What Makes Web3 Different?

I’ve seen it said jokingly, but it’s actually true, that if you want to get people into crypto, then don’t call it crypto, call it Web3 instead. You could apply something similar to NFTs. Refer to them as blockchain art, and you’ll sidestep some animosity.

The reality is that for years now, crypto has endured negative press and a sketchy reputation. It has been associated with rug pulls and rip-offs, compared to a Ponzi scheme and a casino, and referred to as a technology that has no application. To the skeptic, crypto was, at best, the answer to a question that didn’t exist.

And, while some of those assertions are wide of the mark, not all are without substance. Scams and misdemeanours? Yes, they happen. A Ponzi scheme and a casino? No, although it’s true that adoption is critical, which drives a need to onboard newcomers, and that wild financial speculation is part of the game.

But, what about the last assertion, that crypto is pointless and has no worthwhile applications? Well, if you’re a veteran bitcoiner, you’ll point out that coding money from thin air, and in the process realizing a means of separating money from government, is a profound achievement that could be pivotal in human history.

That’s monumental enough but is still, for the moment, speculative and only a potential outcome. So, let’s consider another development enabled by crypto: Web3.

This is curious, because if ‘how do we construct Web3?’ is the question, and ‘crypto’ is the answer, then the answer was made before the question existed. So, the crypto naysayers were half right, temporarily.

And, let’s keep in mind that Web3 is (for the moment) most strongly associated with Ethereum , rather than Bitcoin. So, we could potentially have two deeply disruptive timeline alterations resulting from blockchain technology: the separation of state and money (thanks bitcoin), and a censorship-proof, decentralized web (cheers Ethereum).

To get back to the point, the second of those two possibilities, what exactly is Web3, how does it differ from the web in its current form, and what will it change?

Ownership

One of the most critical characteristics of Web3 is that it facilitates ownership, but to understand what that means, let’s think about the web up to now.

Web1

In the 1990s, we used the first iteration of the web, and it was something that you read. It was decentralized, not yet having become controlled by entities who had accumulated network power, but it was a place where you looked at static pages and consumed information.

Web2

The Web2 era began sometime around the early 2000s, and it was at this point that the web transitioned to a place where you both consumed and created content. So, you could read and write. What also happened, was that a process of centralization took place, as the giant platforms that we were all familiar with were accumulating power. The web at this point functioned efficiently, you could create and publish content very easily, but you were powerless, and the shots were called entirely by the big tech platforms.

Furthermore, on Web2 you have no consistent, self-owned, portable identity. When you move from one platform to another, you have to sign up and start all over again, as each entity is siloed off and self-contained.

As venture capitalist Li Jin said,

"Creators are building their businesses on rented land when they are building on web2 platforms."

Web3

With Web3, we keep the efficiency of Web2 but reinstate the decentralization of Web1. At this point, we can read and write, and we can also own things. That means that your content, data, digital assets and identity belong to you, not to a centralized platform whose favors you are borrowing.

Value flows around Web3 in the form of blockchain-based fungible tokens, enabling financial transactions and, through DeFi, peer-to-peer financial services that are free from gatekeepers and central authorities.

Ownership of unique digital assets (which could be anything, from art and music to virtual land, to a domain name or to personal data) is enabled through tokens that are non-fungible (NFTs).

Online data, content, and identity are owned by the user, not by a third party, and are transportable around the web, just as you remain the same person when you walk between different locations in the real world.

And, Web3 is decentralized, meaning that there are no controlling powers, plus no-one can have you removed or put up barriers to participation. It is trustless, permissionless and immutable.

Techno-optimism

The early days of the web were an optimistic, open-minded time when tech-utopians dreamed of expansive futures. In recent years, as centralization has gripped the online world. There has been a more pessimistic air and a sense that boundless individualism has been replaced by top-down control along with a requirement to watch what you say in case you get zapped by the powers that be.

However, in Web3, constructed on blockchains and crypto, I sense a return of that old positivity, albeit in a new generation. There is a sense that existing structures can be not toppled, but sidestepped, and that great things and transformative wealth can be created cooperatively and owned individually. It is not slavishly collectivist nor overly self-centered, it’s simply fair and aims to make things better, through building.