"Web 3” Taking Back the Internet for Users, Not Corporations
The Evolution to Web 3: Rebuilding the Internet on Blockchain
Web 3 represents the next phase of the internet's evolution by incorporating decentralized blockchain technology. This allows the web to move away from control by big tech gatekeepers towards a model where users control their own data and online identity.
What Exactly is Web 3?
Web 3 refers to the overall vision of a decentralized web built on public blockchains like Ethereum, rather than centralized servers. It has the following features:
- Decentralization - Instead of a few players like Amazon or Facebook controlling the web, control, and content creation are distributed among users.
- Ownership - Users own their data and digital assets versus centralized Web 2.0 platforms.
- Trustless - Interactions are facilitated by cryptography and economic incentives rather than trusting a middleman.
- Transparency - Activity on public blockchains is transparent and auditable by all users.
- Collaboration - Users can collectively build ecosystems like decentralized apps rather than siloed platforms.
The emergence of Web 3:
While still early days, some building blocks of Web 3 include:
- Cryptocurrencies - Digital assets owned and exchanged by users without centralized control.
- NFTs - Non-fungible tokens representing unique digital assets like art, collectibles, and tickets.
- DAOs - Decentralized autonomous organizations that allow collective governance and cooperation.
- Metaverse - Persistent 3D virtual worlds interconnecting users digitally.
- DeFi - Permissionless financial services via blockchain smart contracts.
Benefits and Drawbacks:
Web 3 aspires to hand control back to users in an open digital world. However, it faces adoption challenges like poor UX and scalability. Critics also argue Web 3 is not as decentralized as proponents claim. Big VC funds own large stakes in platforms like OpenSea.
Challenges Facing Mainstream Web 3 Adoption:
- Onboarding complexity - Managing cryptographic keys and transacting on Web 3 platforms requires significant technical know-how. Poor UX deters average users.
- Scalability - Performance limitations of blockchain networks about transaction speed, latency, and fees curb adoption.
- Mobile compatibility - Most Web 3 applications are not mobile-friendly yet, restricting access for many users.
- Costs - Transacting on blockchains like sending payments or minting NFTs remains expensive for users.
- Security - Hacks, scams, and irreversible transactions create barriers for wary users along with a lack of insurance protections.
- Regulation - Oversight of decentralized networks creates uncertainty around compliance and legal requirements.
Centralization Risks:
- Critics point out that much of Web 3 is still built on top of Web 2 models like venture capital investment into startups. This leads to similar centralizing forces.
- Network effects and whales owning majority stakes in protocols undermine the goal of distributed control and access.
- As with previous internet revolutions, big corporations may eventually dominate Web 3 by cornering control over emerging ecosystems.
Potential Solutions:
- Improved layer 2 scaling like rollups on Ethereum, sidechains, parachains, and interoperability help address performance issues.
- Better key management solutions through social account recovery and hardware wallets improve usability.
- Decentralized data storage projects like Filecoin, IPFS, and Arweave provide alternatives to Big Tech hosting.
- Direct community ownership models, airdrops, and progressive decentralization may counterbalance VC influence.
- Mobile-native wallets and applications along with fiat on-ramps aid mainstream adoption.
The Path Ahead:
Realizing the full vision of Web 3 requires maturing technology and shifting user mindsets from passive content consumption to active ownership and decentralization. If these hurdles are overcome, web 3 could transform how we interact online - placing users at the center rather than corporations. But the road ahead remains filled with open questions and challenges.
While still highly conceptual, Web 3 represents an idealistic goal of realigning economic incentives and user participation on the Internet. Components like DeFi and NFTs offer early glimpses of its potential to shift online power structures. But converting ambition to reality will determine if Web 3 changes the internet or is just a buzzword.
Here are some of the major types and categories of applications being built for the Web3 ecosystem:
- Decentralized Finance (DeFi) - Financial applications like lending, borrowing, trading, derivatives, asset management etc. built on blockchains. Major DeFi apps include Aave, Uniswap, and Compound.
- Non-Fungible Tokens (NFTs) - Apps for minting, buying, selling, and displaying NFTs like digital art, collectibles, metaverse assets, etc. The top NFT platforms are OpenSea, Rarible, and NBA Top Shot.
- Metaverse - 3D virtual environments like Decentraland, The Sandbox, and gaming worlds that allow users to create, own, and monetize digital assets.
- Social - Apps like Lens Protocol, and Noise that allow decentralized social interactions via crypto wallets and without centralized platforms.
- Identity - Self-sovereign identity platforms like BrightID, and Veramo give users ownership over digital identity credentials.
- Storage - Decentralized storage networks like Filecoin, Arweave, and IPFS for hosting data securely outside big centralized servers.
- Compute - Blockchain compute projects like Golem, and iExec that allow the sharing of idle computing resources for decentralized cloud services.
- Oracles - Chainlink, API3 that connect blockchains to external data needed for smart contracts to execute actions.
- DAOs - Decentralized autonomous organizations with governance tokens like MakerDAO, Uniswap, and ConstitutionDAO.
- Payments - Cryptocurrency payment processors like BitPay, and CoinPayments for merchant transactions and remittances.
- Wallets - Crypto wallets like MetaMask, Coinbase Wallet, and Trust Wallet for managing digital assets.
