There has been a lot of hype around Web3 lately, and rightfully so. It is a fast and exciting new thing that seems extremely promising. It is my intention with this blog post to give a high level understanding of what Web3 is, its benefits and also its drawbacks. Although there have been many of these types of posts already, I am writing this for my own understanding. If reading this happens to help someone else, all the better!
The internet as we know it has almost completely ingrained itself into our everyday life. People have been able to connect in ways never known before, while online shopping has changed the face of commerce forever. While all this is great, the current architecture favors big companies that have the resources required to run the networks we rely on so heavily. These companies ultimately control the data flow which means they are the ones with all the power.
Web3 is a paradigm shift, the natural evolution of the internet. A decentralized network without a single point of failure and unable to be censored. What does this all mean? In order to understand exactly what Web3 is and the problems it solves, we first need to understand it's predecessors.
Web1 vs Web2 vs Web3
Web 1.0
The first iteration of the web began roughly around 1991 and lasted to about 2004. In this time, developers would make a website that users could navigate to and take in the information, usually just in text or image format. So the average user was just a consumer of content and could not upload their own. It was a very one-way interaction.
Web 2.0
Web2 marks an era where users could participate in the creation of content online. Where we are at currently, you don't have to be a developer in order to post your ideas to the web. You could create a video, upload it and have other users interact with it through watching, sharing or commenting. Write a blog post directly online, even create entire websites without touching a line of code.
Through sites such as Facebook and YouTube, people are able to interact in ways that were not possible before. You could make friends with people across the globe and easily communicate with them. This international collaboration created new opportunities for everyone. Businesses are now able to exist entirely online. E-commerce has exploded, making the purchase of goods as easy as pressing a button.
There are a few major drawbacks however. First, the networks these websites run on are entirely centralized. This means that the owners of the network are in complete control of the data flowing in and out. This has resulted in companies selling its user's data for vast amounts of money, while the average user gets nothing in return.
Second, because of this centralization, it creates a single point of failure. All one would have to do to take down an organization's site is to attack its servers. This issue doesn't even have to be an attack. Just recently, Facebook's entire digital infrastructure, including Instagram and WhatsApp, was taken offline apparently due to a configuration change. Millions of people who rely on these services for everyday communication were unable to access them for up to 12 hours.
Thirdly, the operators of these platforms have the power to censor anyone who uses them. They are in control of deeming what is appropriate for users to interact with. If Twitter decides your content doesn't match its guidelines, it could get taken down or worse, you could be banned.
Thankfully, Web3 aims to solve these massive issues and bring us into a new era of interactivity online.
Web 3.0
Web3 is essentially a decentralized version of Web2 which aims to give power back to the people that use it.
It is decentralized in the sense that the entire network, called a blockchain, exists on many computers around the globe, not just a few server locations. In order for any changes to be made to the blockchain they need to be agreed upon by the people running the network. This makes the whole system more democratic, as anyone can operate a node and participate in this process.
It's important to note that blockchain technology itself is not Web3. It is just a tool to help facilitate this new era of internet.
This inherent decentralization forces companies to find a new way to make money online instead of harvesting its users data. They would no longer be the sole holder of this information, thus making it impossible to monetize.
Because the network is spread out over a vast array of computers, this also eliminates the vulnerability of having a single point of failure. In order to take the network down, someone would have to attack all the computers in the network at the same time, which is virtually impossible.
As for censorship, since all the data lives on the blockchain, it can never be taken down or covered up. The data is not controlled by any one party, it exists on every single node of the network so anyone can see what was uploaded by which address and when.
Improvements
Not only does Web3 aim to fix issues with the existing architecture of the internet, it also seeks to add improvements to the experience as a whole.
One major improvement is the use of cryptocurrencies as a payment gateway. Currently, if you want to send someone money across the globe it is a huge process involving a mediary such as a bank. You have to physically go to the bank, pay them a fee, sometimes answer questions about why you are sending money in the first place, and after all that, it can still take a few days for your money to reach its destination.
With cryptocurrency being native to the internet, once you have the coins in your wallet, all it takes to send someone money is to paste in their wallet address, choose the amount you want to give them, then hit send. That's it. Depending on the cryptocurrency used, this could take a few seconds or minutes. Not days.
Outside of sending cryptocurrency, in order to interact with Web3 sites, a user will need to set up a wallet. The two most common ones are Coinbase Wallet and Metamask. These wallets basically act as a single sign-in for the entire Web3. You only need to make one account, click the button to connect your wallet, and you are good to go.
This makes things so much easier for the average user. You only need to manage one password for the entire web and if you want to pay for something, your wallet is already connected so it's just a few button clicks. On top of that, no personal data is required to login to these sites and anyone can get a wallet and use the network, making it permission-less.
Drawbacks
All that being said, there are some drawbacks to this new era of internet in its current state. Primarily, it is quite difficult for the average user to get into it. Signing up for a wallet is a process that many people will not be used to, and for those not technologically inclined it can seem very daunting.
The space is also full of scammers looking to prey on new users of the Web3 architecture. A common issue is for someone to post in a public forum seeking help and a scammer will pose as tech support for the specific platform. They would then ask for the seed phrase for your wallet (a series of 12 or more words used to gain access or reactivate your wallet) and once they have that, drain your account for everything that's in there. (NEVER GIVE YOUR SEED PHRASE TO ANYONE.)
Another major drawback is the challenge of scalability. In order to serve the masses, Web3 and its technologies will need to be able to handle thousands of transactions per second. In its current state, the Ethereum blockchain - which can be considered the backbone of Web3 - can only handle around 30. To put that into perspective, Visa handles roughly 1700 transactions per second.
Additionally, it costs money to carry out these transactions in what is called "gas fees". Storing large amounts of information on the blockchain is quite expensive and the fees involved are very volatile. In order for this technology to be used at scale, things will have to be much cheaper and more predictable.
Conclusion
Although there are still many technological challenges with bringing about the wide adoption of this new era of internet, I am convinced it will be accomplished. The benefits from using this technology are just too vast and world changing for it not to be the way things are done in the future. On top of that, these challenges are being tackled by some of the world's strongest minds.
What we are seeing now is just the very beginning of something huge. In 5 to 10 years time, we will be living in a world where technology is more strongly ingrained with the fabric of society, making it easier for people to interact online and distributing the power and wealth generated more evenly to the average user.