing a central authority. Examples include Uniswap, Kyber Network, and 0x.

Decentralized Storage Solutions

These platforms allow users to store data in a decentralized manner, using a network of computers to validate and secure the data. Examples include IPFS and Storj.

Decentralized Identity Solutions

These are platforms that allow users to securely store and manage their digital identity in a decentralized manner. Examples include uPort and Civic.

Smart Contract Platforms

These platforms allow users to create and execute self-executing contracts using blockchain-based technology. Examples include Ethereum and EOS.

Key Web 3.0 Challenges

There are several key challenges that web3 is currently facing:

Scalability

Decentralized systems can struggle with handling a large volume of transactions and interactions, leading to performance issues and slower speeds.

User Experience

Decentralized systems can be complex and difficult for the average user to understand and use, hindering adoption and use.

Regulation

Decentralized systems are not subject to the same regulations as traditional web systems, which can create uncertainty and potential risks for users.

Integration With Traditional Systems

Decentralized systems may struggle to integrate with traditional web systems, which can limit their potential impact and adoption.

The Future of the Internet

The future of the internet is a topic of much debate and speculation. While it is difficult to predict exactly what the internet will look like in the future, there are several trends and developments that are worth considering:

Increased Decentralization

The internet will likely become more decentralized over time with the rise of technologies such as blockchain based, peer-to-peer networks, and decentralized applications (dApps). This could increase security, transparency, and inclusivity in online systems and applications.

Greater Integration With the Physical World

The internet is increasingly being used to connect and control a wide range of physical devices and systems, such as smart homes, self-driving cars, and industrial machinery. This trend is likely to continue in the future.

Increased Use of Artificial Intelligence

Artificial intelligenceis expected to play an increasingly important role in the future of the internet, helping to improve efficiency, accuracy, and personalization in a wide range of online applications and services.

Greater Emphasis on Privacy

As internet users become more aware of the risks to their personal data and privacy, it is likely that there will be a greater emphasis on protecting this information online. This could involve the use of encryption, decentralized systems, and other privacy-enhancing technologies.

Continued Globalization

The internet has already played a significant role in connecting people and communities around the world, and this trend is likely to continue in the future.

Web3 Is the Future of the Internet

With the advent of DeFi protocols, Web 3.0 wallets, blockchain domains, and browsers, the internet as we know it is changing rapidly. Many aspects of Web 3.0 are in their first iteration today, including cloud computing, augmented reality, blockchain technology, and IoT. 

However, as with the evolution of Web 2.0, the fruition of Web 3.0 will probably take decades, not years. The transition between Web 2.0 and Web 3.0 will not be fully realized until all the major building blocks are in place.

That being said, you can begin using and experiencing some of the Web 3.0 techs today and be at the forefront of this paradigm shift. For starters, you can take a look at the recently launched OKX Web 3.0 wallet extension, which can be used to access various services and marketplaces.

FAQs

What Is Web3, and How Does It Work?

Web3, also known as the decentralized web, is a model for building and accessing decentralized web-based systems and applications, meaning they do not rely on a single point of control or authority. Instead, they rely on a network of computers and users to validate and verify information, allowing for increased security, transparency, and inclusivity. Web3 technologies include blockchain, peer-to-peer networks, and decentralized applications (dApps).

What Is Web3 in Simple Terms?

Web3 is a way of building and using the internet that is decentralized, meaning it doesn’t rely on one central authority or control point. Instead, it relies on a network of computers and users to validate and verify information, which can provide increased security, transparency, and inclusivity.

What Is the Point of Web3?

The goal of Web3 is to create a more secure, transparent, and inclusive online environment by relying on decentralized systems rather than traditional, centralized systems. Decentralized systems can potentially offer increased security, as they are less vulnerable to hacks and breaches. They can also offer greater transparency, as all users can access the same information and verify its accuracy. Additionally, decentralized systems can be more inclusive, as they allow for greater participation and access for all users, regardless of their location or resources.

What Is Web3 Technology?

Web3 technology refers to the tools and platforms used to build and access decentralized web-based systems and applications. These technologies include blockchain, peer-to-peer networks, decentralized applications (dApps), decentralized exchanges, decentralized storage solutions, decentralized identity solutions, and smart contract platforms.

Why Will Web3 Change the World?

Web3, also known as the decentralized web, has the potential to bring about significant changes to the internet and how it is used. By relying on decentralized systems rather than traditional, centralized systems, Web3 could increase security, transparency, and inclusivity in online systems and applications. This could have far-reaching implications for a wide range of industries and sectors, from finance and healthcare to education and governance. Additionally, Web3 could facilitate greater integration between the internet and the physical world and the increased use of artificial intelligence and other emerging technologies.