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Web3 has become a notable topic in the technology world over the past year. With interest in the concept showing no signs of slowing, we must return to the basics: what exactly is Web3?
The internet has evolved significantly since its initial creation the late 1990s. Supposedly, Web3 is the incoming generation of the internet, and we are already seeing some of its transformative applications in action.
In the beginning, there was Web 1.0. This was the early days of the internet, based on decentralised, open protocols. Most online activity was limited to consuming content through individual static webpages, with very little interactivity possible. Users could publish and contribute to internet content, but this required specialised technical abilities, like coding, to do so.
Then came our current era, Web 2.0. Also described as the ‘read/write’ version of the internet, this was much more interactive. Users without coding ability could create, publish, and consume content on blogs, internet forums, and marketplaces. The rise of social media sites such as Facebook, Twitter, and Instagram made content sharing even easier, their websites and applications designed in a way that allowed anyone to be a creator.
Despite the benefits of free services provided by Web 2.0, the public have become increasingly aware that this comes at the cost of personal information. The core of the Web 2.0 business model revolves around data. When we use websites today, the data supplied by our online activities is managed and owned by the companies. Thus, we do not have any real control over how our data is used or stored.
Today, most online activities take place on closed platforms owned by a very small number of large corporations, giving them huge power and influence that can be abused. Beyond concerns regarding our personal data being used to create targeted advertisements and informing our timelines on social media, there have also been more serious occurrences of data leaks. For example, Facebook has been embroiled in numerous controversies where they breached data privacy laws, resulting in the Federal Trade Commission issuing its largest ever penalty of $5 billion in 2019.
An issue of Web 2.0 is that it is controlled by a minority. These large companies are subject to coordinating with government regulators to work in particular industries, but there are also issues with this model.
Firstly, regulation of new industries is slow, problematic in the fast-moving technology industry. It requires development and implementation of government policy, and lack of sufficient government funding can make this process even slower and inconsistent.
Secondly, there are complexities if one wants to operate internationally. Regulators and laws vary between jurisdictions, and the current centralised model of Web 2.0 becomes increasingly obstructive as society and industries become more and more globalised.
Overall, supporters argue that Web3 is the necessary next step to rectify the internet’s current flaws.
In contrast to Web 2.0, Web3 is the ‘read/write/own’ phase of the internet. The main principle of Web3 is that it will be decentralised and will reduce dependence on large technology companies, giving the average user greater control over their personal data and even the directions online protocols take.
At the most basic level, Web3 is described as a ‘decentralised online ecosystem based on the blockchain’. There are advantages to using blockchain’s distributed ledger technology, a data storage method built around two key concepts of encryption and distributed computing for greater control.
Working together, the data stored can only be accessed and changed by permitted persons, even if the server it is stored on is owned by an external party. Data can be more securely stored and all activities regarding the data easily traced.
The blockchain basis of Web3 has made ‘cooperative governance’ of internet protocols possible. Users can become shareholders and active participants by acquiring tokens or cryptocurrencies representing ownership, which in return can be spent to vote on future protocols. Unlike Web 2.0 where all decisions are made by the dominant companies, Web3 somewhat democratises the internet.
We are already witnessing numerous Web3 applications in action, ranging from the financial to arts to social media industries. For example, Bitcoin transactions on the blockchain are secure yet ‘trustless’, meaning two parties do not a need a third party—like a bank, person or intermediary—to facilitate the interaction.
A non-fungible token (NFT) is perhaps the most widely known Web3 concept. NFTs can be created from tangible and intangible items and could grant the buyer exclusive ownership of the item the NFT represents. This has made a major impact in the digital gaming industry, where NFTs can allow gamers to become the true owners of their in-game assets, instead of the game developer.
As we can see, Web3 concepts and applications have great potential to reshape the internet. Unsurprisingly, there has also been scepticism regarding Web3.
One concern is that Web3 is not secure. Over the past year, there have been reports of Web3 developers struggling against theft and data breaches. The decentralised decision model means that no designated individual or party is responsible for monitoring nor resolving security issues. Until Web3 addresses these challenges, it will not be able to effectively achieve its goals of data privacy and secure transactions.
In addition, critics have voiced their concerns that Web3 is too idealistic.
While Web3 claims to defy the hierarchical control of Web 2.0, this does not necessarily seem to be sufficiently practiced. The term ‘decentralisation theatre’ has repeatedly been used, referring to blockchain projects that are decentralised in name but not in substance. There are still clear figureheads and dominant beneficiaries in the industry, undermining the positioning of Web3 as an egalitarian internet.
The goals of Web3 to offer more autonomy, transparency and security over their data has certainly shifted the way we think of the internet. As with any new technology, it faces challenges in development and regulation, concerns that do not necessarily outweigh the benefits of its services. Ultimately, Web3 has only just begun, and we must approach it with an open mind.
Mileson Qiang Guo is an entrepreneur and investor, and the founder of The Institute for Emerging Technologies and Social Impact (ITSI). He founded ITSI to foster debate and discussion about the social impact of emerging technologies amongst industry pioneers and policy leaders. The Institute aims to cultivate original research, share ideas and connect people with the shared goal of harnessing technology for the greatest social and economic benefit.