Welcome back to your last lesson on Web 3.0, the future of a decentralized internet.
Last updated on 8/17/2021
Last lesson: Web 3.0
Your final lesson in the Web 3 Pocket Guide is finally here. Aren’t you excited?
We’re proud of you, padawan. You’ve come a long way. By now you should be familiar with decentralization, blockchain technology, tokenomics, Web 1.0 and Web 2.0. To wrap it all up, we’ll be discussing the next evolution of the internet: Web 3.0.
From your first lesson on decentralization all the way to this one, what you’ll notice is that each lesson is a building block to fully understanding Web 3.0. Decentralization, blockchain technology, tokenomics, and Web 1.0 and Web 2.0 all contribute to fully understanding Web 3.0 and its ecosystem. Already people are building protocols and applications that are native to Web 3.0. So let’s start our final lesson together by describing the features of Web 3.0, and what it entails for humanity.
Web 2.0 brought lots of innovations: a collaborative internet, multidirectional network effects, a brand new social dynamic, and new forms of content and media. It’s much better than the static nature of Web 1.0, which at the time technically prohibited people from collaborating, interacting, and communicating how we do now.
However, Web 2.0 is a centralized internet, with protocols and applications designed by third parties that oversee much of our interactions. There are technical and philosophical issues we face with a centralized internet, and Web 3.0 and its proponents aim to fix these problems by developing new protocols and applications that help break up centralization and empower the users of the future. Let’s give a few examples, shall we?
Single Point of Failure: A server is a computer or system that provides resources, data, services, or programs to other computers (known as “clients'') in a network. The problem with centralized servers is that they can result in a single point of failure, which can be a risk factor for businesses linked to the server. So if the server goes down, so do the other devices attached to it, which means user requests are unable to be completed. For example, if the server that Instagram, Facebook, or Twitter is connected to goes down, then users of these applications are unable to use it. Aside from that, there are groups of people who oversee these servers, and they have access to their users' data and information while the users do not.
Censorship: The motif of Web 2.0 is the control tech giants have over their own applications. Granted, not everything that is posted onto social media is lovely and friendly. COVID-19 showed us how real censorship is and that, no matter who you are, your account and your content can be taken down (see what happened to our last president). The real concern with censorship is that it prevents ideas/content to be digested, critiqued and/or shared. Terms like disinformation and fake news can be used as defenses to de-platform someone or wipe them away from social media. Regulation is a concern, but it shouldn’t be at the expense of sharing information with people, or harming their streams of income. Not to mention, some of these social media companies are pushed to ban people and certain ideologies from their platform in order to maintain business.
Privacy, Security, Data: User data is the bread and butter of today’s tech companies. Users give up their data, trusting that the companies will store it, and that it ends there. Truth is, companies make lots of money off their users' data and sell it right back to them. On top of that, our data is stored in their databases and, with a simple hack into their system, hackers have access to millions of users’ data. Based on your likes, engagement time, and searched videos, companies take note of it, gather and package related content and give it to you. Nobody asks for this initially, but it is a sacrifice we unknowingly signed up for with Web 2.0 platforms.
Content Compensation: Web 2.0 elevated content creation, making everyone who posted a selfie or tweeted their thoughts a content creator. When content creators distribute their work on Web 2.0 platforms and generate revenue, a large amount of their profit is taken by the platforms. For example, on average Youtube channels can receive $18 per 1,000 ad views, which equates to $3-$5 per 1,000 video views. Ads are how most content creators make their money on Youtube, but to even qualify to run ads on their channel, content creators have to have 1,000 subscribers and over 4,000 hours of watch time within the last 12 months. Creating content is how these people survive, so with these barriers to entry and stake in their profit, their compensation is little to none.
Originally, the web was designed to be open, permissionless and trustless. Or in other words, a completely decentralized web that omits intermediaries from most, if not all, activity on the web, and allows people from all over the globe to interact with each other. Obviously things take time, and in the current state of Web 2.0, intermediaries and their restrictions limit the web from being completely open, permissionless and trustless.
There are technical reasons and personal reasons for why some of these problems exist, and they prevent the current web from being completely open, permissionless and trustless:
Open: The invention of blockchain technology permits an open, decentralized web. At its core, blockchain technology is software that provides a collaborative community where people can access information and utilize it to build decentralized applications, also known as dApps. Its openness, transparency, and immutability gives everyone equal access and opportunity. In Web 2.0, if someone wanted to know the code to Instagram, or how to build or add to the platform, that code is locked away or kept among the developers who built it from scratch. In Web 3.0, if someone wants to know how to build an application on Ethereum, all they have to do is go to Ethereum’s website, examine the open sourced code, and figure out how to build it.
Permissionless: Remember as a child you needed a permission slip signed by your parents in order to attend that field trip to the zoo? Well, Web 3.0 is that field trip, except you don’t need a permission slip or a parent’s signature! Because it’s decentralized, people in Web 3.0 communicate and interact with each other without an intermediary prohibiting them. More importantly, if someone is inspired and determined to build something, they don’t need a license or some kind of certification to do so. For example, in order to get a specific job, specific credentials are required. But what if you had the knowledge and not the credentials? Web 3.0 removes any form of gatekeeping by allowing anybody to participate.
Trustless: It would be wrong for us to say that Web 3.0 is completely trustless. The thing is, blockchain technology minimizes the need for the trust of middle men. It’s immutable, censorship resistant, and totally reliant on code, meaning nobody can manipulate data or information inside the blockchain. Users are then forced to trust hard code and the performance of a technology that ultimately acts on its own once it's built. Blockchain also secures the data and information, so users can trust that their data is private and secure.
Tokens add a native payment layer to Web 3.0. Every Web 3.0 application has native tokens that allow people to transact, trade, spend, and save. Unlike normal electronic payment applications, like Stripe or Paypal, tokens have the ability to be frictionless, borderless and completely interoperable. And users of Web 3.0 will have complete control of their finances.
Wallets: On Web 3.0, everyone will have a digital wallet that stores their tokens and cryptocurrencies. There are lots of wallets to choose from, and they come in the form of hardware wallets and digital wallets. Hardware wallets, like the Ledger Nano, are basically USB drives that fit into your computer and securely hold your cryptocurrency. Digital wallets, like Metamask, are similar to hardware wallets, except they hold your cryptocurrencies for you via software. It’s important to note that the user of these wallets is responsible for it entirely. If you use Metamask, it’s important to keep track of your seed phrase, which is a unique password given to you so that you can access your wallet.
Full Integration: Web 3.0 is specifically designed to fully integrate its applications, users and cryptocurrencies. Metamask, for example, is more than just a wallet. It holds your private information, as well as financial information. Once you make a Metamask wallet, you now have access to the Ethereum ecosystem, which is full of different gaming, trading, and financial dApps that you can access. Metamask allows you to jump from dApp to dApp and surf the internet while being protected against potential hackers and giving out your information for free.
Tokenomics represents a new way to build companies. In traditional tech, if someone has an idea for a software company, they need money to support themselves and the business so they can start building it. So what do they do? They go to a venture capitalist firm and pitch their idea to see if they can get someone to invest.
Seeking out venture capital isn’t always the best method for building a startup and now this step isn’t mandatory like it used to be. Now, instead of pitching to a group of investors, projects can be bootstrapped with tokens and this allows for Web 3.0 teams to have different dynamics when putting their vision into the world.
Web 3.0 expedites this process by omitting the need for venture capitalist firms and paves a way straight to the people. In other words, it allows for crowdfunding to happen easier. In Web 3.0, if you have an idea for a new and exciting project, you can reach out to a bunch of people and see who is willing to participate in building or investing in your business. You lay out the plan: a certain amount of tokens to be released, a set percentage for those who are building and investing in it, and an amount set aside for future contributions and funding for the project.
Stakeholders within the company receive governance tokens, which give them voting privileges and a say in what goes on in the company. Reminder: governance tokens are different from standard tokens. Builders of the project can sell their earnings after a set amount of tokens have been released. And supporters of the project can buy and acquire ownership and, if anybody feels like the project is a scam, they can signal others in the community by selling their stake.
This is already happening in the Web 3.0 space through ICO’s (initial coin offerings) and IDO’s (initial dex offerings), when people are trying to seek funding and support in a project. In the future, there will be more to come.
As we end our final lesson together, we want to congratulate you for pursuing a new field. When learning about crypto, it forces you to do your own research and studying. That’s any field really, but when it comes to crypto, there are many people who are put off by its complexity. As you dive deeper into crypto, it introduces you to a brand new perspective, changing how you view the world.
The beginning stages of Web 3.0 are here, but they’re not in full effect. As people catch on to crypto--from Bitcoin to now NFTs--they will slowly integrate into the Web 3.0 ecosystem and adopt its new utilities. A paradigm shift is happening underneath our noses, and we want to give you a headstart.
Thank you for your time and attention. We’ll be dropping a brand new guide sometime soon, so be on the lookout. Until then, keep seeking 👁
Thank you for reading.