The internet we use now is a far cry from what it was just ten years ago! The progression of the internet has incorporated itself into many aspects of our daily lives. We use the internet for nearly everything from work to school, personal lives, and beyond.
The internet is undoubtedly the most significant technological development in human history. Although the industry has progressed immensely since its inception, we are just scratching the surface of what it can do for us.
Today’s internet resembles the automobile industry in 1920. Like the automobile in the 1920s, the internet is a game-changing technology that has been around for 20 years but is still immature and needs significant enhancements.
With that in mind, this article will explore the latest paradigm shift that the internet is undergoing: Web3. Specifically, this article will dive into what Web3 is, what it gets used for, and why YOU should be ready for it.
There are a few key distinctions between Web2 and Web3 , but decentralization is at the heart of web3.
Web3 , on the other hand, improves the internet as we know it today by adding a few innovative features. More specifically, Web3 is:
- Open: apps get created with open-source software developed by an open and accessible community of developers, and they are in full view of the public.
- Trustless: participants can interact publicly or privately on the network without the need for a trusted third party.
- Permissionless: without the approval of a governing body, anyone, including users and suppliers, can participate.
In Web3, developers rarely create and deploy apps that run on a single server or store their data in a single database, often hosted and managed by a single cloud provider.
Instead, Web3 apps are built on blockchains, decentralized networks of numerous peer-to-peer nodes (servers), or a hybrid of the two, often called dApps or decentralized apps.
Developers are rewarded and compete to provide the highest quality services to everybody utilizing the service to establish a stable and secure decentralized network.
Furthermore, you will find that cryptocurrency gets mentioned when discussing Web3. This reoccurring mention is because many of these protocols rely heavily on cryptocurrencies. Thus, anyone wishing to develop, govern, contribute to or improve one of the projects has a financial incentive in the form of tokens.
These protocols may provide various services, such as computation, storage, bandwidth, identification, hosting, and other online services formerly offered by cloud providers.
People can earn a living by participating in the protocol in various ways, both technical and non-technical. On the other hand, consumers of the service typically pay to use the protocol, much like they would pay a cloud provider. Except in Web3, money is distributed directly to network participants or developers.
With this, as with many forms of decentralization, the unneeded and frequently wasteful intermediaries are eliminated.
This decentralization eliminates unneeded and wasteful intermediaries that often act as gatekeepers to the best that the web has to offer.
Many web infrastructure protocols have produced utility tokens that dictate how the protocol runs, such as Filecoin, Livepeer, Arweave, and The Graph. Participants at all levels of the network get rewarded with these tokens. This reward system is how even native blockchain technologies like Ethereum work.
How Identity Works in Web3
Identity in Web3 functions differently today than it did in previous versions of the platform. Most of the time, IDs in Web3 apps are related to the person’s wallet address interacting with the app.
Web2 requires users to identify themselves via things like emails and passwords, which you inevitably lose and have to update and require you to hand over personal data.
In Web3, Wallet addresses are fully anonymous unless the user chooses to link their own identity to it publicly deliberately.
Moreover, suppose a person uses the same wallet for numerous and different dApps. In that case, their identity and details can be smoothly transferred between them, allowing them to build up their reputation over time. Developers may already include self-sovereign identification into their apps using protocols and technologies like Ceramic and IDX to replace traditional authentication and identity layers.
In addition, the Ethereum Foundation has a working RFP for creating a specification for “Sign in with Ethereum ” which would give a more simplified and documented way to do this in the future.
With Web3, you can use applications that are open, trustless, and permissionless, giving you greater security on the web.
The Uses of Web3
While the Web2 wave continues to bear fruit, the world is now witnessing the first signs of growth from the next major paradigm change in online applications, aptly dubbed Web3.
Web3, also known as the Semantic Web and coined by Tim Berners-Lee, the Web’s original inventor, is an even more fundamental upheaval. One that will eventually cast everything else into the shade.
Indeed, the move to open, trustless, and permissionless networks is massive and groundbreaking.
The ability to coordinate and incentivize the long tail of work, service, data, and content providers has become the disempowered backdrop to many of the world’s challenges. Some of these challenges include health, food, finance, and sustainability. Instability is the outcome of these new open, trustless, and permissionless networks.
Web2 and Web3 are organized in fundamentally different ways. Web2 gave us mobile, social, and cloud networks that are centrally managed. Web3 gives us decentralized networks and artificial intelligence. A single corporation won’t be the gatekeeper to an entire network in a world dominated by Web3.
Web2 gave rise to massive computer data centers. These centers were needed to store, organize, and use the massive amounts of data people were generating.
Web3 will be replacing these massive centers with decentralized computing resources distributed among phones, laptops, appliances, sensors, and cars. This decentralized way of handling data will allow us to produce and consume 160 times more data in 2025 than in 2010.
Decentralized data networks enable people to take back ownership of their own data — from an individual’s health and wellness data to a farmer’s crop data, to a car’s position and performance data, and virtually anything else— and sell or trade it without sacrificing ownership, privacy, or relying on third-party middlemen. As a result, decentralized data networks have the potential to include the entire long tail of data providers in the developing “data economy.”
Artificial Intelligence and Machine Learning algorithms, without a doubt, have advanced to the point where they can generate helpful, even life-saving, predictions and actions. When we transition these platforms to decentralized data structures we will gain access into far more data than we have today that will help us with new advancements into things like precision materials, medication and pharmaceuticals, and even climate modeling.
Ultimately, Web3 paves the way for a future in which different people and machines can interact with data, value, and other counterparties without the involvement of third parties. These capabilities are thanks to a peer-to-peer network substrate. The end product is a modular, human-centric, privacy-preserving computer fabric for the next web wave.
More specifically, here are two of the most effective uses of Web3:
Native, Built-in Payments
Tokens also enable a truly borderless and seamless payment process. Companies likes Stripe and Paypal, for example, have generated billions of dollars in value by facilitating electronic payments.
However, these methods are extremely complicated, and have their own flaws and ineffeciencies.. To use them, you must also provide sensitive information and personal data, and we’ve all heard too many stories about hackers and nefarious organizations stealing personal data.
Web3 applications, on the other hand, may use crypto wallets like MetaMask and Torus to make international payments and transactions simple, anonymous, and safe, allowing you to make payments without giving personal information that could come back to haunt you
Networks like Solana offer latency in the hundreds of milliseconds, and transaction costs a fraction of a penny. Users do not have to go through numerous friction-filled procedures to engage with and participate in the network, as they do in the present financial system. They only need to download or install a wallet to begin sending and receiving payments without any restrictions and gatekeeping.
A Novel Approach to Business Formation
Tokens also facilitate tokenization and the establishment of a token economy . Consider the current status of establishing a software company. Someone has a great concept, but they will need money to sustain and support themselves to build it.
To get funding, they hire venture capitalists and give up a portion of the company. Diluting the ownership of the company and introducing people who may have different priorities often means that the user experience is sacrificed so that the early investors can recoup their investment. And, this often takes years so everyone works without any guarantee the time, money, and labor they’ve dedicated will create something of real value.
Instead, imagine presenting a fresh and innovative idea that answers a real need. From the beginning, anyone can help construct it or invest in it. The corporation announces the release of a certain amount of tokens. The system will give 10% to early builders, 10% will get sold to the general public, and the remainder will compensate contributors and fund the project in the future.
Stakeholders can vote with their tokens on changes to the project’s future, and those who helped construct it can sell some of their holdings to profit after the tokens get distributed. People who believe in the initiative can buy and hold shares, while others can sell theirs.
This system of buying and selling tokens is completely transparent unlike buying and selling stock in a company where information can be hidden from shareholders.
This is already happening in the Web3 space.
Radicle , a decentralized GitHub alternative, is one example of an app that allows stakeholders to engage in project governance. Another is Gitcoin, allowing developers to get compensated in bitcoin for participating in and contributing to Open Source projects. Yearn will enable stakeholders to vote on proposals and participate in decision-making. Tokens are issued by Uniswap, SuperRare, The Graph, Audius, and a slew of other protocols and projects to enable ownership, participation, and governance.
Furthermore, DAOs (Decentralized Autonomous Organizations), which provide a different approach to establishing what people have previously and traditionally thought of as a corporation, is garnering a lot of traction and investment from traditional developers and venture capitalists.
These organizations get tokenized, and they turn the concept of organizational structure on its head by providing real, liquid, and equitable ownership. Ownership can then be distributed to a wider number of stakeholders and helps align incentives in novel and fascinating ways.
DAOs are too broad of a subject to fit entirely into this article, but for now, it is safe to say and believe that they are the future of building things and what people used to think of as businesses and companies.
Why Developers Should Learn Web3
The web has changed dramatically over the years, and it is nearlyunrecognizable from its early days. Learning Web3 is a crucial skill for developers given Web3’s ambition toward a genuinely decentralized internet.
For the web and beyond, decentralization has enormous potential. The ecosystem may get populated with developers who have original ideas forhigh-quality products.
Data ownership and compensation are some of the most important implications of decentralization and blockchain technology. It is safe to assume that as we move toward Web3 and the technology that supports it matures and becomes scalable, the web will return to its original intent.
In conclusion, Web3 will create a more equitable internet by allowing individuals to be sovereign. True sovereignty entails controlling one’s time and information and being able to control who profits from it.
In the end, Web3’s decentralized blockchain protocol will allow individuals, particularly developers, to connect to an internet where they can own and be properly compensated for their time and data, overshadowing an exploitative and unlawful web where giant, centralized repositories get held and for profit.