Web3 is the next generation of the internet, where users are in control of their own data and privacy. With web3, you can choose which applications to use and which to trust with your data. Web3 is still in its early stages, but it has the potential to change the way we use the internet forever.
What is web3?
Well, if you don’t know what the internet or WWW even is, we don’t blame you, you might be pretty young! The short explanation is that the internet and the World Wide Web are systems used to communicate and share information across computers and countries. The World Wide Web is just one part of the internet, which is a system of networking systems. So, what is web3? Simply put web3 is the next generation of the internet.
But why do we need another internet? Well, there are a few reasons. First, the current internet is not exactly user-friendly, nor is it decentralized. The current internet is centered around a server-client model, where a server (typically owned by a company like Google or Facebook) stores and controls the data and maintains ownership of it. The users interact with the servers using a browser and can’t directly own or control the data. Centralization, another reason why we need a new internet is security. Hackers can easily gain access to users’ accounts and steal their personal information or trick them into giving away other private information, like crypto-keys. Finally, the current internet is heavily dominated by big companies and their policies, a problem that´s especially visible when it comes to issues of privacy and censorship.
Those are three big problems with the current internet, and they aren’t going away any time soon. But a new one, web3, promises to change all that. We won’t see web3 overtake the existing internet any time soon, this is basically the infancy stage of the new technology, but we´ll definitely see more and more use of web3 as time goes on. And who knows, maybe one day we’ll have completely shut down the current internet and transitioned completely to web3.
For now, we can think of web3 as a complete rewrite of the protocols that make up the internet, but keeping the same functionality. Just like the internet of today was a reworking of concepts from the 1980s (ARPANET), we can expect that web3 will build upon the foundations laid by the internet of today.
So, what are those foundational elements that web3 will build upon? Well, for one, everything should be decentralized. That means that no single entity controls a server or a database with people’s personal information on it.
Instead, servers will be run by communities of thousands of people, if not millions, who will collectively maintain the servers that make up the internet. Users will have complete control over their data and where they send their data, especially their personal data. Everything will be peer-to-peer, the focus will no longer be on servers and clients, but on users and peers.
Let’s look at each of the three big problems with the current internet and see how web3 plans to fix them.
Server and data control:
Instead of relying solely on large corporations to control our data and the servers that store our digital information, web3 will enable us to collectively control these servers. This will be done through decentralized networks, also called distributed networks, where anyone can run a server that contributes to the network.
One example of a truly decentralized network is cryptocurrencies. There are no “server” or “database” for Bitcoin. The coins aren’t stored on a server, there is no central database to look up who owns which coins. Instead, the coins are mined—created through proof of work—on millions of computers around the world at the same time.
The transaction ledger, where the coins’ ownership is recorded, is also spread across all of these computers. There is no central server that holds the ledger. Instead, every computer in the network holds a copy of the ledger.
This is how a true, decentralized network functions. Each computer contributes to the larger whole and maintains a portion of the network. Users are their own peers; they don’t communicate solely with the server admin, but with each other.
How will this aspect of web3 change the current internet? Well, for one, server ownership will become a major business opportunity. Right now, huge corporations like Amazon own tens of thousands of servers and rent out space on them to other companies. Other corporations, like Google, build their own servers to run their giant digital services.
But how many servers do individuals and smaller companies own? Very few—and almost none for the bigger companies. Due to the expensive infrastructure it takes to run servers, fewer and fewer people are doing so. As a result, there are voids in who owns and operates servers and who has access to data.
With web3, everyone will have access to data and an understanding of how computers work. As a result, more people will be able to own and operate their own server infrastructure and market that space out to others who want it. This will create infinitely more opportunities for smaller companies to monetize their space, as well as larger corporations who want to reduce costs by renting out space.
Who will maintain the ledger, though? Without a central server, how will the ledger be maintained consistently across all computers in the network?
That’s where the miners come in. Miners are individuals and companies who own servers and dedicate some of their processing power to maintaining the transaction ledger. In exchange for this work, miners receive crypto coins as a reward.
As more miners join the network and allocate more processing power to the ledger, it becomes increasingly difficult to earn rewards. This is designed into the mining process it is called proof of work. As the industry advances, engineers will develop more efficient ways to earn rewards, and the amount of processing power required will decrease.
It’s important to note that some people argue that the term “web3” is misleading, as web3 doesn’t mean a new web but a new internet. They argue that web2 refers to the messaging and connecting layer of the internet, and that web3 will create a web dominated by blockchain applications like file sharing and peer-to-peer commerce.
User control of data:
Right now, companies like Facebook and Google own our data. But as the blockchain industry grows, more and more people will have the power to take their data back.
As a result, we’ll have less of an “internet of information” and more of an “internet of ownership.”
Not only will users own their data, but they’ll also have a better understanding of how AI tools like machine learning operate. This understanding will allow them to provide input and discern how the algorithms should function—and whether they should function that way at all.
Eventually, we’ll reach a point where users will be able to provide a chunk of data, an algorithm will extract a bit of information from that data, and then the user will be able to validate whether the algorithm presented an accurate representation. This process will confirm or deny whether the company should even have the data in the first place.
Revenue sharing:Right now, websites and apps earn money in one of two ways—by selling advertising or by charging for premium services. The blockchain industry offers a third option: letting users help maintain the ledger, which in turn gives companies a financial reward.
As the industry progresses, we could see a system in which websites and apps sell user data only if they first get permission and if they share a portion of the profits generated from that data with the users who agreed to share it.
Cutting out the middleman:Right now, when a website or app sells a product, it takes a cut of the price. As the blockchain grows, companies will be able to conduct purchases directly with each other, cutting out the middleman and giving users a better deal. We’ll also see fewer resell restrictions, as platforms will allow users to resell products to other users.
Improved security and privacy:
Right now, when you go to a new website, it offers you an awkward reminder that it can store cookies on your device that will help the site remember you the next time you visit. These cookies can also be stolen by hackers, who then use the information to create false profiles of other users.
On a blockchain-protected website, users would grant permissions for companies to access certain chunks of their smart contracts. This would allow them to keep track of certain milestones or awards, for example. The chunks would remain encrypted, so no one would know what they actually contained. Users would also remain anonymous, since the platforms wouldn’t get their real-world identities. The blockchain also offers improved privacy in that it doesn’t have a middleman. Transactions are carried out between users directly, cutting out the person or company that would normally take a cut of the sale.
Once mainstream apps start using the blockchain, we could see an era in which Facebook and other social media platforms no longer collect our data and users can interact freely without worrying about fake profiles or stolen cookies.
Financing ventures:Since 2019 has been a rough year for IPOs, many companies have pushed their plans to go public. Once the blockchain proves itself, many companies may choose to raise money directly from investors using currencies like bitcoin rather than working with banks and stock markets which can slow down the process.
Currently, startups can apply to join a space institution like NASA’s Center for the Advancement of Science and Technology (CASIS) or the Australian Digital Innovation Program (ADIP) to receive funding and help develop their missions. With the blockchain, perhaps we’ll see companies getting funding directly from users through crowdsourcing campaigns the same way people fund art projects or trips to Outer Space. People are more willing to donate when they feel like they’ll receive awards or acknowledgment for their contribution, whether it be promotional swag or honorary titles.
Better service:Today, when you click on a link, your browser initiates a series of transactions to find and display the new page. With the blockchain, pages will be able to assemble themselves upon request, saving computers and websites alike considerable time and trouble.
The blockchain can improve service through authentication, streamlined transactions and enhanced privacy.
Mass scaling:Currently, when a website wants to increase its capacity to handle visitors, it turns to cloud computing or data storage. The blockchain can handle countless transactions safely and securely, so it wouldn’t need much computer power or storage to operate. In fact, a blockchain can scale indefinitely as long as there are enough nodes to support it.
No middlemen:Today, when you make a purchase online, your payment goes through a series of processors and middlemen before the seller receives the funds. With the blockchain, the two of you can make the transaction directly . This means less fees and a quicker process. In the case of rentals or ride-sharing, for example, this could mean significantly reduced pricing since there would be no corporate bosses to take their cut. Companies like Google and Facebook have collected user data and exploited it to give users a better experience . . . so they say.But what they’ve done is track your every move and sell it to advertisers so they can push their products on you.
Better security:Breakins and hacks are a constant threat to everything from our privacy to our reputations. The blockchain is extremely secure due to its cryptography, cyber-thieves are going to have a tough time trying to steal our identities or data since we won’t have to give it up in the first place. If we do get hacked, the damage will be limited to the extent of the attack instead of causing a nation-wide shutdown like we saw with wrecks like Mirai and ransomware.
In conclusion, web3 has the potential to change the internet as we know it by decentralizing it and making it more secure. It will be slower than the current internet, but it will be more secure and private.