It’s impossible not to be dragged into the Web3 black hole if you follow technology. Perhaps, it has become a major discussion topic for tech developers, and they’re watching out on what’s going on in this space. Several people have already taken a plunge. Web3 acts like a natural function in which Crypto and other services run on what is known as the Blockchain or distributed networks in the Cryptocurrency world. Web3 is a word that has been around for a few years now, but it seems this year it has been widely accepted

This buzz cycle describes how technological advancements appear to imitate a predictable pattern of initial excitement, disappointment, and ultimate comeback. When a technology is first imagined or released, everyone can't stop gushing about how it will permanently revolutionize everything. Many dismiss these buzzy announcements as a waste of time since they fall well short of the expected renaissance. However, a core group of believers continues to grow, finally producing a strong standard that improves life. Then the latest hot thing attracts the VC classes' attention, and the cycle begins all over again. Smartphones, the sharing economy, big data, machine learning, the Internet of Things, virtual reality, and blockchain technology have all followed this cubic function of technology expectations in the last decade or two.

What is Web3? 

Web3 is a hypothetical future internet version built on public Blockchains, a record-keeping system best known for supporting Crypto transactions. Web3 is intriguing because it is decentralized, which essentially means that rather than consumers accessing the internet via services offered by giant companies like Google, Apple, or Facebook, individuals own and run specific areas of the internet.  Web3 somehow doesn’t require “approval”, which denotes that central authorities don’t have the choice to assign who gets to access what services, but neither does it require “loyalty”, which supports the notion that virtual transactions amongst individuals or groups do not require the use of an intermediary. Web3 technically safeguards privacy better because these authorities and intermediaries are already doing most of the data collection. However, while this is an idealistic picture of Web3 anticipated by Blockchain programmers and supporters for the future, it may not be as equal in practice. Whereas, DeFi is a component of Web3 that’s picking up steam. It consists of using the Blockchain to execute real-world financial transactions without the intervention of banks or the government. Nevertheless, dozens of new major corporations and venture capital firms are pumping billions into Web3, and it’s difficult to conceive that their engagement won’t result in some form of centralized power. 

Why is it so important? 

To grasp why Web3  is so significant, you must first explain the significance of the past editions of the Internet, Web1, and Web2, which ran from the 1990s to the present. Web1 originated as a collection of personal or static web pages. In the early 1990s, folks were just getting warmed up with the Internet, which was loaded with static web pages. There was very little opportunity for interaction. Later came Web2, and with that big tech companies like Facebook, Google, and Amazon in the 2000s. User-generated content was all the rage at the time. This is the section that the majority of people are aware of. Humans create vast volumes of content or data while browsing, shopping, or even posting videos and images, whether they acknowledge it or not. All of this information data is saved and stored on the servers of the businesses with whom users engage. Therefore, as a result, intermediaries become guardians of user data, allowing them to benefit the profit from it through advertisements. 

The scope of such data collection is based on their market supremacy. Google dominates the web search market with a market share of over 90%. As per Statcounter data, Facebook has a 72% market share in social sites. For such enterprises, the percentage of netizens on social media and the amount of hours they spend absorbing content is an important development metric. 

Hence, the more time spent making content, the more data the business company can collect, which will aid in the improvement of its AI algorithm and advertising engine, which is a major source of revenue for the company. Therefore, two issues arise i.e. privacy and plagiarism.  Web3 can greatly aid in the resolution of some of these issues. 

Why is it coined as Web3? 

Again from the initial connectivity of computer networks in the 1970s and 1980s through the first blooming of browsers and websites in the 1990s, Web 1.0 covers everything. Companies built applications on top of it in the next phase, Web 2.0, ranging from social media platforms to search engines to wikis, much of it based on user-generated content. Even though this makes much of the web decentralized in some ways, most things still go through large companies. Web3’s vision is clear-cut to develop software and platforms that aren’t reliant on existing businesses or Web 2.0 economic models like advertising. For instance, users could pay for services directly with tokens. In an optimistic scenario, Web3 services will be controlled, owned, and enhanced by network members. The justification for why it's Web3 rather than Web 3.0, is due to changes in how developers communicate online. 

Is Web3 related to Crypto? 

Web3 will rely heavily on NFTs, digital currencies, and other Blockchain entities. Reddit for example is attempting to make Web3 inroads by inventing a technique to utilize Crypto tokens to allow users to essentially control pieces of the communities they engage in on the site. The concept is that users would use “community points”, where they would obtain by posting on a specific subreddit. The user is then awarded points based on how many users upvote or downvote a particular post. Those credits/votes can effectively be used as voting shares, letting people who have made significant contributions have a greater say in choices that affect the community. Since these points are stored on the Blockchain, their holders have more authority over them; they can’t be taken away simply, and they track you. To be frank, this is simply one use of the Web3 concept idea of Decentralized Autonomous Organizations, or DAOs, which employ tokens to distribute ownership and decision-making power. NFTs are also an important part of Web3. They’re one-of-a-kind Crypto tokens that are generally utilized as certificates of ownership for virtual items such as artwork or basketball footage. This is in contrast to Bitcoin, which may be exchanged for any other Bitcoin. According to Web3 advocates, the digital scarcity is symbolized by NFTs that will enable the user of this new internet to exchange anything from video game skins to medical records. 

Ethereum (ETH) is a Cryptocurrency similar to Bitcoin which rewards the users who make a contribution to the network's upkeep, and is widely used to develop Web3 apps. Its currency is called Ether, and it has a market capitalization of $511 billion. Apps can also have associated tokens, which can be used not just to pay for services but also to regulate the development and cost structure of the apps. Much of the motivation for this action, at least at first, is the possibility of a price increase in the token. It may increase as more people join the community, but speculations can also inflate it. In Crypto, there’s a lot of that. 

What’s all the hype about Web3? 

All of the buzz looks like it’s coming from the Crypto industry, which would naturally gain from a more dependent internet on their technology. Some of the hype arises from a few well-known organizations, such as Reddit, taking steps to get a jump on developing Web3 services and platforms. CoinDesk reported in late October that GameStop is hiring a “Head of Web3 Gaming” along with software developers for an undefined NFT platform. Since there has been a lot of debate about whether Web3 could augment video games by letting players more conveniently buy and sell in-game items or earn tokens that will give them more ability to decide how the game is run. Nevertheless, Verge speculated that GameStop may just be using terms like “Web3” and “Blockchain” in its job postings to attract the same kind of alternatives. The venture capital firm Andreessen Horowitz’s Web3 lobbying drive in Washington, D.C. in early October was possibly a more significant recent development. Web3, which has invested heavily in Crypto and Blockchain technology, has sent executives to Capitol Hill and White House to advocate Web3 as a solution to Silicon Valley consolidation and to propose norms for the evolving virtual realm, according to the company or organization. 

Disclaimer: The author’s thoughts and comments are solely for educational reasons and informative purposes only. They do not represent financial, investment, or other advice.