The Web3 — What It Is (And Isn’t)

A simple and clear definition of the Web3 — and why it changes everything.

Please note that there is a lot of confusion and unclear usage of the term “Web3” out there. First mentions of this term date back to 2006, with Markoff’s much-regarded NYT article, and 2007, when the W3C CEO Steve Bratt published a paper titled “Web 3.0 Emerging”. Following his work, the “Web 3.0” was, and is to this day, often largely understood to equal the “semantic web”, where “tasks often require combining data across the internet” (Bratt, 2007).

This work, however, follows a different understanding and terminology commonly used in the blockchain community, where the “Web3” is synonymous with the “decentralized” or “autonomous web”.

Notwithstanding, there are some commonalities and links between both definitions of Web3(.0). The understanding, however, also seems to stem from the conviction that the W3C’s version of the Web3 has never been fully realized.

As a blogger and writer, I have (for a long time) carelessly read over the term “Web3”, until at some point I saw it being mentioned in so many ICO White Papers, by projects who aim to offer the breakthrough enabler of this revolutionary new technological age and era, that I finally decided that I just had to look deeper into it.

My searches on the concept, however, were not particularly revealing, and I quickly realized that there were many confusing and opposing definitions of the term. It wasn’t until I finally stumbled upon a ConsenSys webinar that I saw a terminology which clarified things for me.

Given that there is an ever-increasing debate about an important concept with which there seems to be a lack of basic consensus (what an irony…), in this post, I want to help provide more clarity and understanding as to what large parts of the blockchain community seem to (implicitly) mean by a Web3, and how it is different from Web2 and Web1.

Creating the Context — Web1 and Web2

Of course, any serious attempt at defining and characterizing the Web3 must begin with a discussion of what came before: Web1 and Web2.

The Web1 begins in the early 1990s and — according to some — it lasts until the early years of the new millennium, and represents the early days of the 2000s; it represents the early days of the World Wide Web being used by more and more people to search for, and consume, information.

Web1 — The Static Web

In the Web1 (1.0) also entitled “the static web”, users make use of Netscape Navigator or Internet Explorer to open static websites which contain only text and very few graphic elements (if any). This is also due to the limited bandwidth provided by Internet modems or ISDN connections that enable connection to the Internet in the first place.

The Internet is furthermore enabled by the TCP/IP protocol, which allows users to open HTTP addresses in their web browsers. Data is stored on web servers hosted by webhosting providers, while the data is exclusively published and owned by its creators, who provide information to users limited to the role of consumer. More advanced protocols are also developed for specific purposes, such as the file transfer protocol (FTP), but all of them are based on the TCP/IP protocol.

The Web1 revolutionized the way information was shared and communicated, and allowed a democratization of knowledge, as anyone with a modem and web browser could now access and read publicly available information.

Naturally, as groundbreaking as it was, the Web1 was limited in its functionality, facing numerous shortcomings that companies, developers and technicians all sought to overcome.

The biggest limitation was certainly the static nature of the content, causing incorrect (and sometimes misleading or outdated) information to be shared, but — most importantly — caused the lack of interactivity between the content creator and the reader/user.

Hence, this restricted web users to the passive role of information consumer, thereby foregoing an improvement of the quality of provided contents. Hence, it was sometimes also described as “read only”.

Naturally, these challenges gave birth to…

The Web2 — The Programmable Web

The much-celebrated Web2 (2.0) began to develop in the first years of the new millennium. Some have called it the “programmable web”. It is powered by more advanced protocols, allowing for a new degree of information exchange and interactivity.

It gives rise to the dominating medium in the Web2 — social media or social networks such as Facebook, YouTube and Twitter. Equally importantly, it is technological enablers like the increasing availability of high-speed broadband connections, as well as the unstoppable proliferation of smartphones from 2006 onward, that set the scene for a more colorful, multimedia-filled Web2, full of audio and images/videos.

Communication is changed from bilateral to multilateral, the web turns to “read-and-write”, and users change from the role of consumer to more active “prosumers”, with this term reflecting the blurring nature between data producers and data consumers.

Moreover, the Web2 describes the ability to connect applications with one another, as in the case of markups, e.g. combining a geographic mapping with a photo-sharing service (Markoff, 2006).

While connected, complex web applications and social media completely change the way in which we interact. One further development is also descriptive of the Web2: online shopping spreads unstoppably, as e-commerce providers like Amazon enable 24/7-purchasing from an unprecedented assortment of products.

Praised for all its amazing accomplishments, which are focused around easier, cheaper, and faster communication and the spreading of messages around the world (case in point: the role of social media in the Arab Spring), the Web2 also brought about a number of massive downsides, arising from market participants realizing their visions and economic interests.

The Web2 turned out to be a “winner-takes-it-all-market”, in which data ownership becomes centralized and monopolized between a handful of omnipotent, global tech titans. These social media platforms turn their users into data producers and valuable data profiles, with companies monetizing their user’s personal data by selling out space for ever-better-targetable ads on their platforms, in order to appeal to the very users that build those systems in the first place.

All told, four big and central problems result from the enormous market power and centralized data ownership (Raval, 2018)

Lack of competition: not only means that it is impossible for startups to rank in here, it also makes power-mongering and abuse very likely, as well as overcharging users.

Data ownership is centralized: most of the world’s data is centralized with Google, Facebook and Amazon, which monetize personalized data for huge profits — and in return, users get free service access, without participating in the monetization of their data.

Lack of accountability: the huge data owners are not held accountable. Once we have agreed to share personal data, it is hard to know what is being done with the data.

Data abuse/theft: big centralized data storage represents a single point of failure and an attractive attack goal for hackers who can steal vast amounts of data with the aim to potentially sell or abuse them. Naturally, data abuse can also happen by the large entities themselves.

All of these issues call for a powerful revolutionary solution. Some believe that we have found it with the emerging…

Web3 — The Decentralized Autonomous Web

The Web3 was originally born with the publication of the Bitcoin White Paper in late 2008, which gave the first workable solution to a decentralized peer-to-peer digital currency that could overcome the double spending problem. Drawing upon previous concepts and works, it combined cryptography to create transaction data that was hashed and stored in a connected chain of cryptographically-sealed blocks which served to make transaction data immutable and practically unhackable.

While blockchain technology represents the technological foundation, it wasn’t until 2013, when Vitalik Buterin introduced his smart contracts and dApps-platform Ethereum, that the vision of the Web3, the decentralized web, could finally be conceptualized.

The “decentralized web” describes a web in which decentralized, distributed networks run by independent nodes on their computing power-delivering computers host, and provide the necessary infrastructure to run self-executing, programmable agreements — smart contracts — without them being controlled by a single central entity.

The Web3 is powered by blockchain technology, cryptography, enormous amounts of computing power, smart contracts, and decentralized apps (“dApps”). It turns users from prosumers to co-creators and co-owners of infrastructure and network.

Most importantly, however, it also solves the problems of centralized data ownership, data abuse, and theft, because of its decentralized nature. The advent of self-sovereign identity management gives users full control over their own personal data.

The blockchain not only provides for an immutable record of all time-stamped access attempts to personal data, thereby preventing theft and abuse; it also enables users to only share their data with those parties or entities which they themselves deem appropriate. Combined with an adequate cryptocurrency, monetization of data and direct payment to users now becomes possible.

Moreover, since decentralized apps are not managed by a central entity, they are censorship-resistant. Hence, no evil government or entity can shut them off. Automated transactions through smart contracts also carry with them the promise of cost reductions and efficiency gains, resulting from lowered transaction costs.

Possible Implications of Web3 on Individuals, Businesses and Society

At this point, with the blockchain being such a young, dynamically-evolving and incredibly promising technology, it is almost impossible to give a comprehensive, all-encompassing outlook as to what the Web3 can mean for businesses, individuals and society as a whole.

This section, therefore, will attempt an inevitably incomplete (and somewhat vague) outlook into how our world may stand to change, due to the Web3.

We can look at a decentralized economy as the ultimate scenario and development stage, which can be seen as a universe. Because of decentralized networks, blockchain and exciting intersections with AI and IoT, it can potentially deliver solutions to the whole world we cannot even foresee yet. Self-sovereign identity will become the new standard in the next five to seven years, and thereby change many existing problems, as well as a predatory winner-takes-it-all landscape.

The Web 3.0 will bring about many new business models and offer startups new opportunities to compete on a level playing field. While it is true that 85%+ of ICOs were scams, among the remaining 15% are some of the winning projects that will become big corporations and giants of the Web3 — we just don’t know yet who of them will make it.

Most importantly, however, Web3 offers the promise to finally produce what Web1 and Web2 promised but ultimately failed to deliver: a level, more even playing field and democratic nature of data sharing, greater control for the individual regarding as to how and when their data will be shared, more equal cooperation at eye level between players of different size, and a more secure and accountable business world through tamper-proof, immutable records and unchangeable, transparent audit trails which serve as a serious warning to all those who would even consider engaging in criminal activities.

While this article has placed its focus on the blockchain technology as the enabler of Web3 — the decentralized web — it is also important to specify its concrete function, and to highlight that additional technologies are required in order to realize the full vision of what the Web3 could become.

A full deep-dive would be beyond the scope of this article. Therefore, a short excerpt and reference to a model laid out by German blockchain expert Shermin Voshmgir shall suffice, in this instance.

As the model below shows, the blockchain’s role in the Web3 is to provide the basic protocol, as well as the decentralized processing power for the Web3 to run. A decentralized storage solution (like the promising IPFS standard) is also required, as well as decentralized database solutions and protocols for transaction communication. Ultimately, these building blocks will enable the execution and usage of decentralized apps which represent the application layer and allow for seamless usage by end users.

The Ultimate Vision For Web3: A Decentralized Economy

Let’s start with the end in mind. The ultimate vision that stands at the end of realized decentralized applications and Web3 is a decentralized economy — admittedly, another vague buzzword that could be taken to mean a thousand things.

In my understanding, this is about a more democratic, inclusive economy, in which empowered users have more influence and control, and a more even distribution of power between smaller and bigger companies is achieved.

Generally, as users with computers may often be a producing part of the very networks and ecosystems that they serve, the line between producers and users is going to be blurred.

However, decentralized networks are what strike me as the most fundamental cornerstone of a decentralized economy. As economies are ultimately about how value is created and exchanged, these networks and their dynamics are the decentralized economy at heart.

The decentralized economy will consist of many decentralized networks centered around specific purposes or decentralized applications. One great example is artists’ networks, wherein content creators get directly rewarded in tokens by the content consumers of the same network. The platform STEEMIT, with its token STEEM, is probably the most famous example of one such decentralized community.

The combination of a more even playing field and an empowered consumer, most of all, will result from the self-sovereign identity, and ultimately become the new standard in digital identity management. Personal data, under the ownership and full control of only the users, will mean an end to identity and data theft, as well as much more stringent privacy protection.

Then there are fascinating intersections with the Internet of Things. The blockchain can represent a secure, tamper-proof communication layer, through which secure transaction and machine-to-machine communication can take place. Tokens like IOTA could be the solution for cost-free microtransactions between IOT-enabled machines for rendering and consuming services.

Another avenue to be explored is blockchain as the basis for AGI — Artificial General Intelligence. This term describes AI that goes beyond the mere imitation of human intelligence in a single domain, and is instead able to generalize. It is self-learning, self-teaching, and can learn any human skill, while at the same time being able to harness machine learning features, such as much faster calculation and computing capabilities. Again, a full deep-dive is a topic for another time, but blockchain can represent a valuable solution for keeping AI within narrower, pre-determined limits, and avoiding the realistic risk of becoming uncontrollable, and potentially harmful, to the human race.

Pioneer Kristen W. Carlson, professor at Cornell University, has proposed for DLT to be there to keep AGI in check, e.g. by providing an immutable audit trail, or by separating AGI components into distinct, decentralized apps. Her reasoning is that AGI development is too fast for humans to track, hence, we need to pre-code certain limits into smart contracts for AGI.

Another use case is for blockchain to represent the distributed infrastructure for the execution of open-source AI algorithms, available to be used by anyone. This, combined with the token for settlement of usage fees, is the vision of the KaaSy project — KaaS standing for “knowledge as a service”.

Overall, decentralized autonomous organizations and the usage of tokens to represent voting power enabled by smart contracts allow for decentralized or community-controlled companies, with broader, more inclusive governance. And since anyone who owns tokens can participate in governance decisions using smart contracts — from wherever they are in the world, and at practically zero transactional costs — decentralized governance becomes feasible, if it is deemed appropriate and meaningful.