Web3: History & Basics

Web 3.0, often referred to as Web3, is a concept that represents the next stage in the evolution of the internet. This concept is gaining increasing attention due to its potential to revolutionize the way we interact with the online world. To understand Web3, let’s delve into its history, core principles, and potential applications.

The Evolution of the Internet: Web 1.0, Web 2.0, and Web 3.0

The internet has undergone significant transformations over the years, progressing through distinct phases:

Web 1.0: The “Read-Only” Web (Early 1990s – Late 2000s)

Web 1.0 marked the internet’s early days, when it primarily served as a platform for publishing information. Key features included static web pages and limited user interaction. Users could access information in the form of text, images, and hyperlinks, but had limited ability to create or modify content. Notable websites included news portals, electronic brochures, and email services.

Web 2.0: Collective Intelligence (Early 2000s – Mid-2010s)

Web 2.0 brought interactivity, social communication, and user-generated content to the forefront. It introduced dynamic web pages, social networks, blogs, video hosting, and collaborative platforms. Users could actively participate, comment, discuss, and create content. This phase promoted collective intelligence, allowing users to contribute to the online ecosystem.

Web 3.0: The Internet of the Future (Mid-2010s – Present)

Web 3.0 represents the current and future stage of the internet. It incorporates advanced technologies such as artificial intelligence (AI), blockchain, decentralized apps (dApps), and more. Key differentiators include:

• AI for Personalization: AI enhances user experiences by personalizing content and recommendations based on data analysis. It also enables automation and natural interaction with information.
• Blockchain Technology: Decentralized ledger technology (DLT), particularly blockchain, ensures data security, authenticity, and privacy. It’s a foundational element of Web3.
• AR and VR Integration: Augmented reality (AR) and virtual reality (VR) expand possibilities for interaction and immersion in digital environments.

Long story short, the internet transformed from being a simple source of information to a social hub, and then to a personalized heaven of a certain user. It’s neither good nor bad — because there are pros and cons to each stage. For example, “read-only” mode is better suited for the searchers of unbiased information, but the libraries have never been famous for being entertaining. On the other hand, a personalized newsfeed can be more convenient and less stressful, at the cost of hiding from the truth and lack of motivation to learn new things.

What you want to do as a marketer, though, is to be prepared for the advent of Web3, because it can and will affect your marketing efforts. For instance, once you gain the favor of users when under the reign of Web3, your ads might start popping up automatically, thanks to the personalized newsfeed — meaning, fewer expenses on ad promotion.

Main Features of Web3

Web3 is characterized by several fundamental principles:

• Decentralization: All data, applications, and content are distributed across the network, eliminating centralized control. This is possible with the help of blockchain. In a nutshell, the moderator is no longer needed, because the network is supported by the majority of the users, who are simply unable to go rogue instantaneously and in a similar fashion.
• Interoperability: Web3 aims to create a unified infrastructure where various blockchains and dApps can interact efficiently. Unlike the point above, this one is a long shot, due to the infamous blockchain forks, which happen when users are unable to come to an agreement, resulting in two subbranches.
• Data Control: Users can control their data using distributed identity systems, enhancing privacy and security. Once again, an ideal scenario, because mainstream blockchain is all about transparency. While it is very hard to relate transactions displayed to a certain actor, it is still possible. Treat it as a stock exchange, where every trader is aware of the transactions taking place, but can’t relate them to some exact people. Would you like all the network to know about your constipation, even though nobody would be able to tell it is exactly you? On the other hand… it might be even worse to share this kind of data to a central regulator, which will know precisely it is you and can leak the info — between the upper and the nether millstone, huh?
• Cryptocurrencies and Tokens: Digital assets play a pivotal role, facilitating actions and serving as value equivalents within the Web3 ecosystem. In a nutshell, cryptocurrency is an attempt to merge classic tangible money, like gold, with fiat trust-based money, like dollars. A true blockchain-based cryptocurrency cannot be minted out of thin air (like modern money is) — they have to be “mined”, hence the name. Mining refers to sacrificing computational power on solving a complex equation, which is easily verifiable. It is similar to finding a divisor, e.g, 57,135 / ? = 65. Once you find out the question mark equals 879, you can easily verify it. As for the gold component, cryptocurrencies are (ideally) resilient to inflation, because they are backboned by actual work, which has a certain monetary value, hence the name of the famous consensus mechanism — Proof-of-Work.

Applications of Web3

Web3 technologies are already finding applications across various domains:

• Blockchain and Cryptocurrencies: Cryptocurrencies, driven by blockchain technology, offer secure and transparent transactions.
• Decentralized Finance (DeFi): DeFi applications provide financial services traditionally offered by banks. They’re gaining traction for their convenience and user-centric approach.
• Decentralized Social Networks: These platforms prioritize decentralization, privacy, and user data control, countering issues like fake news and manipulation.
• Gaming Applications: Web3 enhances gaming by allowing players to earn from in-game achievements and exchange in-game items.
• Decentralized Data Storage: Decentralized storage systems like IPFS provide reliability, integrity, and privacy for data. Yet, once again, privacy here is not about concealing the data from the public, not in a classic blockchain at least. It is about inability to relate the data to a certain actor — in other words, the world might know about someone having a kinky night, but nobody will be able to tell it is you.
• Decentralized Computing: Users can engage in distributed computing across decentralized networks, reducing reliance on large data centers.
• Decentralized Autonomous Organizations (DAOs): DAOs enable community-driven decision-making without centralized intermediaries.

Challenges of Web3

Despite its potential, Web3 faces several challenges:

• Complexity: Understanding and integrating Web3 technologies can be challenging, and a shortage of skilled personnel compounds this issue.
• Low Scalability: Some blockchains, like Bitcoin, struggle with scalability when user numbers surge.
• Security Concerns: Web3 is susceptible to hacking and fraud activities, impacting its security.
• Lack of Regulation: Regulatory challenges arise due to Web3’s decentralized nature.
• Energy Consumption: Some blockchain networks consume substantial energy, but efforts are underway to address this. For example, there are many alternative consensus mechanisms out there, e.g., Proof-of-Stake.

Conclusion

Web3 represents a transformative phase in the evolution of the internet, characterized by decentralization, security, and user empowerment. While it faces challenges, its potential for innovation and positive change is immense, with applications spanning finance, social networking, gaming, and beyond. The journey to Web3 is ongoing, and it promises a more decentralized, secure, and inclusive digital future.