There’s iOS 18 and Google Tensor G3, but is Web3? The next version of the internet? Essentially, yes, it is. The very nature of the internet is changing as new technology continues to pour in and leave an impact on how we use and experience the internet as a whole. When blockchain burst onto the scene, few understood what it meant then and that’s still true today, as the knowledge of what it is and how it works has been hoarded by a small segment of those who understand what it is all about.
But if you’re determined to learn some Web3 basics and keep up with the evolution of the internet, blockchain technology is central to the process. Before you begin investing in the future of the internet, you might benefit from having Web3 explained simply and we’re going to try and do just that.
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What Is Web3 in Simple Terms?
To give you an overview of what Web3 is, it refers to the next version of the internet, set to be created on blockchain technology, based on the principle of decentralization. It works on the basis of shared ledgers that can be controlled by individuals rather than turning to the servers and powers of different companies as we do now—Web3 promotes peer-to-peer (P2P) networks over the structure we have today. You might have already realized that a majority of the internet is controlled and organized by a few big powerhouses. These companies maintain large servers that hold and route information, and we interact with each other via their platforms. Whether you send an email or exchange money with someone, you operate via these established platforms. This current iteration of the internet is referred to as Web2.
The decentralization concept comes into play as a basic Web3 system where the central data silos and channels are broken down so individuals can connect with each other directly, using community-run networks that rely on an interconnected channel of many computers (nodes) to store and manage data. Through these nodes, each individual or “participant” can connect directly to another node. Their transactions are stacked into “blocks” and then connected to the existing “chain” of transactions, resulting in a ledger with a record of the exchange.
If it sounds complicated, it is because even a basic explanation of Web3 for beginners is so evidently unfamiliar from how we see the internet function today. Still, reading about and understanding Web3 might make you more open to the benefits the new internet can offer. According to most records, Gavin Wood, the co-founder of Ethereum, coined the term in 2014. He believed that decentralized technology was the only way we could preserve liberal democracy and he and other influential figures began the work towards reframing our understanding of blockchain and the internet as a whole.
Web3 Explained: What Is the Main Goal of Web3?
The main goal of Web3 is to identify and resolve the shortcomings of Web2, and it intends to do so in multiple ways. In the current version of the internet, which has been around since 2004, we have a lot of tools that make life easier for us. These tools and platforms create new ways to interact with the data we find online. The downside to this is that our interaction lacks any sense of privacy, controlled entirely by companies that have access to your data at all times. It isn’t an ideal system but it’s what we have so far.
The Web3 basics offer to change the system and take the power back into our hands, championing ownership so we can decide what is shared and with whom. According to Simplilearn, “Users will be able to sell their own data through decentralized data networks, ensuring that they maintain ownership control.” Selling personal information may not be the top priority, but it does give individuals authority over what is rightfully theirs.
Web3 also intends to be trustful and permissionless. While trying to understand what Web3 is, you might recognize the emphasis on holding individual power. With power, it also brings a trusting, multi-directional bond where you are free to access any information you want without having to get permission from a governing body or give up something in exchange for it. Web3 intends to create a direct link between you and the source, allowing you to transact in a way that is comfortable for you. When its goals of interoperability are met, Web3 can enable different applications and services to work together smoothly instead of meeting incompatibility issues across platforms.
Is Web3 Artificial Intelligence?
This brings us back to the “What is Web3?” question and our understanding of its components. Web3 is not artificial intelligence itself but it does intend to use AI and machine learning to make its systems more efficient and sustainable. Web3 and its effort of decentralization can initially help AI systems by decentralizing the training models that are also maintained by a handful of powers, instilling transparency and promoting a voluntary exchange of knowledge and learning.
AI algorithms are adept at predicting data when they are sufficiently trained and these predictions can be incorporated while setting up Web3 systems. One of the many concerns with Web3 is the worry over security and how it can be facilitated, and AI can perhaps contribute to the detection of fraudulent activities and privacy vulnerabilities when set up.
Smart contracts that are to be the cornerstone with Web3, can only be executed when the right conditions are met, eliminating the need for trust or familiarity between parties. AI could have a very important role in automating such processes. Semantic information does not always translate well in our present system, but AI could be the component to change that.
We are still in the early stages of our journey towards Web3 and there are many layers of support that we have not predicted and practiced yet. The current evolution and investment in AI will inevitably tie into the Web3 basics over time.
Who Benefits from Web3?
The beneficiaries of Web3 systems would be every individual who participates in the use of such tech. Big businesses that currently run these central services stand to lose heavily in the shift to Web3. However, the average population will retain ownership of their data and the executive power to decide what they do with it. That is the most essential takeaway you should retain from this Web3 overview. Blockchain technology guarantees transparent systems and even businesses that commit to this central cause could eliminate a lot of the vulnerabilities that are present today.
By removing intermediaries, and facilitating a P2P network, users gain the authority to share information as is convenient for them.
What Are the Disadvantages of Web3?
If you understand what Web3 is and see the benefits of its adoption, you might begin to wonder why we haven’t yet scaled up such technology already. What we’ve discussed so far are the Web3 basics, but there are a lot of complex components that will take years more to set up and more time to find acceptance globally. The transition to an entirely new internet structure will mean a lot of changes in how we operate and governmental regulations are bound to get in the way. One of the biggest disadvantages of Web3 is the complicated nature of the technology structure itself, and the difficulty of explaining its impact to the wider masses.
With AI, we’ve been able to see both acceptance and resistance, but it is still easier technology to decipher for a larger majority. Things are a little different for blockchain and Web3. There are other disadvantages to Web3 as well:
- Being associated with the volatility of the crypto market: Many understand blockchain to a degree but from the perspective of cryptocurrency, a market that has had too many ups and downs for users to trust willingly
- Scalability Issues: Limited computational power to support extensive decentralized networks
- Complexity: Web3 technologies are complex and will be difficult for average users to understand and use without building more awareness around such tech
- Economic and social barrier: Access to the internet is not universal and another major shift in technology will make it harder for those who are just catching up to adapt all over again
- Security concerns: Smart contracts and other Web3 tech will have bugs and severe security issues until they can be rightly tested and resolved
- Regulatory Uncertainty: The regulatory environment for Web3 technologies is still in the early stages and there are insufficient policies for enforcing it, leading to uncertainty and potential legal risks for developers and users. Creating an international system will bring issues with many overlapping guidelines
- Lack of decision-makers: One of the benefits of Web3 is its lack of central powers but it also removes decision-makers and the ease of coordination between various participants
- Difficulty with securing consensus: Without central decision-makers, a democratic setup takes every perspective into consideration, which is hard to do with such a setup
Is Web3 the Future of the Internet?
There is no way to guarantee an answer to questions about when and how we will make the transition to Web3, but for all intents and purposes, Web3 is believed to be the future of the Internet. Many stakeholders and authorities are certain that the adoption of the decentralized Web3 systems built on blockchain is the only way forward. Cryptocurrencies, Decentralized Autonomous Organizations (DAOs), and NFTs all belong to the Web3 blockchain family and they have all gained popularity and some degree of acceptance in their own right. Axie Infinity, a blockchain game developed by Vietnamese studio Sky Mavis, has shifted how some see Ethereum-based cryptocurrencies by gamifying its exchange in-game.
According to Harvard Business Review, the number of developers working on Web3 doubled to 18,000 in 2021. The numbers have certainly grown since then. Investments in companies that work with Web3 are on the rise and we’re seeing more and more individuals sensing the shift, developing a sense of curiosity, and asking anyone they can, “What is Web3 and how can I be a part of it?”
Platforms like Coursera offer courses on Web3 for beginners, explaining the fundamentals of the rising technology. Actively exploring the basics of Web3 is in everyone’s best interest, if only to stay prepared for the changes the next few years will bring. Web3 does seem to be the future of the internet but the path towards it still remains unfinished.