What Is Web3?

Web3 Explained

You’ve likely heard buzz around the term “Web3” — also stylized as Web 3.0 — and related phenomena like cryptocurrency, blockchain, decentralized finance (DeFi), and non-fungible tokens (NFTs). In short, Web3 is a next-generation internet architecture that is being created by a diverse coalition of independent developers, nonprofit organizations, and businesses. This new internet is intended to be a more decentralized version of the internet we are familiar with. In other words, the Web3 internet is designed to mitigate the influence of the small handful of internet service providers (ISPs) and tech companies that have historically dominated the web. Instead, the goal is for Web3 to be collectively controlled and managed by ordinary users and to democratize access to the internet.

Web3 marks a dramatic departure from how older versions of the internet have been set up, and as a result, the term Web3 encapsulates a wide range of technologies that are essential to this new “decentralized internet.” When used in a technological context, the term “decentralized” typically refers to blockchain technology, which is responsible for everything from cryptocurrencies like Bitcoin to NFTs and in-game metaverse worlds. Blockchain is core to Web3’s decentralized design, but it is far from the only technology being used; the future internet will also rely heavily on artificial intelligence (AI) and virtual reality/augmented reality (VR/AR) to create a more intuitive user experience (UX). In other words, while Web3 technology is complex and still a work in progress, the future internet is intended to be more useful and egalitarian than the internet of today.

What is Web3 Technology?

A main goal of Web3 technology is to give control of the internet to ordinary internet users. In the words of the Web3 Foundation (a non-profit entity founded to promote the development and adoption of Web3 projects), Web3 users are meant to “control their data, identity, and destiny.”

This proposed design for Web3 is radically different from previous iterations of the internet. More specifically, during the initial days of the internet, users could only set up and/or view static websites, and there was very little interaction between users and websites, if any. This stage of the internet is referred to as Web1 (or Web 1.0). From there, these static web pages gave way to interactive websites, which perform specific actions based on user input. This is the Web2 (or Web 2.0) internet movement that has shaped the majority of internet experiences that many of us rely on today, and this model has enabled everything from ecommerce to social media and other forms of user-generated content (UGC).

Within this Web2 ecosystem, UGC platforms became the primary beneficiaries of online users’ interests and personal expressions. But even though users have a ton of options online, they often have little control over how their information is used. User accounts can easily be shut down or drained by a service provider, and they often have little-to-no direct say in how the products and services they use are operated. Additionally, the current internet model largely relies on centralized servers and protocols to operate, which means many businesses have centralized points of failure that can be targeted by hackers. This architectural limitation has the potential to result in massive data breaches.

In many respects, blockchain and Web3 aim to change the way things are done. While there is a lot of hype and speculation surrounding various blockchain projects, at its core blockchain is a distributed network and transaction ledger that can verify or reject transactions without requiring a centralized authority. Additionally, these blockchain networks store an encrypted record of every online event that has happened on the network in a way that is practically impossible to alter or destroy. This not only makes it harder for massive businesses to gain a monopoly over any corner of the future internet, but it also dramatically reduces the risk of a central point of failure, since data on a blockchain is highly encrypted, shared through high-security infrastructures, and standardized across decentralized networks of transaction validators.

In other words, a blockchain and Web3 ecosystem can give you direct control of your money; you don’t have to use centralized payment systems, many of which impose limits, charge high fees, and/or have undergone serious security breaches. In many respects, Web3 structures can give you more direct ownership over your online identity, in contrast to how your identity in Web2 systems can often be tethered to monopolistic and advertising-driven identity management systems. For the progression of a transparent monetary system to combat these and other issues, DeFi may become one of the internet's most well-used, forward-thinking, and viable ecosystems moving forward.

How to Use Web3?

Unless you’re an avid crypto user, there aren’t that many opportunities to interact with Web3 projects in their current form; this bundle of technologies is likely a few years away from mainstream adoption. However, developers of countless Web3 crypto projects have been busy laying the foundations for a Web3 internet, and hundreds of applications and websites are already running on some version of Web3.

What’s important to remember is that there is no single centralized authority overseeing the development of this new and open internet. Instead, progress is being made through the efforts of a loosely aligned assortment of private businesses, nonprofit organizations, and individuals. These stakeholders are leveraging Web3 technology to spin up next-generation financial products and services, social networks, messaging platforms, online service providers, and more.

These loosely organized but tightly aligned proponents of Web3 are approaching internet development in a variety of ways, with organizations like the Web3 Foundation mainly focused on establishing guidelines for the overall Web3 ecosystem while businesses like ConsenSys Labs help entrepreneurs build new decentralized applications (dApps) meant to populate Web3’s digital landscape. However, since the goal of Web3 technology is to enable a more decentralized, collaborative internet, the various blockchain projects working to create the Web3 crypto ecosystem can be viewed as collaborators rather than competitors.

Blockchain and Web3 Technology Can Give People More Control

The ecosystem being deliberately built with blockchain and Web3 technology is designed to address the prevalent deficiencies and vulnerabilities endemic to the Web2 internet ecosystem, but Web3 technology needs more time to evolve before it is truly ready for mainstream adoption and everyday use. However, this doesn’t mean you can’t begin exploring the burgeoning Web3 ecosystem and take advantage of exciting Web3 projects within the decentralized finance space and beyond. Web3 may not be ready for everyone, but it is shaping up to be a technological revolution unlike many others in that its architecture features strong capabilities for empowering individuals and local communities.

Ever since the internet became widely adopted in the late 1990s, it has become ever more deeply intertwined with our daily lives. Web3 technology is poised to make it possible for ordinary users to exercise higher levels of control over various aspects of their online experiences.