What is Web 3?

In recent, Web3 has suddenly become a hot topic. Leaders in the traditional technology industry and the emerging blockchain industry have participated in this discussion with their different perspectives on the history and future of the Internet. Before discussing Web3 in detail, let's quickly review how the concept has evolved.

The proposed background of web3


The concept of "Web 3.0" was originally proposed by Tim Berners-Lee, the inventor of HTTP, during the Internet bubble, and refers to an integrated communication framework where Internet data can be machine-readable across various applications and systems. Web 3.0 is also commonly referred to as the "Semantic Web".


By 2014, Ethereum co-founder Gavin Wood redefined the term Berner-Lee coined to refer to a blockchain technology in a blog post titled "DApps: What Web 3.0 Is". "Innovative modes of interaction between parties" can be implemented based on "trustless interaction systems". The focus of this article by Gavin Wood is not cryptoassets, but protocols and technologies such as consensus engines and cryptography. These protocols and technologies enable more robust social contracts on the web. He later elaborated on the ultimate goal of Web3, which is "less trust, more facts." Now, many people have different views on this concept. Both traditional technology companies and the emerging blockchain industry are constantly thinking about what the core value proposition and protocol of Web3 are, and what impact it will have on the future trust model.


This article will define Web3 according to the development history of the Internet, introduce the key technologies of the Web3 technology stack in detail, and discuss the current and future development of Web3.


History of the Internet: From Web 1.0 to Web 2.0


Most people think of the web as the continuing backbone of modern life - it was invented and has been around ever since. However, the Web as most of us know it today is very different from what was originally imagined. To better understand this, it is helpful to divide the history of the Web into several periods - Web 1.0 and Web 2.0 .


Web 1.0: Read-Only (1990-2004)


In 1989, at CERN in Geneva, Tim Berners-Lee was busy developing the protocol that would become the World Wide Web. Their idea is to create open, decentralized protocols that allow information to be shared from anywhere on the planet. Berners-Lee's first creation, now known as "Web 1.0". Web 1.0 was the first phase of development of the Internet, which lasted from 1994 to 2004, with the emergence of social media giants such as Twitter and Facebook. Web 1.0 was mostly static websites owned by companies with close to zero interaction between users, and it was known as the read-only web.


Web 2.0: Read-Write (2004-now)


The Internet underwent a metamorphosis around 2004, when the Internet had developed in terms of speed, fiber-optic infrastructure, and search engines, so user demand for social networking, music, video sharing, and payment transactions rose dramatically. Users' demand for social attributes has also spawned many Internet companies today, such as: Facebook and Twitter. With the advent of social media platforms, the web is no longer read-only, but has evolved to be read-write. Instead of companies providing content to users, they started providing platforms to share user-generated content and engage in user-to-user interactions. This new, more interactive Internet feature enhances the user experience. But with it comes the problem that users must authorize centralized third-party platforms to manage large amounts of data if they want to use these new features. Therefore, these centralized entities are endowed with enormous power and influence in terms of data and content authority. Web 2.0 has also given rise to ad-driven revenue models. While users can create content, they do not own it or benefit from its monetization.


Web 3.0: Read-Write-Own


The premise of 'Web 3.0' was coined by Ethereum co-founder Gavin Wood shortly after Ethereum launched in 2014. Gavin put into words a solution for a problem that many early crypto adopters felt: the Web required too much trust. That is, most of the Web that people know and use today relies on trusting a handful of private companies to act in the public's best interests.


Web3 definition


Web3 is a decentralized Internet that aims to create a new contract system and subvert the way individuals and institutions reach agreements. Web3 replicates the decentralized infrastructure of the first version of the Internet (ie, Web 1.0). Web 1.0 features users' own blog sites and RSS feeds. On this basis, Web3 also combines the rich interactive experience of Web 2.0, such as social media platforms. The combination of Web 1.0 and Web 2.0 forms the digital ecosystem of Web3, in which users can truly own their own data, and transactions are protected by encryption technology. Instead of trusting brand endorsements, users can rely on deterministic software code logic to strictly enforce the protocol. Web3 has become an all-encompassing term that represents a vision for a new and better Internet. A post on Twitter in 2020 said it best: Web1 is read-only, Web2 is read-write, and Web3 will be read-write itself.



Web3 core idea


Web3 is decentralized: instead of a large swathe of the internet controlled and owned by a centralized entity, ownership is distributed among its builders and users.


Web3 is permissionless: everyone has equal access to participate in Web3, and no one is excluded.


Web3 has native payment capabilities: it uses cryptocurrencies to spend and send money online, rather than relying on the outdated infrastructure of banks and payment processors.


Web3 is trustless: it operates using incentives and economic mechanisms rather than relying on trusted third parties.


Why is Web3 important?


While Web3's killer features aren't isolated or fit into neat categories, we've tried to keep them separate for simplicity to make them easier to understand.


Ownership


Web3 gives you ownership of digital assets like never before. For example, let's say you're playing a web2 game. If you purchase an in-game item, it is tied directly to your account. If the game creator deletes your account, you will lose these items. Alternatively, if you stop playing the game, you will lose the value invested in in-game items.


Web3 allows direct ownership through non-fungible tokens (NFTs). No one, not even the creator of the game, has the power to take away your ownership. And, if you stop playing, you can sell or trade your in-game items on the open market and get their value back.


Censorship resistance


Censorship resistance is the idea that neither party can prevent anyone from participating in a given platform or network. In a blockchain system, censorship resistance ensures that all the rules governing the network are made and followed equally by users and cannot be changed for personal gain. Censorship-resistant blockchains ensure that all transactions within the network are protected from potential interference, making them immutable. Once a transaction is complete, it is distributed to all nodes in the network and is nearly impossible to change. This property was first introduced by Bitcoin but has since been adopted by a wide range of crypto projects.


On Web3, user data resides on the blockchain, and all data is free from platform intervention. Therefore, the censorship-resistant properties of Web3 will also be more conducive to protecting the rights and interests of creators.


Decentralized autonomous organizations (DAOs)


In addition to owning your data in Web3, you can also own the platform as a collective, using tokens similar to company shares. DAOs allow you to coordinate decentralized ownership of a platform and make decisions about its future.


DAO is technically defined as an agreed smart contract. Once a smart contract is deployed on the blockchain, its transaction records and rules can only be maintained on the blockchain. In the blockchain, this public consensus rule is guaranteed to be executed through open source smart contracts, and its security and certainty are guaranteed by the blockchain itself.


DAO usually does not set up decision-making layers and management layers, but adopts the method of community democratic voting to govern. Users who own tokens vote on how resources are used, and the code automatically executes the voting results, thereby achieving democratic autonomy.


However, many Web3 communities are defined as DAOs. These communities all have varying degrees of code decentralization and automation. Currently, we are exploring what DAOs are and how they will evolve in the future.


Identity


Traditionally, you would create an account for each platform you use. For example, you might have a Twitter account, a YouTube account, and a Reddit account. Want to change your display name or profile picture? You must do this on every account. In some cases, you can use social logins, but this introduces a familiar problem - censorship. With just one click, these platforms can lock you out of your entire online life. To make matters worse, many platforms require you to trust their personally identifiable information in order to create an account.


Web3 solves these problems by allowing you to control your digital identity using an Ethereum address and an ENS profile. Using an Ethereum address provides secure, censorship-resistant, and anonymous single sign-on across platforms.


The Application area of web3


Web3 combines decentralization and interactivity, creating a new Internet model. In it, users can interact directly, bypassing intermediaries. dApp users can access financial instruments without permission, trade crypto assets peer-to-peer, get parametric insurance claims, trade digital artworks with verifiable ownership via NFTs, and earn money in-game. All of these activities can be carried out directly, bypassing the intermediary completely.


The builders of Web3 hope to create a more fair and open Internet through this innovative architecture, where users can directly interact and trade. At present, Web3 applications using the three core technologies of blockchain, smart contracts and decentralized oracle networks have realized a wealth of use cases, subverting various industries such as real estate, education, finance, gaming, and medical care, and are bound to become More other industries will be disrupted in the future.


Decentralized Finance


Web3 technology enables individuals to create and participate in financial agreements with unprecedented inclusivity, security and transparency. Another well-known name for this innovative economic model is Decentralized Finance (DeFi).


Unlike traditional financial services, DeFi protocols utilize decentralized blockchain infrastructure and secure data input from oracles to help users trade directly in a transparent and tamper-proof on-chain market. Take the decentralized currency marketplace Aave as an example: Aave has secured over $12 billion in value for smart contracts by integrating Chainlink oracles. The protocol adopts a non-custodial model, and its users can lend and borrow peer-to-peer. Money markets are a key pillar of the healthy functioning of the economy. The on-chain currency market decentralizes control and utilizes predefined smart contract logic, which can reduce participation thresholds and single-point failure risks, and avoid systemic risks and insufficient reserves.


The innovative financial application of DeFi is currently the most striking development of Web3, however, Web3 is far more than financial transactions, but also includes various fields in the Internet world, from entertainment to social media to browsers.


NFTs, Games and the Metaverse


NFTs, blockchain games and the metaverse are emerging forces in the Web3 ecosystem. NFTs provide verifiable ownership of digital assets, giving these digital goods the same uniqueness as physical assets. With NFTs, digital assets can be distinguished from each other even if they look identical, just as two identical books in the real world can be distinguished by their unique markings and wear marks. This is significant for digital artwork, metaverse applications and games.


The future of Web3


Web3 is a young and growing ecosystem, and more and more users have begun to realize how important trustless interactions and cryptographically secured protocols are. While Web3 is still in its infancy, it has the potential to restore the Internet to what its designers had hoped: complete transparency, reliability, and ease of use. Today's Web3 application scenarios cover the fields of DeFi, NFT, and tokenized ownership, but this is just the beginning. This technology will permeate every aspect of people's daily lives in the future as we continue to improve the infrastructure that supports it. The future of the web3 looks bright.