Web1 began in the 1990s as a read-only system for viewing information. Web2 later entered the picture, offering the ability to co-create and share ideas, regardless of who you are. Now, Web3 is making its foray into the internet with the ability to co-own a slice of the digital economy. From the humble read-only origins of Web1 to the community focused shift of Web2, Web3 is the latest evolution of the internet that leverages blockchain technology to create a trustless and immutable system that doesn’t rely on intermediaries, thus achieving efficiency, privacy, and digital ownership for all. So what is Web3, how does it work and what can we expect?
Web3 is often described as the next generation of the internet: a decentralized, permissionless web experience powered by distributed ledger technology (DLT) and cryptocurrency. Simply put, Web3 puts the power in the hands of users and creators.
Its user base has taken up the technology to create a vast ecosystem of new ways to interconnect money with the internet. From non-fungible tokens (NFTs), play-to-earn games, and more, Web3 is opening the doors for entirely new ways to monetize the internet.
The privacy-focused Brave browser and the Solana software wallet Phantom are both great examples of Web3 companies. Implementation of Web3 includes the MakerDAO, one of the largest decentralized apps (dapps) on the Ethereum blockchain, Decentraland, a globally-accessible metaverse, and more.
To understand what Web3 is, we must trace its evolution back to the beginning.
Web1 was the first iteration of the internet that provided basic information and static web pages, mostly run by individuals. From there, Web2 evolved to define the modern-day internet and revolutionized communication through the creation and extensive use of social media networks. Web3 is laser-focused on bringing power back to the people through a virtual medium. The internet is made up of everyday people, but is owned by a select few institutions. Web3 wants to be self-driven by its users and built upon public infrastructure that’s credibly neutral and universally accessible.
There is a lot more to Web1, Web2 and Web3, so let’s break each one down further.
An Overview of Web1 and Web2
Because each evolution of the web was built on top of the prior version, it is vital to understand the differences between Web1 and Web2. This will not only help distinguish the features of Web2 vs Web3, but it will also help expand on the current Web3 definition to fully understand what Web3 is.
What is Web1? Web1 technologies include these core components: HTML, HTTP and URI. In these early years of the internet, web pages were static and limited to read-only content. At the time, the purpose of web use was simply informational. Web1 created an online presence that provided information to anyone at any time.
Web2 was a major step up from Web1 by introducing read-write abilities. Whereas Web1 pages were static, Web2 pages offered various information, user-to-user interaction, content creation and blogging. The evolution to Web2 also meant internet applications could be read from and written on by users.
Over just a few short years, Web2 applications have fundamentally altered how we shop, how we socialize and how we create content. E-commerce web apps bring the checkout line to the living room, with websites like Amazon, Alibaba, Ebay, and more.
Social networking Web2 applications such as Facebook and Twitter allow users to meet new people, socialize with friends, and more. User-made content hit the scene around the same time and continued to grow with applications like Pinterest and TikTok.
What is Web2’s greatest change from Web1? The ability for different applications to communicate with each other using application program interfaces (API). And yet, as much as Web2 was superior to Web1, the differences between Web2 vs Web3 are equally astounding.
A Look Into Web3 Today
If Web1 involves static read-only web pages, and Web2 integrates read-write web applications, then what is Web3 and how does it work? The first use of the term “Web3” was by Ethereum co-founder and founder of Polkadot, Gavin Wood, shortly after Ethereum launched in 2014. In essence, Web3 is built on an open-source foundation of decentralized protocols that uses blockchains, cryptocurrencies, and NFTs to empower users in the form of ownership. Web3 is built for individuals and strives to uphold individual privacy.
Web3 is decentralized. This means that ownership distribution goes to builders and users, as opposed to Web2 applications which are largely owned and controlled by centralized corporations. Web3 is also open-source and permissionless, in that all users have equal access to participate in Web3 applications that no one can be censored from accessing it.
Web3 has native payments. While Web2 applications typically rely on the legacy bank infrastructure and related payment processors, Web3 uses cryptocurrency for making purchases and transferring funds.
The final major feature of Web3 is that it is trustless, meaning that rather than relying on third parties (companies with Web2 applications) to operate, it uses smart contracts and consensus mechanisms. In Web2, user-generated content often ties to the platforms and is subject to censorship, it’s easy to see why a trustless and decentralized foundation is important.
What is Web3 Used For?
Web3 gives the user ownership of their data. Every user owns their data and can decide to monetize it. In contrast, items purchased on Web2 applications are at the whim of the companies who created the items. If a user’s account is deleted, all the information associated with it is deleted as well. With Web3, purchase items are safe from deletion, protected and stored on cryptocurrency wallets. This is because of its decentralized properties; centralized entities have no control over what lives online and what doesn’t. Rather, the community upholding the network gets to decide, providing a much more fair internet for everyone.
For example, in today’s virtual economy, in-game items belong to the game creators, leaving the jurisdiction as to how they’re used up to the developers. People may spend endless time and energy into these games collecting virtual goods, but have no flexibility or value to show for their efforts. Web3 flips this system on its head, enabling the players to take ownership and do with their in-game items what they see fit. It opens up and monetizes a previously controlled economy, giving players the option to trade in their work in the virtual world for real world rewards.
Or another example, in the case of social media, the platforms own the content. Users are able to share their ideas, but those ideas reside in the servers of Web2 platforms. With Web3, users can take control of their own thoughts and content, thus changing the way we interact with online platforms and each other.
Web3 is used to maintain pseudonymity. On Web3, your wallet is your identity, which isn’t easily linked to your actual identity. When you think about how much personal information platforms require on Web2 versus Web3, and how often Web2 data breaches occur, there is no doubt as to the superiority of Web3.
By design, Web3 is democratic, as apps are run by decentralized autonomous organizations (DAOs). Web3 payments utilize cryptocurrencies to send money without the need of a trusted third party.
Web3 is a way to not only own what they create, but to even own a slice of the platform itself. Cooperative governance and ownership structures are easy with Web3 thanks to DAOs that allow for collective decision making.
It’s important to note that Web3 is still not entirely decentralized in its current form. Although Web3 platforms are working towards complete decentralization, many Web3 users still rely on centralized platforms like Discord and GitHub.
Learn More About Web3
Web3 is an evolving ecosystem, with upcoming developments in Web3 right around the corner. While Web2 is still entirely relevant, the rapidly-expanding Web3 will host the future of online interaction.
To learn more about this fervently growing ecosystem, be sure to check out the FTT DAO blog for more educational resources. Follow FTT DAO on Twitter, and follow the FTT DAO YouTube channel to keep up with FTX news and the latest developments in Web3 crypto.