What is Web3 (Web 3.0)? All you need to know

Main

• Web3 (Web 3.0) is a term for a new generation of the Internet. It covers both infrastructure elements and applications.
• There is no precise definition of Web3. The concept of Web 3.0 appeared back in the 90s and included such concepts as the semantic web. In recent years, Web3 has been associated with the principle of decentralization.
• Modern Web3 applications have attributes such as DAOs, cryptocurrencies, blockchain and decentralized data storage systems, sovereign identity (SSI), the Internet of Things, metaverses, NFTs, and other phenomena and technologies.

What is Web 1.0 and Web 2.0?

Web 1.0 is the first version of the World Wide Web, which began to gain popularity in the early 90s after the introduction of the communication protocol and HTTP. Sites in this version were static pages with text, links, and images. According to Tim Berners-Lee, credited as the creator of the Web, Web 1.0 sites were “read-only”. Interaction with sites was limited to the simplest forms of communication, such as forums.

Web 2.0 is the second generation of the Internet, which began to spread in the early 2000s. Web 2.0 is based on interactive platforms and services connected to the World Wide Web. The difference from the first generation is that sites have become web applications that users can use on their own. Later, social networks and a system of cloud services were added to this. Well-known representatives of Web 2.0 are Amazon, Facebook and Twitter.

How is Web3 different from previous versions of the Internet?

In Web 1.0, data was presented to users statically—websites were for informational purposes only. In Web 2.0, users actively interact with Internet resources, create their own content and communicate with each other.

The concept of Web 3.0 first appeared in the 90s. Berners-Lee called her semantic web. The architecture of the new generation had to include several main components. Among the main ideas of Web 3.0 was the translation of all network content written in human language into a machine-readable form, which would allow algorithms and programs to recognize the meanings of messages and build connections based on them.

In the future, the perception of the concept has changed. In 2014, Ethereum co-founder Gavin Wood published an article in which he described Web 3.0 from a new perspective – as a more decentralized version of the network built using the blockchain. His proposals concerned primarily changes in the data storage system and increasing the level of user anonymity.

In 2021, the term Web 3.0 was remembered again — against the backdrop of the growing popularity of decentralized applications and NFTs. In the course of heated Internet discussions, the word “Web3” has also gained popularity.

What is Web3 anyway?

The crypto community is still looking for a definition for Web 3.0. But its fundamental difference from Web 2.0 is the increase in decentralization at all levels, including data storage and application use. Web3 era applications are often referred to as those that have one or more of the following attributes:

• blockchain and smart contracts are integrated into individual product functions;
• the source code of the program has been published, there is the possibility of participation for third-party developers;
• the service uses virtual (VR) or augmented (AR) reality technologies;
• tools for paying for transactions using cryptocurrencies built into the front-end;
• use of non-fungible tokens (NFTs);
• the storage system uses the IPFS protocol;
• a decentralized autonomous organization (DAO) participates in project management.

Web3 also involves the active use of artificial intelligence (AI). This gives ample opportunity to personalize the user experience. This principle underlies the business models of many major web platforms such as YouTube, Netflix or Amazon. Although in terms of organization they remain centralized.

Web3 is also closely related to the concept of the metaverse.

Another key Web3 phenomenon is sovereign identity.

How do Web3 applications work?

When developing applications of the “next generation”, they adhere to the decentralization of the organization of data, including their storage. At least part of the network application data is stored on the blockchain, i.e. decentralized.

Product development is not only and not so much the owner, but a distributed community. It manages the project through a DAO (Decentralized Autonomous Organization).

In turn, decentralization is the key to what cryptocurrencies and smart contracts have been able to implement in the economy: to eliminate the need for trust, and, therefore, for intermediaries and centralized structures.

Thus, the ideal state of Web3 is freedom from censorship and restrictions, as well as an efficient business model without the use of hierarchical structures and traditional financial instruments.

What blockchain projects are working in the field of Web3?

There are many projects in the crypto industry that position themselves as part of the Web3 movement. To name a few of the biggest examples:

Filecoin (FIL) is a global “marketplace” for decentralized data storage. It is an alternative to centralized cloud storage: it unites a network of computers whose users can “rent out” free disk space. Filecoin’s competitors are Storj (STORJ) and Siacoin (SC).

There are also successful examples in the direction of data transmission and the Internet of Things (IoT). One of them is Helium, a decentralized network of special modems that provide a fast and stable connection service for IoT devices, primarily smart sensors and meters.

Another example is IOTA, which is built on a kind of distributed ledger without the use of blocks and mining. Instead, each subsequent transaction confirms the previous two. IOTA is also designed for “smart” devices that can conduct microtransactions on this network at virtually no cost.

There are projects that offer a new system for organizing and searching for content on the Web. For example, The Graph (GRT) is a decentralized and open indexing protocol for querying data from blockchains, acting as an analogue of an Internet search engine. The Graph groups information from a separate network into a so-called subgraph, which is accessed through the API. Applications can get any data from subgraphs using SQL queries.

Polkadot initially positioned itself as a platform for Web3 and, in particular, decentralized applications. For developers, there is a set of Polkadot Substrate tools that allows you to create separate blockchains (so-called “parachains”) interconnected within the Polkadot ecosystem.

The obvious contender for the title of the main blockchain for Web 3.0 is Ethereum, which has already become the main platform for decentralized applications. In addition to many DeFi and NFT projects, one can single out the Ethereum Name Service, which allows you to generate domain names tied to an address on the network.

Blockchains for Web3 include other platforms for decentralized applications, including Solana, Avalanche, Polygon and others.

Why does Web3 need cryptocurrencies?

Many new generation Internet projects may have their own crypto asset that has certain functions or provides benefits when using the application.

One of the common functions of a project token is governance. Token holders participate in the management of the application through the DAO, a decentralized management body that operates using smart contracts.

The amount of tokens held determines the “weight” of the vote in voting. DAO members themselves formulate and discuss new proposals, as well as vote on them. DAO votes can relate to a variety of issues – from allocating funds for a project to changing some application parameter.

Thus, the DAO is responsible for the development of the project and its tokenomics.

Are big Internet companies also developing Web 3.0?

The concept of Web 3 attracts not only crypto projects and startups, but also traditional Web 2.0 players – large technology companies.

In May 2022, Google Cloud announced the start of developing tools for blockchain developers. Former Google Chairman and CEO Eric Schmidt called the idea of ​​Web3 interesting and highlighted two changes that the next generation of the Internet will bring – user ownership of content and payment of compensation for activity. And Ethereum co-founder Joseph Lubin noted the opportunities for decentralization provided by the “new version” of the Internet.

YouTube plans to introduce Web3 elements into its products. Support for decentralized applications at the native level is being developed by the Opera browser team.

According to Grayscale, the annual revenue growth of the Web 3.0 metaverse sector will reach $1 trillion. Major companies such as Uniswap Labs, Pantera Capital, and Dragonfly Capital have created venture capital units that will focus on Web 3.0 application development.

According to a study by Electric Capital, the number of developers in the field of Web3 technologies increased by 75% in 2021.

Why is Web 3.0 criticized?

The vagueness of the definition and the extremely frequent use of this word make the idea of ​​Web3 a popular object of criticism.

For example, businessman Elon Musk stated in an interview at the end of 2021 that Web 3.0 is “more of a promotion tool, not something real.”