What is Web 3.0?

Over the past few decades, the internet has evolved significantly. We’ve gone from IRC (Internet Relay Chat) to modern social media platforms. Basic online payments to sophisticated digital banking services. Now we’re experiencing a new era of technology in the form of cryptocurrency and blockchains.

The internet has become a vital part of our everyday lives as many people, businesses, and governments rely on the network. So far, we’ve seen Web 1.0 and 2.0, but what exactly should we expect from Web 3.0? It’s a buzzword that we often hear, but most of us don’t understand the significance of this next technological step.

In this guide, we’ll be exploring what Web 3.0 actually is, how it differs from what came before, and what it offers for the future.

What is Web 3.0?

Web3 is the next phase of the internet, focused on making it more decentralized, secure, and user-driven. Imagine the internet as a place where you control your data and have more power over how things work, instead of big companies holding all the control.

In Web3, blockchain technology plays a huge role. This technology creates a network where information is stored across multiple computers rather than a central server, which makes it more secure and transparent. People can own digital assets like cryptocurrencies or unique items (NFTs) and verify their ownership on the blockchain.

The idea behind Web3 is to create a more democratic, peer-to-peer internet where users have greater control over their information, assets, and online identities without relying on third parties, like social media giants or banks.

Gavin Wood, the co-founder of Ethereum, coined the term Web 3.0 shortly after the project launched in 2014. The entrepreneur shared that the internet requires too much trust, whether it’s registering your personal details with a centralized financial institution or relying on large social media platforms acting in your best interest with your data. In Web 2.0, users are required to relinquish personal information and authority to dominant platforms such as Facebook and Google, leading to significant power dynamics as these centralized entities control data ownership and user interactions.

The core idea of Web 3.0 is made of several components including but not limited to the following:

• Trustless: Web 3.0 applications are based on economic mechanisms and incentives instead of relying on third parties to provide a safe network for interaction
• Native payments: Web 3.0 offers native payment infrastructure driven by cryptocurrency, allowing users to trade using secure transactions. This eliminates the need to rely upon outdated financial infrastructures like banks and fiat currencies.
• Permissionless: Web 3.0 is not gated by people or organizations, so anyone can access these systems.
• Decentralized: Ownership is distributed among users instead of concentrated in the hands of centralized organizations.

Web 3.0’s two cornerstones are the semantic web and artificial intelligence (including machine learning). The semantic web will aid in teaching the computer what the data means, allowing AI to develop real-world use cases that can make better use of the data.

Key Features of Web 3.0

In this section, we have shared the aspects and technologies that contribute to the development of Web 3.0. These are just some of the main components that are pooled together while building Web 3.0 applications. Additional technology breakthroughs will add to the richness internet’s future.

3D Visualization and Spatial Web

Some people call Web 3.0 the Spatial Web since it aims to blur the lines between reality and the digital world. Potentially Web 3.0 will utilize revolutionary graphics in a 3D setting, making the experience seem life-like.

Unlike 2D, 3D graphics add more depth to the virtual world and immerse users much more. We can see the start of this trend with the rise of projects like Decentraland and Genesis World. Currently, metaverses are viewed as video games where people spend their leisure time. However, we could potentially see real-life applications like teaching doctors surgery or flight simulators in the future.

Ubiquity

Ubiquity means having the capacity to be everywhere at the same time. Web 2.0 is already somewhat ubiquitous since, for example, Instagram users can capture a picture and share it almost instantly. The image becomes available to anyone no matter their location, as long as they have access to the social media platform and an internet connection.

Web 3.0 takes this step further by making the internet accessible to all people anywhere at any time. In the future, smart devices will no longer connect to the internet via computers and phones like Web 2.0 but rather with new types of devices that are yet to be invented.

Semantic Web

Semantics is the study of relationships between worlds. Therefore, the semantic web would allow computers to analyze vast amounts of data from the internet, such as transactions and content. This would allow machines to detect what users prefer when browsing the web and push specific content. Essentially, a semantic web would deliver a better experience driven by enhanced data connectivity.

Artificial intelligence

AI allows computers to better understand the context and relevance of information, which will greatly expand the scope of digital technologies. Web 3.0 programs can help people manage daily tasks via AI automation. Some of the use cases of AI in Web 3.0 have been illustrated below:

• Generation of more personalized and relevant recommendations
• Smarter decentralized applications
• Intelligent NFTs integrated with self-learning capabilities (Example: Alethea AI’s Alice)
• Robust safety of content metadata

Moreover, Web 3.0 AI will act as a safeguard for people surfing the internet. For example, online review platforms like Trustpilot offer consumers a way to distinguish if a product or service is of high quality. Unfortunately, brands can gather a large group of people and pay for reviews. Therefore, the internet needs an AI that can spot fake reviews and provide reliable data. As AI advances, it will ultimately showcase users the best-filtered content and unbiased data.

Machine learning

Another piece of the Web 3.0 puzzle was dreamed of way back in the 1990s. The idea was computers would be able to contextualize information much like the human brain. In Web 3.0, computers will understand information similarly to humans through technologies based on Semantic Web concepts. Web 3.0 will incorporate machine learning that uses data and algorithms to imitate how humans learn, gradually improving efficiency. Artificial intelligence will enable computers to produce faster and more accurate results in various sectors like drug developments, logistics, manufacturing, and more.

Cryptocurrencies

The prime vision of Web 3.0 is decentralization, which can be achieved only if the community is transacting within the ecosystem through cryptocurrency. Built and designed on the top of the blockchain, cryptocurrency, aka “crypto”, is a form of payment that can circulate without the need for a central monetary authority such as a government or bank. Cryptocurrency empowers users to seamlessly make transactions in a peer-to-peer ecosystem at speed and without the involvement of any intermediary in the process.

Blockchain

Blockchain is a distributed ledger technology containing the immutable record of the transactions executed within the network. The transactions are verified by the network participants using a consensus mechanism like Proof-of-Work or Proof-of-Stake. One of the key features of blockchain technology is its ability to securely store data within a decentralized network, providing a secure foundation for cryptocurrency transactions, smart contracts, and the broader Web 3.0 ecosystem.

When the transactions are verified, they are added to the block and once a block reaches its storage capacity, the next block is added in the sequence, creating a chain of blocks – hence blockchain.

The blocks are chained together using a hash. In addition to the data, every block also has a hash which can be compared to a fingerprint. A hash identifies a block and all of its content and is always unique, just like a fingerprint.

Have a look at the top characteristics of blockchain technology:

1. Transparency: The distributed ledger is public, hence anyone can use a blockchain explorer and create an audit trail for all transactions that have occurred on the network.
2. Decentralization: Blockchain does not need a central authority to validate the transactions and hence, no one can just simply edit the content of the blocks or characteristics of the network.
3. Immutability: Once the data has been recorded in the block, it can’t be changed or tampered with.

And here are some of the programs that already exist on blockchains:

• Smart contracts: These are self-executing programs that honor an agreement between two parties. Users can inspect the lines of code of a smart contract before use to ensure they are happy with the deal. Smart contracts exist on distributed ledgers, so blockchains are a vital part of the technology. Some of the top uses of smart contracts include digital identity, mortgages, supply chain management, insurance, and asset management.
• Decentralized exchanges: DEXs allow users to exchange cryptocurrency anonymously without access restrictions, and the fees can be lower than centralized systems like banks. These peer-to-peer platforms require no oversight by any third party, which means users can interact directly.

Users need a compatible DeFi wallet to connect to a DEX, so no registration or KYC verification is required. The system is non-custodial, which means users control the private keys and take custody of their own funds. DeFi (Decentralized Finance) is a Web 3.0 feature that is gaining popularity. Real-world financial transactions can be carried out on the blockchain without the assistance of banks or the government. In the meantime, a lot of large companies and venture capital firms are investing heavily in Web 3.0, and it is difficult to imagine that their involvement won’t lead to some kind of centralized power.

A Brief History of Web Evolution

Web 3.0 isn’t a new concept – Jeffery Zeldman, one of the early developers of Web 1.0 and Web 2.0 applications, had written blogs supporting the idea of Web 3.0 in 2006. However, talks of the new internet era began as early as 2001. Let’s take a look at the history of the Web.

Web 1.0 (1989 – 2005)

Web 1.0 or the Static Web was the first reliable internet in the 1990s despite offering limited applications and user interaction. Back in those times, creating websites or commenting on blog posts wasn’t possible. Web 1.0 didn’t have advanced algorithms to scan internet pages, making it challenging for users to find relevant information.

Web 2.0 (2005 – to present)

Web 2.0 or the social web made the internet interactive due to new technologies like CSS3, HTML5, Javascript, and more. This allowed advanced software to be written and new websites to be launched like Facebook, YouTube, Wikipedia, Google, and many more. In essence, Web 2.0 paved the way for user-generated content and social media networks since data can now be distributed and shared between various applications.

Web 3.0 (In development)

Web 3.0 is the next evolutionary step for the internet. It would make the internet more intelligent and process information with human-like intelligence through AI algorithms. Before, data was statically presented to users, and they could interact with that information dynamically. However, Web 3.0 will take advantage of AI to improve the user experience by making the internet more personalized and familiar. To compare, you can look at how YouTube recommends videos based on your preferences. Web 3.0 will create a similar environment for users.

Furthermore, Web 3.0 can leverage P2P (peer-to-peer) technologies like blockchain, virtual reality, open-source software, and more. Also, Web 3.0 aims to create a more open and decentralized internet. In theory, this would mean people could take back ownership of their data rather than relying on companies to handle their information with care.

How is Web 3.0 Different From Web 2.0?

In this section, we will cover the differences between Web 2.0 and Web 3.0, so you can better understand the transition and what will change. This builds upon the included technologies you learned about in the key features section.

Decentralised Finance Systems

Web 2.0 financial systems include fiat currencies like the USD, banks, and centralized rulemaking. Therefore, governments or banks can change trading rules at a moment’s notice, and common people have no choice but to go along with the changes. Some of these might be negative and lead to inflation, increased mortgage costs, and limits on the amount of money you can send.

In comparison, Web 3.0 financial systems include cryptocurrencies, smart contracts, and decentralization. These systems are transparent and consistent because lines of code and community govern the functioning of features.

Interoperability

Decentralized applications (dApps) and data are increasingly becoming more compatible. For example, tokens built using Ethereum can easily support each other’s applications, providing the ubiquity needed for a connected Web 3.0 experience. New projects like Cosmos are linking blockchains together, making the digital economy more interconnected than ever.

Digital Economies

Cryptocurrency provides a new digital economy that a central government can’t own. Blockchain technology allows users to own information on the chain and create transactions without using a third party. Now people can trade online goods, services, and content without disclosing personal details or needing a banking service. Also, digital economies provide a safety net for people as they don’t need to rely on a bank to protect their funds.

Crypto Wallets

Nowadays, anybody can create a crypto wallet to store coins and make transactions. The biggest benefit is that they don’t require creating an account or providing personal details. You have complete control over your funds and don’t rely on a centralized service. Also, the most popular cryptocurrency wallets are convenient to use since they are compatible with most blockchains.

Content Ownership

In Web 2.0, the system has complete control over various aspects of data ownership, which leads to a lack of anonymity, poor data protection, access issues, and storage limits. Web 3.0, however, allows data to be exchanged in various locations at the same time. It promotes anonymity, and data security is improved because of the advanced cryptography protocols. For example, if you own content in the form of a non-fungible token, you can prove the uniqueness and provenance of your content, as well as your ownership of it.

Access and Permissions

Web 2.0 systems can block access if you fail a background check or are from the wrong region, limit transactions if their rules are broken, or cause loss of income when systems go down. For instance, Twitter can block access to your account, and banks can stop transactions if they feel it does not match their criteria, which could change at any time.

Web 3.0 is more stable since systems cannot simply go down or decide to change based on a centralized decision. For example, the Ethereum network is distributed over thousands of nodes. When one node goes down, others step in to take over the workload.

Centralized vs Decentralized

Web 2.0 systems are centralized, which means power, decision-making, control, and computational resources are focused in one location or a small number of people. This causes problems such as manipulation of the system, lack of agency for individuals, and the potential for downtime as the network has a single point of failure.

On the other hand, Web 3.0 follows a decentralized philosophy where no single person or organization controls the system. The community running the protocol is put into power. Also, computational power is spread among many nodes, which allows transaction records to be stored across the network.

Efficient Browsing

When using a search engine, you may have found it tricky to receive the best results. However, these algorithms have improved at analyzing and finding the best results based on metadata and search context. Over the years, search engines will become more advanced and lead to a convenient web browsing experience.

Better Customer Support

Customer service is critical for a business to succeed. Likewise, as consumers, we expect premium help when needed. Unfortunately, due to the significant costs or scale of a business, many web services struggle to answer and contact all clients. Web 3.0 will incorporate smarter chatbots that can talk to multiple customers simultaneously. As a result, users can enjoy a great experience when dealing with support agents.

Information Interconnectivity

When Web 3.0 applications become adopted, algorithms will have more data sets to analyze. This will help them deliver a better experience for each individual and accommodate their specific needs.

Marketing and Advertising

Most people use an ad blocker when browsing the web due to the unbelievable amount of advertisements. However, if the ads are relevant to your needs, they could be useful instead of a nuisance. Web 3.0 aims to use smart AI systems to target specific audiences based on in-depth data. As a result, you’ll receive relevant advertisements focused on your hobbies and interests.

Examples of Web 3.0

In this section, we will focus on revolutionary projects building Web3 technologies. There is a long way to go until we live in a truly web 3.0 world, but looking at ongoing progress is exciting.

A New Way of Building Companies

With Web 2.0, building a company requires raising funds from sources such as venture capitalists, which scoops out a significant percentage of the business. Investment from such sources can lead to incentives that are not in the best interests of the company or users.

In comparison, projects in the Web 3.0 ecosystem are crowdfunded by the community through ICOs (Initial Coin Offerings), IEOs (Initial Exchange Offerings), or IDOs (Initial DEX Offerings). These offerings open the gates for the community to buy the native tokens of the projects if the prospects are promising.

The community members holding the project’s token are often granted exclusive access and perks followed by the right to vote through DAO proposals. Voting rights are granted to the community members holding tokens, hence, they get the power to control the direction of the project, not the board of directors.

Web 3.0 Projects and Applications

OpenSea

OpenSea is the first and largest NFT marketplace in terms of trading volume. Founded in 2017, more than 800 employees work for OpenSea from different parts of the globe. You can think of OpenSea as the eBay of digital collectibles (NFTs). The platform offers various features, including:

• Create NFTs and set up a collection
• Browse through various NFT categories
• View NFT statistics and analytics
• Filter the NFTs to narrow the search
• View the transaction history of NFTs

OpenSea supports transactions through cryptocurrencies, but Ethereum is the most popular one – after all, this NFT marketplace is built on top of the Ethereum network.

Meta

Meta, formerly known as Facebook, is arguably the biggest technology firm investing billions in the expansion of the metaverse. The company aims to revolutionize the way people play, work, and communicate. The portfolio of Meta’s metaverse is diverse and includes:

• Horizon Metaverse
• VR Fitness
• Metaverse Gaming Hunt
• VR Messenger Calls
• The Presence Platform
• Spark AR

• Investment in Education

There are many other companies working on the development of the metaverse like Microsoft and Apple, but Meta’s strategic acquisitions of companies like Oculus and Spark AR followed by a diversified metaverse portfolio and the personal interest of Mark Zuckerberg is creating the lead position for Meta.

Furthermore, the metaverse team at Facebook is also creating a lot of opportunities for brands and businesses to interact with customers in a virtual environment. With brands including but not limited to Nike, Adidas, and Prada understanding the capability of commercializing their products in a virtual setting, Facebook’s metaverse initiative has a long way to go.

Ethereum

Ethereum is a decentralized and open-source blockchain protocol empowered by the Ether (ETH) coin that allows users to execute transactions, earn interest via ETH staking, play blockchain games, use and store NFTs, trade cryptocurrencies, use social media, and more.

Ethereum is a web 3.0 network that is driven by the community and supports decentralized concepts like DApps (decentralized applications), blockchain games, decentralized exchanges, and DAOs (decentralized autonomous organizations).

Instead of a centralized server, the Ethereum network runs on thousands of different computers known as nodes, allowing the network to achieve decentralization, immunity to attacks, and 100% uptime.

DeFi (decentralized finance) is the most important Web 3.0 innovation from Ethereum allowing users to send, receive, borrow, earn interest, and even stream funds from any part of the world without experiencing any downtime.

Ethereum is a pioneer in the emerging Web 3.0 ecosystem and this can be verified from some interesting stats as listed below:

• Daily transactions exceeding 1M
• $22.5 billion of value locked in DeFi
• Over 11,000 nodes across the globe

3D Graphics

One of the top Web 3.0 applications is 3D graphics, where the lines of reality are blurred. Many Web 3.0 websites and software will take advantage of this major step in technology. For example, digital tours for physical locations, e-commerce, computer games, work meetings through video calls, and much more.

What’s the Importance of Web3?

In this section, we will focus on the advantages of Web 3.0 and why it is important for the evolution of the internet. You’ll see that there is a lot at stake, and if the theory becomes reality, then the advantages of Web 3.0 will change the social and commercial landscape.

Decentralized Autonomous Organizations (DAOs)

There are many Web 3.0 projects that allow their native tokens to be used as a medium for voting on proposals for the improvement and evolution of the project. These tokens, (known as governance tokens) are held by the community members, hence instead of the board of directors, it is the community holding these governance tokens that decides the development direction of the project. The voting power is based on the number of tokens held or locked by a member.

Web 3.0 tokens are digital assets that are associated with the vision of creating a decentralized Internet.

All of the voting process is executed on-chain, which means that the community members sign and record the votes on the blockchain. This enables complete transparency within the community and decentralized growth is ushered in. The user only needs to have an internet connection and own some governance tokens to become part of the DAO and contribute to building the future of Web 3.0.

Furthermore, the rules, regulations, and guidelines in the DAO are not managed by an individual or a group but by a smart contract. The smart contract technology is encoded with all the crucial information that is necessary to ensure fair and transparent voting on the proposals.

Censorship Resistance

You might have heard about users on Twitter getting banned for various reasons. It’s a form of censorship that would not exist on decentralized Web 3.0 applications. In August 2021, OnlyFans shared their intentions to ban sexually explicit content, which is how most of the creators on the platform made money. This outraged many content creators and would lead to a loss of income. Consequently, OnlyFans reversed the decision, highlighting a problem with Web 2.0 applications – a massive imbalance between content creators and platforms.

If a social media platform for the Web 3.0 ecosystem is built, then the development team of such a platform does not have the right to control the content on the platform – only the community members can do that. For example, if a political opinion is posted, then the platform cannot censor it but the users could by voting against the content, hence the power is shifted into the hands of the community, making the project decentralized.

Ownership

The ownership of digital assets on Web 2.0 is unstable and can be taken away from you without warning. For example, most games nowadays are directly tied to your account, and you don’t own them after purchase – they reside in a centralized cloud infrastructure. Therefore, if companies like Steam decide to close down your account or delete the game from the library, you will lose access.

Web 3.0 aims to overhaul this approach by giving you direct access to digital assets like cryptocurrency and NFTs (non-fungible tokens). You can store these digital assets in a non-custodial wallet and sell them later whenever you want. To access the assets in your self-custody wallets, the private key is required which must be protected by you. Hence, without these private keys, nobody can exercise any right to take those digital items away from you.

Native Payments

The payment systems in Web 2.0 have too many loopholes. The need to trust the centralized application, unpredictable changes in the policies, and the freezing of funds are just a few examples. High transfer fees and slow processing times also contribute to the inefficiency of these legacy payment solutions.

Utilizing cryptocurrencies like ETH allows users to save money on transfer fees and send money directly to other users in an instant without needing a third party. Lines of code will replace the oversight of third parties, which can be trusted to act predictably and fairly.

Identity

Identity management is not optimized across the Web 2.0 internet. You need to create an account with various platforms, remember your username/password, and keep them secure. On top of that, platforms can limit access to your account, thus censoring you.

However, Web 3.0 allows identities to be created using an ENS profile and an Ethereum address. Therefore, logging in to multiple platforms is possible via a single Ethereum address that is anonymous and, therefore, censorship-resistant.

Finally, it must be said that user data won’t be under the control of third parties in Web 3.0 because intermediaries are no longer necessary. This reduces the possibility of corporate or governmental censorship and the potency of denial-of-service (DoS) assaults.

Prior to Web 3.0, it was challenging to locate the most accurate result on search engines. However, over time, they have become better at identifying semantically relevant results based on search context and data on the web pages. Web browsing becomes more practical as a result, making it easier for everyone to find the precise information they need on the web pages.

What Are the Challenges of Web 3.0?

Web 3.0 is currently hampered by a few limitations and we will cover them in this section. Overcoming these hurdles is a key to ensuring the successful transition to Web 3.0.

User Experience

Currently, Web 3.0 applications don’t provide a good user experience. Firstly, understanding how to use these platforms can be complicated for newcomers. Users must understand the fundamentals of blockchain technology and refer to the technical documentation to get the most out of Web 3.0. Compare this to the optimized and fast onboarding process of Web 2.0 applications.

Also, the security concern must be understood by users before they can safely trade. For example, decentralized exchanges and cryptocurrencies are unregulated technology. Therefore, scams and cases of theft are frequent, so user protection is not adequate for mainstream applications.

Accessibility

You can take advantage of features like the Ethereum profile without a charge, but current transaction costs (gas fees) are too high. Also, the technologies required for accessing Web 3.0 infrastructure are not viable in developing nations where the average income is lower. For example, when the first mainstream metaverse goes live, users will need VR headsets that are expensive. The barriers to entry must be lower across all aspects of Web 3.0 for it to be a viable choice over Web 2.0 technologies.

Education

Overall, Web 3.0 is not difficult to understand, but it is significantly different. Therefore, users will need to do a lot of learning to familiarize themselves with the systems and functions at play. Educational content must also be translated into all languages to ensure users worldwide have equal access.

Final Thoughts on Web 3.0

To summarize, Web 3.0 will be a big change in how people do business, learn, communicate, and transfer value. Various technologies need to come together for Web 3.0 to take shape, including blockchain, cryptocurrencies, smart contracts, AI, metaverses, NFTs, and more. This will lead to a decentralized, inclusive, and transparent digital world where users are empowered to take control of their assets. However, multiple challenges need to be overcome before Web 3.0 is accessible to all.

It’s an exciting time in the Web 3.0 space as projects with large amounts of financial support push the envelope. Keep an eye on this space, as during the next few years, you can expect massive breakthroughs.

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