Web3 refers to the next version of the internet, which will focus on decentralization and user ownership.
Web3 is a future, decentralized form of the internet, where users become owners. Rather than using free apps and platforms that collect user data, as in the current phase of Web2, users in the future Web3 phase will be able to participate in the creation, operation, and governance of the protocols themselves.
In Web3, ownership can be represented by digital tokens or cryptocurrencies, through decentralized networks known as blockchains. For example, if you hold enough digital tokens for a particular network, you could have a say over the operation or governance of the network. This is similar to the way stockholder voting rights allow shareholders of record in a company to vote on certain corporate actions.
Web 1.0 was the first iteration of the modern internet, from 1990 until around 2004. In the Web 1.0 era, users typically engaged with static web pages where read-only content was created and distributed by a small cohort of gatekeepers like Yahoo and AOL.
Web 2.0, which broadly encompasses 2005 to the present day, is the dynamic and interactive web, in which static web pages are joined by apps and user-generated content. Web 2.0 is ruled by a set of dominant platforms, as represented by the market power of the FAANG companies—Facebook (now Meta), Amazon, Apple, Netflix, and Google, all of which exchange services for personal data to some degree.
Web3 enhances the internet as we know it today with a few other added characteristics. web3 is:
Distributed and robust
Native built-in payments
Source Image: preethikasireddy.com
Now, let’s dive in a little deeper into what makes this possible.
The Ethereum blockchain is often touted as a “world computer.” That’s because it’s a globally accessible, deterministic state machine maintained by a peer-to-peer network of nodes. State changes on this state machine are governed by the rules of consensus that the peers in the network follow. In other words, it’s literally designed to be a state machine that anyone in the world can access and write to. As a result, this machine isn’t owned by any single entity — but collectively by everyone in the network. Also, data can only be written to the Ethereum blockchain — you can never update existing data.
2) Smart contracts
A smart contract is a program that runs on the Ethereum blockchain and defines the logic behind the state changes happening on the blockchain. Smart contracts are written in high-level languages, such as Solidity or Vyper. Because smart contract code is stored on the Ethereum blockchain, anyone can inspect the application logic of all smart contracts on the network.
3) Ethereum Virtual Machine (EVM)
Up next, you have the Ethereum Virtual Machine, which executes the logic defined in the smart contracts and processes the state changes that happen on this globally accessible state machine. The EVM doesn’t understand high-level languages like Solidity and Vyper, which are used to write smart contracts. Instead, you have to compile the high-level language down into bytecode, which the EVM can then execute.
Finally, we have the frontend. As we mentioned before, it defines the UI logic, but the frontend also communicates with the application logic defined in smart contracts. The communication between the frontend and smart contracts is a little more complicated than it appears in the diagram above.
Benefits of Web3:
Many Web3 developers have chosen to build dapps because of Ethereum's inherent decentralization:
Anyone who is on the network has permission to use the service – or in other words, permission isn't required.
No one can block you or deny you access to the service.
Payments are built in via the native token, ether (ETH).
Ethereum is turing-complete, meaning you can pretty much program anything
Limitation of Web3:
Web3 has some limitations right now:
Scalability – transactions are slower on web3 because they're decentralized. Changes to state, like a payment, need to be processed by a miner and propagated throughout the network.
UX – interacting with web3 applications can require extra steps, software, and education. This can be a hurdle to adoption.
Accessibility – the lack of integration in modern web browsers makes web3 less accessible to most users.
Cost – most successful dapps put very small portions of their code on the blockchain as it's expensive.
Web2 vs. Web3
Here is a breakdown of Web2 vs. Web3:
Web2: This is the phase we have been in since the early-2000s, when the emergence of large platforms like Google, Facebook, Twitter, and Amazon, as well as services like Uber and Venmo, brought a centralized, commercial order to the internet by making it easier to connect, browse, interact, and make transactions online. These large companies capture much of the monetary value created on the internet.
Web3: This is the future of the internet, where we return to the individualized utility of Web 1.0, but this time it's based on blockchain technology and digital tokens that can foster a decentralized internet. Rather than the large players of Web2 capturing the bulk of monetary value, Web3 replaces the centralized entities with decentralized networks that distribute the value to creators, users, and developers.
The Tech Platform