The Evolution of the Web
Web3 or Web 3.0 is a term that recently started to emerge and gained popularity with the rise of blockchain and cryptocurrency.
It comes after Web2 as a new generation of the internet. To understand it better it is best to start with a historical overview of the internet’s evolution.
Web1 or the original internet that started in the 90s wouldn’t have much to offer to today’s users. It consisted of mainly static websites that offered little or no user interactions making the users passive consumers of content.
Web2 or Web 2.0, the current version of the web, marks the change in the way how the internet is used.
The term was coined by Nancy DiNucci in 1999, but it was popularized in 2004 when the web was defined as a platform where software apps are built directly on the web by Tim O’Reilly and John Battelle.
More importantly, Web2 made its users creators and active participants in the creation of the content. Static pages of Web1 have been completely replaced with user-generated content, interactive websites, interoperability and direct user participation.
With every innovation Web2 has set demands for traditional institutions to follow. This shift marked the new era of the internet and gave birth to giants in the tech industry: Facebook, Google, Twitter, YouTube etc.
Innovation and interactivity of Web2 came with a price: it’s built around centralized authority and provides service In exchange for the user’s personal data.
In other words, Web2 operates on the concept of centralization where few companies dominate and control the internet, acting as third-party entities that vouch for the data security of the users.
Web3 or Web 3.0, the term was popularized by Gavin Wood co-founder of Ethereum, is the next logical step in the internet (r)evolution. Philosophy of the web3 is based on the blockchain technology of decentralization, cryptography protocols, AI and ML (machine learning) making the users owners of the data and information they exchange.
Web2 concept of centralized authorities in charge of users’ data security will be replaced with the Web3 concept of decentralization, where data is not stored in one place but many computers scattered around the world.
To say that users’ data is left without any security would be a stretch and it is solved by introducing DAO – Decentralized Autonomous Organization which stands for collective governance equally distributed among stakeholders.
In simple terms, DAO does not have a human factor, it operates on computer programs and code which are transparent. Decentralization of Web3 is denying “one person” changes in DAO’s structure or code making it transparent and more trustworthy. But, changes are possible.
Any change in DAO structure or code requires voting to take place, all stakeholders will vote on proposed change and depending on the result, DAO’s code can be modified.
DAO’s operate by rules set in smart contracts – those contracts govern how operations are handled within DAO. Smart contracts represent digital protocols for data transfers that use mathematical algorithms for automatic transaction execution, after the specified conditions and full control of the process are met without human factor.
Centralized technology and apps of Web2 will be replaced by DApps – apps developed on blockchain technology and use of cryptography protocols promising users transparency and autonomy over the data and information they share.
Main features of Web3
Everything is receptive to change and it’s only natural, even more so, for the internet to go through changes. From Web1 and currently active version – Web2, Web3 is a new generation of the web.
Main feature that Web3 brings, compared to its older sibling Web2, is decentralization. Web2 based concept of centralization and the need for “gatekeepers” or “authority” of the internet is to be replaced with DAO, giving more control to the users.
In simple terms, this means direct contact without third-parties involved. While Web2 technology is monetizing users’ data, Web3 technology is making users owners of their data. Freedom and transparency that Web3 offers are imprinted in the DAO’s code and structure with smart contracts, simplified – digital protocols, ensuring everyone abides by the rules.
Even though it comes with many advantages in terms of decentralization and what it can offer to the users, Web3 is still in the early stages of developing, there are some things that ask for our attention.
Decentralization is Web3’s main feature but it opens uncharted territory when it comes to customer protection and new security threats. Also, the speed of the data procession is low due to decentralization. At its current stage, Web3 integration requires time and knowledge for the common user making it difficult to use.
But it needs to be acknowledged that Web3 is just at its beginnings and it has a long way before overshadowing Web2. This also means that there is time to upgrade and make it safer and more accessible for the common users. But there is no doubt that Web3 and everything that comes with it is the future for us all.
The current state of the industry
Industry surrounding Web3 is still trying to find firm ground, thankfully, technologies on which Web3 is based upon are making it easier.
Industry that has seen the biggest expansion and benefits from opportunities that Web3 technologies have to offer is IT. Uncharted territory of blockchain and possibilities it has to offer is attracting the giants of the tech industry with Facebook announcing a shift to the Metaverse (3D VR world where people can socialize, work, play etc).
But, to take a step back from “web based industry” and IT giants there is one traditional industry that blockchain may affect the most in the future – Financial industry.
Decentralization of blockchain has allowed freedom, transparency and peer-to-peer contact with DAO ensuring no one can abuse that trust. Everything connected to DAO has great potential in replacing traditional ways of managing one’s finance. It would allow users to take complete control over their own finances and would erase intermediaries needed for completion of transactions.
The name of that mechanism is DeFi, short for Decentralized finance. Blockchain is allowing removal of the middlemen and allowing transactions directly between users.
With the help of DAO and Smart contracts, DeFi is ensuring execution of trades and transactions in a fair and trustworthy process. That means, not only banks but insurance companies, real estate companies and everything connected to the financial sector would have to restructure and redefine systems they are based upon.