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The next phase of the internet is coming: Here’s what you need to know about Web3

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The rapid growth of cryptocurrencies and virtual non-fungible tokens have dominated news headlines in recent years. But not many may see how these modish applications connect together in a wider idea being touted by some as the next iteration of the internet — Web3.

There are many misconceptions surrounding this buzzy (and, frankly, fuzzy) term, including the conflation of Web3 with Web 3.0. Here’s what you need to know about these terms.

What is Web3?

Since Web3 is still a developing movement, there’s no universal agreement among experts about its definition. Simply put, Web3 is envisioned to be a “ decentralized web ecosystem ,” empowering users to bypass internet gatekeepers and retain ownership of their data.

This would be done through blockchain ; rather than relying on single servers and centralized databases, Web3 would run off of public ledgers where data is stored on computer networks that are chained together.

A decentralized Web3 would fundamentally change how the internet operates — financial institutions and tech companies would no longer need to be intermediaries of our online experiences.

As one business reporter put it :

“In a Web3 world, people control their own data and bounce around from social media to email to shopping using a single personalized account, creating a public record on the blockchain of all of that activity.”

Web3’s blockchain-based infrastructure would open up intriguing possibilities by ushering in the era of the “ token economy .” The token economy would allow users to monetize their data by providing them with tokens for their online interactions. These tokens could offer users perks or benefits, including ownership stakes in content platforms or voting rights in online communities.

To better understand Web3, it helps to step back and see how the internet developed into what it is now.

Web 1.0: The ‘read-only’ web

Computer scientist Tim Berners-Lee is credited with inventing the world wide web in 1989, which allowed people to hyperlink static pages of information on websites accessible through internet browsers.

Berners-Lee was exploring more efficient ways for researchers at different institutions to share information. In 1991, he launched the world’s first website , which provided instructions on using the internet.

These basic “read-only” websites were managed by webmasters who were responsible for updating users and managing the information. In 1992, there were 10 websites . By 1994, after the web entered the public domain, there were 3,000.

When Google arrived in 1996 there were two million. Last year, there were approximately 1.2 billion websites , although it is estimated only 17 per cent are still active.

Web 2.0: The social web

The next major shift for the internet saw it develop from a “read-only web” to where we are currently — a “read-write web.” Websites became more dynamic and interactive. People became mass participants in generating content through hosted services like Wikipedia, Blogger, Flickr and Tumblr.

The idea of “Web 2.0” gained traction after technology publisher Tim O’Reilly popularized the term in 2004 .

Later on, social media platforms like Facebook, YouTube, Twitter and Instagram and the growth of mobile apps led to unparalleled connectivity, albeit through distinct platforms. These platforms are known as walled gardens because their parent companies heavily regulate what users are able to do and there is no information exchange between competing services.

Tech companies like Amazon, Google and Apple are deeply embedded into every facet of our lives, from how we store and pay for our content to the personal data we offer ( sometimes without our knowledge ) to use their wares.

Web3 vs. Web 3.0

This brings us to the next phase of the internet, in which many wish to wrest back control from the entities that have come to hegemonize it .

The terms Web3 and Web 3.0 are often used interchangeably, but they are different concepts.

Web3 is the move towards a decentralized internet built on blockchain. Web 3.0, on the other hand, traces back to Berners-Lee’s original vision for the internet as a collection of websites linking everything together at the data level .

Our current internet can be thought of as a gigantic document depot. Computers are capable of retrieving information for us when we ask them to, but they aren’t capable of understanding the deeper meaning behind our requests.

Information is also siloed into separate servers. Advances in programming, natural language processing, machine learning and artificial intelligence would allow computers to discern and process information in a more “human” way, leading to more efficient and effective content discovery, data sharing and analysis. This is known as the “semantic web” or the “read-write-execute” web.

In Berners-Lee’s Web 3.0 world, information would be stored in databases called Solid Pods , which would be owned by individual users. While this is a more centralized approach than Web3’s use of blockchain, it would allow data to be changed more quickly because it wouldn’t be distributed over multiple places.

It would allow, for example, a user’s social media profiles to be linked so that updating the personal information on one would automatically update the rest.

The next era of the internet

Web3 and Web 3.0 are often mixed up because the next era of the internet will likely feature elements of both movements — semantic web applications, linked data and a blockchain economy. It’s not hard to see why there is significant investment happening in this space.

But we’re just seeing the tip of the iceberg when it comes to the logistical issues and legal implications. Governments need to develop new regulations for everything from digital asset sales taxation to consumer protections to the complex privacy and piracy concerns of linked data .

There are also critics who argue that Web3, in particular, is merely a contradictory rebranding of cryptocurrency that will not democratize the internet. While it’s clear we’ve arrived at the doorstep of a new internet era, it’s really anyone’s guess as to what happens when we walk through that door.

• Social media
• Cryptocurrency
• Internet regulation
• Decentralised web

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What is Web3?

Third time’s the charm? You know that the internet is always growing and changing. But it’s not just websites and platforms that are falling in and out of favor; the very code on which the internet is built is constantly in flux. In the past few years, some tech futurists have started pointing to Web3, a term coined by computer scientist Gavin Wood , as a sign of things to come. Web3 is the idea of a new, decentralized internet  built on blockchains , which are distributed ledgers controlled communally by participants. Because of the collective nature of blockchains, if and when Web3 fully arrives—elements of it are already in place—it will, in theory, signal a new era of the internet, one in which use and access are controlled by community-run networks rather than the current, centralized model in which a handful of corporations preside over Web2.

Get to know and directly engage with senior McKinsey experts on Web3

Michael Chui is a partner with the McKinsey Global Institute and a partner in McKinsey’s Bay Area office, where Robert Byrne and Marie-Claude Nadeau are senior partners and Roger Roberts is a partner; Homayoun Hatami is the managing partner for global client capabilities and a senior partner in the Paris office, where Eric Hazan is also a senior partner.

Momentum around elements of Web3 has increased significantly  since 2018, in areas like equity investment, online searches, patent filings, scientific publications, job vacancies, and press reports. The financial-services industry has been at the vanguard  of emerging Web3 technologies and assets: at one point, the daily volume of transactions processed on so-called decentralized-finance exchanges exceeded $10 billion. As we’ll see, though, progress has come in fits and starts.

If you’re still not sure what Web3 is, you’re not alone. According to a 2022 Harvard Business Review poll, nearly 70 percent of the more than 50,000 people who responded admitted they don’t know what Web3 is. In this Explainer , you’ll learn more about Web3, its perils and possibilities, and when—or if—it will come to fruition. 

Learn more about McKinsey’s Digital Practice .

What are Web1 and Web2?

First, if there’s going to be a Web3, you should understand what Web1 and Web2 are. Web1 was the first draft of the internet, the one that proliferated in the 1990s and early 2000s. Much of Web1 was built using “open protocols,” which are ways of exchanging information that can be used by anyone, rather than just one entity or organization. Back then, people mostly used the internet to read web pages and chat with friends or strangers. As Web1 progressed, individuals and companies began using the internet increasingly for e-commerce , as well as for academic and scientific research.

Web2 came about in the mid-2000s, when a new crop of internet companies—upstarts like Facebook, Twitter (now X), and Wikipedia—empowered users to create their own content. But there was a cost to these free-to-use “emergent social software platforms,” as MIT research scientist Andrew McAfee described them  in a 2009 McKinsey Quarterly interview—a cost many users weren’t aware of. These companies monetized user activity and data by selling them to advertisers, while retaining control  over proprietary decisions about functionality and governance.

What technologies support Web3?

Web3 describes what the internet could look like built on new types of technology. Here are the three main ones:

• Blockchain. A blockchain  is a digitally distributed, decentralized ledger that exists across a computer network and facilitates recording of transactions. As new data are added to a network, a new block is created and appended permanently to the chain. All nodes on the blockchain are then updated to reflect the change. This means the system is not subject to a single point of control or failure.
• Smart contracts. Smart contracts are software programs that are automatically executed when specified conditions are met, like terms agreed on by a buyer and seller. Smart contracts are established in code on a blockchain that can’t be altered.
• Digital assets and tokens. These are items of value that exist only digitally. They can include cryptocurrencies, stablecoins, central bank digital currencies (CBDCs), and NFTs (nonfungible tokens). They can also include tokenized versions  of assets, including real things like art or tickets to concerts or sporting events.

Later, we’ll see how each of these technologies is used in practice, with real-world examples of Web3-supported products.

How is Web3 different from Web2?

In the Web2 era, control—over transactions, content, and data—is centralized in tech corporations. In theory, that will change  with the advent of Web3. Evangelists believe that in the Web3 era, users will have the power to control their own information without need for the intermediaries we see today. Web3 could change how information is managed, how the internet is monetized, and even, maybe, how web-based corporations function.

Another difference between the two is how they approach trust. In Web2, a transaction—whether it’s an exchange of money or information—relies on two parties (and usually a central facilitator as well) trusting each other with the information that’s being shared. By contrast, Web3 doesn’t ask users to trust one another. Instead, the technology is designed so that a transaction goes through only if certain criteria are met and data are verified.

Here’s a theoretical example to help illustrate how a Web3 transaction might work. Imagine that someone is looking to buy a concert ticket on the resale market. This person has been scammed before by someone selling a fake ticket; she trusted that the person was selling a real ticket and sent the person money, which the person then stole. This time, she decides to try a Web3-enabled, blockchain-based ticket exchange service. On these sites, every ticket is assigned a unique, immutable, and verifiable identity that is tied to a real person. Before the concertgoer purchases her ticket, the majority of the nodes on the network validate the seller’s credentials, ensuring that the ticket is in fact real. She buys her ticket and enjoys the concert.

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Crypto has faced some trouble. what does this mean for web3.

The cryptocurrency market is facing an uncertain future: in 2022, it lost more than 50 percent of its market capitalization, as several currencies lost value and multiple cryptocurrency exchanges closed. It’s true that cryptocurrencies and Web3 are both built on blockchains. But don’t throw the Web3 baby out with the cryptocurrency bathwater: other areas of Web3 experience continue to push forward. Check out these 2022 numbers :

• The sales count for NFTs increased 68 percent, despite a slowdown in the second half of the year. NFTs are digital representations of an asset stored on a blockchain. Because an NFT is, by definition, nonfungible, meaning it can’t be replicated, it serves as digital proof of ownership that can then be bought or sold.
• Core tool downloads for Ethereum increased by 87 percent. Ethereum is a smart-contract blockchain ; core tools are what developers need to work with it.
• On-chain stablecoin payment volume grew more than 50 percent. A stablecoin  is a private, stabilized cryptocurrency pegged to another currency, commodity, or financial instrument.
• The number of active users of Web3 gaming increased 60 percent.
• The global tokenization market grew by about 23 percent. Tokenization is the process by which NFTs are created and has the potential to affect the structure of financial services and capital markets .

What are some examples of Web3 in the real world?

The number of Web3-supported transactions is still growing. Here are four examples  that were noted in the McKinsey Technology Trends Outlook for 2023:

• In November 2022, JPMorgan Chase made its first cross-border blockchain transaction, involving tokenized Singaporean dollar and Japanese yen deposits. The trade was part of Project Guardian, a partnership between JPMorgan Chase and DBS Bank.
• Securitize, a digital-asset securities firm, partnered with global investment firm KKR to launch a tokenized fund issued on the Avalanche blockchain. Tokenization opens up private equity to more individual investors by digitizing operations and lowering investment minimums.
• 100 Thieves, an esports and lifestyle brand, offered an NFT of a diamond necklace to fans if they created a digital wallet on the platform within 75 hours. More than 300,000 people redeemed the NFT.
• After acquiring the Web3 studio RTFKT in 2021, Nike launched its own Web3 platform in 2022 called .Swoosh and has since offered blockchain-based NFTs to customers. The .Swoosh platform is meant to serve as a hub for new product launches, as well as a space for customers to share virtual apparel designs.

Is Web3 the same as the metaverse?

Not quite. According to technologist Matthew Ball , Web3 refers to decentralized databases and systems architecture, whereas the metaverse  is a new paradigm  of computing and networking. They both may succeed what we experience as the internet today, but there’s a long way to go before that happens.

What are some concerns around Web3?

Web3 technologies are already being taken up by tech pioneers. But early Web3 adopters face several challenges, with more likely to crop up as Web3-enabled tools become more widespread. At present, challenges  include the following:

• Evolving regulation. Authorities are developing their approaches to governing issues such as consumer and investor protection, legality and enforceability of blockchain-based contracts, and know-your-customer and anti-money-laundering standards.
• Value proposition and user experience. Compared with Web2 products, which have been fine-tuned over two decades of development, Web3 has relatively poor user experience standards. The utility of Web3 products, such as NFTs, also remains unclear to many consumers and enterprises.
• Consumer protection. Amid recent failures of several Web3 projects, consumer and investor protection is becoming a focal point for regulators and the general public.

Web3 isn’t a fix-all for the problems that plague Web2. In fact, we’ll likely have to work harder to address the same old problems in new ways necessitated by this new generation of the internet.

Learn more about the Financial Services , Risk & Resilience , Strategy & Corporate Finance , and Technology, Media & Telecommunications  Practices, and check out Web3-related job opportunities if you’re interested in working at McKinsey.

Articles referenced:

• “ Rewriting the beauty code of the future ,” April 20, 2023, Hamza Khan
• “ Tokenizing nontraditional assets: A conversation with Ascent Bit’s Brian Clark ,” March 17, 2023,  Andrew Roth  and Dilip Mistry
• “ A CEO’s guide to the metaverse ,” January 24, 2023, Homayoun Hatami , Eric Hazan , Hamza Khan , and Kim Rants
• “ Web3 beyond the hype ,” September 26, 2022, Anutosh Banerjee , Robert Byrne , Ian De Bode , and Matt Higginson
• “ Forward Thinking on tech and the unpredictability of prediction with Benedict Evans ,” April 6, 2022, Janet Bush and Michael Chui
• “ The promise and peril of the metaverse ,” March 29, 2022,  Mina Alaghband
• “ What is the metaverse—and what does it mean for business? ,” March 29, 2022,  Mina Alaghband
• “ Blockchain’s Occam problem ,” January 4, 2019, Matt Higginson , Marie-Claude Nadeau , and Kausik Rajgopal
• “ Blockchain explained: What it is and isn’t, and why it matters ,” September 28, 2018, Brant Carson  and Matt Higginson
• “ Blockchain beyond the hype: What is the strategic business value? ,” June 19, 2018, Brant Carson , Giulio Romanelli , Patricia Walsh, and Askhat Zhumaev
• “ How Web 2.0 is changing the way we work: An interview with MIT’s Andrew McAfee ,” McKinsey Quarterly , November 1, 2009,  Roger Roberts

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Introduction to Web3

Centralization has helped onboard billions of people to the World Wide Web and created the stable, robust infrastructure on which it lives. At the same time, a handful of centralized entities have a stronghold on large swathes of the World Wide Web, unilaterally deciding what should and should not be allowed.

Web3 is the answer to this dilemma. Instead of a Web monopolized by large technology companies, Web3 embraces decentralization and is being built, operated, and owned by its users. Web3 puts power in the hands of individuals rather than corporations. Before we talk about Web3, let's explore how we got here.

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Most people think of the Web as a continuous pillar of modern life—it was invented and has just existed since. However, the Web most of us know today is quite different from originally imagined. To understand this better, it's helpful to break the Web's short history into loose periods—Web 1.0 and Web 2.0.

Web 1.0: Read-Only (1990-2004)

In 1989, at CERN, Geneva, Tim Berners-Lee was busy developing the protocols that would become the World Wide Web. His idea? To create open, decentralized protocols that allowed information-sharing from anywhere on Earth.

The first inception of Berners-Lee's creation, now known as 'Web 1.0', occurred roughly between 1990 to 2004. Web 1.0 was mainly static websites owned by companies, and there was close to zero interaction between users - individuals seldom produced content - leading to it being known as the read-only web.

Web 2.0: Read-Write (2004-now)

The Web 2.0 period began in 2004 with the emergence of social media platforms. Instead of a read-only, the web evolved to be read-write. Instead of companies providing content to users, they also began to provide platforms to share user-generated content and engage in user-to-user interactions. As more people came online, a handful of top companies began to control a disproportionate amount of the traffic and value generated on the web. Web 2.0 also birthed the advertising-driven revenue model. While users could create content, they didn't own it or benefit from its monetization.

Web 3.0: Read-Write-Own

The premise of 'Web 3.0' was coined by Ethereum co-founder Gavin Wood shortly after Ethereum launched in 2014. Gavin put into words a solution for a problem that many early crypto adopters felt: the Web required too much trust. That is, most of the Web that people know and use today relies on trusting a handful of private companies to act in the public's best interests.

What is Web3?

Core ideas of web3.

Although it's challenging to provide a rigid definition of what Web3 is, a few core principles guide its creation.

• Web3 is decentralized: instead of large swathes of the internet controlled and owned by centralized entities, ownership gets distributed amongst its builders and users.
• Web3 is permissionless: everyone has equal access to participate in Web3, and no one gets excluded.
• Web3 has native payments: it uses cryptocurrency for spending and sending money online instead of relying on the outdated infrastructure of banks and payment processors.
• Web3 is trustless: it operates using incentives and economic mechanisms instead of relying on trusted third-parties.

Why is Web3 important?

Although Web3's killer features aren't isolated and don't fit into neat categories, for simplicity we've tried to separate them to make them easier to understand.

Web3 gives you ownership of your digital assets in an unprecedented way. For example, say you're playing a web2 game. If you purchase an in-game item, it is tied directly to your account. If the game creators delete your account, you will lose these items. Or, if you stop playing the game, you lose the value you invested into your in-game items.

Non-fungible token (NFT)

Censorship resistance.

The power dynamic between platforms and content creators is massively imbalanced.

OnlyFans is a user-generated adult content site with over 1-million content creators, many of which use the platform as their primary source of income. In August 2021, OnlyFans announced plans to ban sexually explicit content. The announcement sparked outrage amongst creators on the platform, who felt they were getting robbed of an income on a platform they helped create. After the backlash, the decision got quickly reversed. Despite the creators winning this battle, it highlights a problem for Web 2.0 creators: you lose the reputation and following you accrued if you leave a platform.

On Web3, your data lives on the blockchain. When you decide to leave a platform, you can take your reputation with you, plugging it into another interface that more clearly aligns with your values.

Web 2.0 requires content creators to trust platforms not to change the rules, but censorship resistance is a native feature of a Web3 platform.

Decentralized autonomous organizations (DAOs)

As well as owning your data in Web3, you can own the platform as a collective, using tokens that act like shares in a company. DAOs let you coordinate decentralized ownership of a platform and make decisions about its future.

Smart contract

However, people define many Web3 communities as DAOs. These communities all have different levels of decentralization and automation by code. Currently, we are exploring what DAOs are and how they might evolve in the future.

Traditionally, you would create an account for every platform you use. For example, you might have a Twitter account, a YouTube account, and a Reddit account. Want to change your display name or profile picture? You have to do it across every account. You can use social sign-ins in some cases, but this presents a familiar problem—censorship. In a single click, these platforms can lock you out of your entire online life. Even worse, many platforms require you to trust them with personally identifiable information to create an account.

Ethereum Name Service (ENS)

Native payments, web3 limitations.

Despite the numerous benefits of Web3 in its current form, there are still many limitations that the ecosystem must address for it to flourish.

Accessibility

User experience.

The technical barrier to entry to using Web3 is currently too high. Users must comprehend security concerns, understand complex technical documentation, and navigate unintuitive user interfaces. Wallet providers , in particular, are working to solve this, but more progress is needed before Web3 gets adopted en masse.

Web3 introduces new paradigms that require learning different mental models than the ones used in Web2.0. A similar education drive happened as Web1.0 was gaining popularity in the late 1990s; proponents of the world wide web used a slew of educational techniques to educate the public from simple metaphors (the information highway, browsers, surfing the web) to television broadcasts (opens in a new tab) . Web3 isn't difficult, but it is different. Educational initiatives informing Web2 users of these Web3 paradigms are vital for its success.

Ethereum.org contributes to Web3 education through our Translation Program , aiming to translate important Ethereum content to as many languages as possible.

Centralized infrastructure

The Web3 ecosystem is young and quickly evolving. As a result, it currently depends mainly on centralized infrastructure (GitHub, Twitter, Discord, etc.). Many Web3 companies are rushing to fill these gaps, but building high-quality, reliable infrastructure takes time.

A decentralized future

Web3 is a young and evolving ecosystem. Gavin Wood coined the term in 2014, but many of these ideas have only recently become a reality. In the last year alone, there has been a considerable surge in the interest in cryptocurrency, improvements to layer 2 scaling solutions, massive experiments with new forms of governance, and revolutions in digital identity.

We are only at the beginning of creating a better Web with Web3, but as we continue to improve the infrastructure that will support it, the future of the Web looks bright.

How can I get involved

• Get a wallet
• Find a community
• Explore Web3 applications
• Build on Web3

Further reading

Web3 isn’t rigidly defined. Various community participants have different perspectives on it. Here are a few of them:

• What is Web3? The Decentralized Internet of the Future Explained (opens in a new tab) – Nader Dabit
• Making Sense of Web 3 (opens in a new tab) – Josh Stark
• Why Web3 Matters (opens in a new tab) — Chris Dixon
• Why Decentralization Matters (opens in a new tab) - Chris Dixon
• The Web3 Landscape (opens in a new tab) – a16z
• The Web3 Debate (opens in a new tab) – Packy McCormick

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What is web3?

By Kevin Roose March 18, 2022

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The Latecomer’s Guide to Crypto

Kevin Roose

This is part of “ The Latecomer’s Guide to Crypto ,” a mega-F.A.Q. about cryptocurrency and its offshoots. Kevin Roose, a Times technology columnist, is answering some of the most frequently asked questions he gets about NFTs , DAOs , DeFi and other crypto concepts.

I’m hearing this term — “web3” — all over the place. What is it?

Web3 is the name some technologists have given to the idea of a new kind of internet service that is built using decentralized blockchains — the shared ledger systems used by cryptocurrencies like Bitcoin and Ether.

The term has been around for years, but it has come into vogue in the past year or so. Packy McCormick, an investor who helped popularize web3, has defined it as “the internet owned by the builders and users, orchestrated with tokens.”

Proponents envision web3 taking many forms, including decentralized social networks, “play-to-earn” video games that reward players with crypto tokens, and NFT platforms that allow people to buy and sell fragments of digital culture. The more idealistic ones say that web3 will transform the internet as we know it, upending traditional gatekeepers and ushering in a new, middleman-free digital economy.

But some critics believe that web3 is little more than a rebranding effort for crypto, with the aim of shedding some of the industry’s cultural and political baggage and convincing people that blockchains are the natural next phase of computing. Others believe it’s a dystopian vision of a pay-to-play internet, in which every activity and social interaction becomes a financial instrument to be bought and sold.

Why are so many people talking about web3 all of a sudden?

Part of it is the usual cocktail of hype, marketing and fear of missing the next big thing.

But the web3 boom also reflects the amount of capital, talent and energy pouring into crypto start-ups on the heels of a yearslong crypto bull market. Venture capital firms have put more than $27 billion into crypto-related projects in 2021 alone — more than the 10 previous years combined — and much of that capital has gone to web3 projects. Some big tech companies, such as Twitter and Reddit, have also started experimenting with their own web3 projects.

And the industry has become a magnet for tech talent , with many employees of big tech firms quitting cushy, stable jobs to go seek their fortunes in web3.

I want to understand web3. But first, can you remind me what web1 and web2 were?

Sure. Web1, in the traditional telling, refers to the internet of the 1990s and early 2000s. It was the internet of blogs, message boards, and early portals like AOL and CompuServe. Most of what people did on web1 was passively read static web pages, and much of it was built using “open protocols” like HTTP, SMTP and FTP. (Don’t worry about what those things are — just know that an open protocol is a piece of web infrastructure that isn’t owned by a single company, and that the concept of open protocols is going to reappear a few sentences from now.)

Web2, the story goes, was the next phase of the internet, starting around 2005 or so — the one characterized by social media behemoths like Facebook, Twitter and YouTube. In web2 (or Web 2.0, as it was usually called then), people began creating and posting their own content, actively participating in the internet rather than passively reading it. But most of that activity ended up being distributed and monetized by big companies, which kept most, if not all, of the money and control for themselves.

Web3, the story goes, will replace these centralized, corporate platforms with open protocols and decentralized, community-run networks, combining the open infrastructure of web1 with the public participation of web2.

The crypto investor Li Jin and the writer Katie Parrott sketched the web3 vision this way: “If the pre-internet/web1 era favored publishers, and the web2 era favored the platforms, the next generation of innovations — collectively known as web3 — is all about tilting the scales of power and ownership back toward creators and users.”

That sounds … exciting but vague. How do web3 proponents actually envision that happening?

Web3 proponents argue that a blockchain-based internet would improve on the current internet in several ways.

First, they say, web3 platforms could give creators and users a way to monetize their activity and contributions in a way that today’s mega-platforms really don’t.

Today, for example, Facebook makes money by aggregating user data and selling targeted ads. A web3 version of Facebook could allow users to monetize their own data, or even earn crypto “tips” from other users for posting interesting content. A web3 Spotify could allow fans to buy “stakes” in up-and-coming artists, effectively becoming their patrons in exchange for a percentage of their streaming royalties. A web3 Uber could be owned by the drivers on the network.

Matt Levine, a Bloomberg columnist, put it this way : “A basic premise of Web3 is that every product is simultaneously an investment opportunity.”

Second, proponents argue, web3 platforms could be democratically governed in a way that web2 platforms aren’t.

Internet behemoths like Facebook and Twitter are essentially autocracies. They can unilaterally seize usernames , ban accounts or change their rules on a whim. A blockchain-based social network could delegate those decisions to users, who could vote on how to handle them.

Third, they say, web3 would be less reliant on advertising-based business models than web2, and people would have more privacy as a result, with fewer trackers and targeted ads following them around and fewer giant companies vacuuming up their personal data.

Of course, this is a highly idealistic version of web3, sketched mostly by people who have a financial stake in making it happen. The reality could be much different.

What’s an example of a web3 app that exists today?

An oft-cited example is Axie Infinity, a video game developed by the Vietnamese game studio Sky Mavis, which uses NFTs and Ethereum-based cryptocurrencies to reward players with real money for achieving in-game objectives.

In the game, players can “breed” characters called Axies, and use them in battles against other players. They can also collect virtual land, in the form of NFTs, and earn a type of digital money called Smooth Love Potion, or SLP, which can be traded on a cryptocurrency exchange. (In an article last year , the writer Casey Newton called it “Pokémon on the blockchain.”)

Axie Infinity has attracted millions of players, including a number of people in the Philippines who make a full-time living from playing the game. But the game’s reliance on crypto tokens makes it volatile, and players can lose money if token values drop, as happened last year .

That just sounds like gambling.

It is, sort of. But gambling is an incredibly successful industry! And web3 people would argue that if you’re going to spend hours and hours of your day playing a video game, you should at least have the opportunity to get paid for it.

Are there any other apps that could help me understand the web3 hype?

It’s not as sexy as a video game, but I’ve always thought that Helium was a good example of a web3 project that demonstrated what makes it different from the technology that came before.

Helium is basically a crypto-powered, crowdsourced wireless network. People can sign up to share bandwidth from their home or office Wi-Fi networks with the Helium network, using a special kind of device that plugs into their computer or router. In exchange, they’re rewarded with Helium tokens when nearby devices use their bandwidth. The more often their hot spots are used, the more tokens they get. The Helium network has more than 500,000 active hot spots today, many of them powering connected devices like parking meters and electric scooters.

You could build a similar network without crypto by going door-to-door, trying to convince people to share slivers of their internet bandwidth with nearby devices. Or, if you were a big telecom company like Verizon or AT&T, you could spend billions of dollars to build such a network yourself. But Helium was able to build a network without huge upfront costs by allowing people to earn crypto tokens for adding new coverage to the network, effectively using crypto’s popularity to finance the construction of something it wanted to build anyway.

So part of the appeal of web3 is that it incentivizes people to do things they might not otherwise do, like playing a video game or sharing their Wi-Fi with strangers?

That’s part of it. But web3 advocates think examples like these are just the beginning.

Well, now we’re venturing deep into the land of the theoretical, but some believers think that web3 could become the backbone of a new, tokenized society.

“Web3 will house our financial institutions, social interactions, personal identities and much, much more in the not-so-distant future,” Lior Messika, a crypto investor, told TechCrunch recently .

Among web3 fans, there’s been a lot of talk about “decentralized identity” — the notion that, in the future, we could all have a kind of reputation score that consists of a blockchain-based tally of the jobs we’ve done, events we’ve attended and projects we’ve contributed to. These records would essentially become permanent records of our online lives, and other people could look them up to decide whether to hire us, trust us with some task or even date us.

That sounds terrifying. Wasn’t there a “Black Mirror” episode about this?

Yes, there was . And the permanence of web3, along with its dependence on volatile crypto markets, is part of the reason that the grander web3 vision has been met with so much resistance.

The writer and technologist Robin Sloan, for example, wrote that the ability to delete things — “an operation basically antithetical to Web3,” in his words — was actually a desirable quality of internet services.

Stephen Diehl, a computer programmer and outspoken crypto detractor, went even further, calling web3 “the hyperfinancialization of all human existence .”

Strong words! What are some other objections to web3?

Some skeptics simply believe that web3 doesn’t make sense from a technical perspective. They point out that blockchains are significantly slower and less capable than standard databases, and that today’s most popular blockchains couldn’t even begin to handle the amount of data that Uber, Facebook or YouTube use on a daily basis. To make web3 services perform as well as consumers demand, they argue , you have to build centralized services on top of them — which would defeat the whole purpose.

There are also people who believe that web3 is an attempt by wealthy investors to pay lip service to decentralization while building new, centralized services that they control — making themselves the new middlemen, in effect.

Is that what Jack Dorsey was fighting about on Twitter?

Yes. Mr. Dorsey — the former chief executive of Twitter — is a big fan of Bitcoin, which he believes will replace the dollar and usher in world peace . And, like many Bitcoin fans, he is more skeptical of other cryptocurrencies, including Ethereum, the blockchain that most of the web3 ecosystem runs on.

In a series of tweets in December, he criticized web3, saying that it was “ultimately a centralized entity with a different label.” He also took shots at Andreessen Horowitz, a well-known venture capital firm that invests heavily in web3 projects, implying that their vision of web3 would take control out of the hands of users and put it in the hands of wealthy investors and centralized tech platforms.

What do regulators have to say about web3?

So far, not much, although the topic did come up during a recent congressional hearing .

But the industry could run into hurdles once regulators start paying attention in earnest. One potentially big problem is that crypto tokens — which are critical to many web3 applications — currently exist in a regulatory gray zone in the United States. Some regulators, including Gary Gensler, the chief of the Securities and Exchange Commission, have argued that many tokens are unregistered securities, and that platforms offering tokens should be subject to the same rules as companies that issue stocks and bonds.

Crypto companies counter that tokens should be treated as a new kind of asset, not covered by existing securities laws. But it’s not clear whether they’ll win this argument. And if U.S. web3 start-ups are required to treat their tokens as securities, many of them may have to shut down, change their products or move to a different country.

How is web3 related to the metaverse, the other confusing tech word I can’t escape these days?

The metaverse, if you’ve been following along, is the term we’re using these days for immersive digital worlds in which users can socialize, play games, attend meetings and do other activities together. It’s the vision Mark Zuckerberg outlined when he announced that Facebook was changing its name to Meta. And some crypto proponents believe that web3 is an essential part of the metaverse, because it would allow for the creation of metaverses that aren’t controlled by a single company or governed by a single set of rules.

Many objects in the metaverse may also be crypto tokens, if the web3 crowd has its way. Your metaverse avatar might be an NFT. Your metaverse house might come with governance tokens or qualify you to join a neighborhood DAO. The mortgage on that house might even be packaged into a mortgage-backed security token and sold on a decentralized exchange.

OK, now my head is spinning.

That’s fine. Honestly, most of this stuff is purely theoretical, and you’ve got plenty of time to study up if it comes to fruition.

For now, just know that web3 is a word you’ll be hearing a lot in the next few years as people try to get their heads around the world of new experiences, platforms and moneymaking opportunities crypto enthusiasts are trying to create.

“Beyond the Bitcoin Bubble” This New York Times Magazine article from 2018 examines the case for web3 (before it was called “web3”) as “a way of getting back to the internet’s roots.”

“My First Impressions of Web3” Moxie Marlinspike, the creator of Signal and a well known cryptography expert, takes a skeptical look at web3 and its technical underpinnings in this 2022 blog post, concluding that “decentralization itself is not actually of immediate practical or pressing importance to the majority of people.”

“The Web3 Renaissance: A Golden Age for Content” In this 2021 blog post, Li Jin and Katie Parrott make the case for web3 as a boon to artists, musicians and creators of internet media, saying that technologies like NFTs and DAOs could unlock a “true creative Golden Age.”

“Notes on Web3 ” In this essay, the author Robin Sloan declares himself a “a full-fledged enemy of Web3” because of its hyperfinancialization and technical limits.

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What is Web3? The future of the internet, a 'marketing buzzword' or something still to be defined?

Science What is Web3? The future of the internet, a 'marketing buzzword' or something still to be defined?

The future of the internet is a multi-trillion-dollar question facing the technology industry, including some of the world's wealthiest companies and investors.

At the centre of a vigorous debate around how our online experiences will evolve is a concept called Web3.

The term has existed for the better part of a decade, but remains a hazy and polarising topic, splitting those who see it as a way to change the world for the better, and others who spy an opportunity to make even more money from a decentralised internet.

So what exactly is Web3, and how is it already changing our internet?

A brief history of the World Wide Web

The first version of the internet, known as Web 1.0, existed between the early nineties and early noughties.

During that time, the internet was largely decentralised and spread across numerous web pages, which weren't very linked or interactive. Internet users also didn't produce their own content to share online.

The current era of the internet, Web 2.0, has been around since the mid-noughties. It's defined by the centralisation of things like communication and commerce on corporate platforms, where we post photos to Facebook that we'll later find embarrassing, buy stuff on Amazon, and show everyone our breakfast on Instagram.

This has led to the creation of a whole lot of data about internet users, including their political leanings and spending patterns, which corporations have sold off to advertisers and even to political campaigns .

According to some, the future of the internet will see users take back control, become part-owners of the web, share in the profits made from their content and decentralise it once again.

This is where the idea of Web3 comes in.

What is Web3?

Web3 is a concept for the next iteration of the internet, built around decentralised blockchain technology — that's the same technology used by cryptocurrencies such as Bitcoin, where data isn't managed by a centralised server or authority, but by all of the computer systems that run on the blockchain.

The term Web3 was introduced in 2014 by Gavin Wood, a co-founder of the Ethereum blockchain, but the term gained mainstream attention last year, amid hype from blockchain enthusiasts and technology investors.

The technologies behind it could allow internet users to earn money, assets, or ownership for making content or otherwise contributing to the web, according to Kelsie Nabben, a researcher at RMIT University's Blockchain Innovation Hub.

"People that are creating value — say when you or I post photos or have video calls — we have no ownership over that value, which is the data we are creating," she said.

"I don't think there's consensus on what Web3 is.

"But in Web3, users who contribute might be rewarded with digital currencies, data or digital assets like art, as well as in the governance, so in the ownership of these digital networks.

"The tools can create amazing communities and community dynamics, and then these microcosms of innovation and experimentation have the potential to change economies, the way labour and employment work, as well as access and participation and digital inclusion."

So when will Web3 be here?

In a sense, elements of Web3 are already forming part of our current internet, including systems that use blockchain technology such as cryptocurrencies, some of the virtual worlds in the metaverse and non-fungible tokens or NFTs , which are tokens that assign ownership to things like digital artwork.

For example, in Web 1.0 you may have emailed someone a photo of yourself.

In Web 2.0, you may have shared a selfie with friends on a centralised social media platform, and that platform might have mined the photo for usable or monetisable data.

In a Web3 world, your social media profile photo could, for example, be an NFT of a digital artwork or image you own. This is something Twitter actually introduced in January, to a pretty mixed response.

Why are some people sceptical of Web3?

Despite Web3's ideals of decentralisation and shared ownership, some believe it is also an opportunity for investors to cash in.

Tesla and SpaceX founder Elon Musk is known for his interest in cryptocurrencies, but in December he said he thought Web3 seemed to be "more marketing buzzword than reality".

Around the same time, Twitter founder and fellow blockchain advocate Jack Dorsey said Web3 still had "corporate incentives" and was heavily controlled by venture capitalists and their limited partners, or shareholders.

We've already seen some musicians and artists have their work sold as NFTs without their consent  on new Web3-associated platforms.

Ms Nabben said while there were "very transformative ideologies" behind parts of Web3, it was important to think through the potential downsides of any new technologies.

This includes the technology's limitations, who can access it, and how it can be exploited.

"That's obviously what generally went wrong with Web 2.0, or the current internet as we have it — that many of the apps and the platforms that we use have become very extractive and very exploitative," she said.

"People have a lot of idealistic ideas [like], 'Web3 will be a democracy! Everyone that uses the platform gets the same amount of tokens!'

"But in practice, we see that's not what happens and there's still politics, and people will still try to find ways to exploit the system."

Ms Nabben encourages people to be cautious and investigate the Web3 platforms or products they are interested in before jumping in.

"Look at things like whether the source code is publicly available, whether the platform is privately owned, what the business model is, and whether it's venture-capital-backed or was funded through a new funding model," she said.

"Not everyone would necessarily agree that Web3, as it appears now, is desirable — large players benefit from the way that the internet is structured now, and [there are] still very real commercial interests in some Web3 things, which aren't necessarily bad, but people should be made aware of them."

What could the future of the internet actually look like?

Moxie Marlinspike, the founder of encrypted messaging app Signal, wrote on his website in January that technical and market realities were impacting Web3's dreams of decentralisation, but "you can't stop a gold rush".

Mr Marlinspike said he could understand the idealism of Web3's advocates and the use of blockchain technology was leading to "creativity/exploration that is somewhat reminiscent of early internet days".

Ms Nabben said she liked the idea of Web3's participatory systems, but it was too early to say whether they would work as planned.

"I think it's so early in the innovation on the governance models of how to practically achieve that."

She said it will be important to bring transparency and accountability to the systems on which the future of the internet is built, especially in decentralised spaces like those enabled by   Web3.

"The rules are in the software code, rather than the rules being in the law of Australia, for example.

"The people that actually get to encode technology have a great responsibility to think about the social consequences of it."

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Web3, often known as Web 3.0, is a concept for a new version of the World Wide Web that is based on the blockchain technology and integrates decentralisation and token based economics. Ethereum’s co-founder Gavin Wood coined the term in the year of 2014.

The topic has a high probability of being asked as a Current Affairs Question or as a Science & Technology Questions in IAS Prelims and Mains.

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What is Web 3.0?

Web 3.0 refers to the next generation of the internet, in which apps and websites will be able to handle data in a clever human like manner using technologies such as machine learning (ML), Big Data, and decentralised ledger technology (DLT), among others. Tim Berners-Lee, the inventor of the World Wide Web, dubbed Web 3.0 the Semantic Web, with the goal of creating a more autonomous, smart, and open internet. Web3 ideas vary, but they all focus around the concept of decentralisation and frequently include blockchain technologies, such as cryptocurrencies and non-fungible tokens (NFTs).

Data will be interlinked in a decentralised manner, which would be a significant improvement over our present internet generation (Web 2.0), where data is generally held in centralised repositories. Users and computers will be able to engage with data as well. However, programmes must be able to comprehend information both conceptually and culturally in order for this to happen. With this in mind, the Semantic Web and Artificial Intelligence (AI) are the two cornerstones of Web 3.0.

Because Web 3.0 networks will operate via decentralised protocols — the founding network protocols of blockchain and cryptocurrency technology — it is expected to witness a strong confluence as well as symbiotic relationship between the above three technologies and other sectors. They will be interoperable, smoothly integrated, automated by smart contracts, and used to run everything from microtransactions to censorship resistant P2P data file storage and exchange through applications like Filecoin, to entirely transforming how businesses conduct and operate. The present flurry of DeFi protocols is only the beginning.

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Evolution of the Web Technology

Web 1.0 (1989 to 2004).

Despite only providing access to limited content and little to no user involvement, Web 1.0, also known as the Static Web, was the earliest and most dependable internet in the 1990s. Because there were no algorithms to sift through internet pages in Web 1.0, it was incredibly difficult for consumers to obtain useful information. Simply described, it was like a one way road with a narrow footpath wherein content was created by a small group of people and information was largely gathered through directories.

Web 2.0 (2004 to present)

Thanks to developments in internet technology such as Javascript, HTML5, CSS3, and others, the Social Web, aka Web 2.0, made the web a lot more interactive. Because data can now be transferred and shared across several platforms and applications, social media and user-generated content production have flourished.

Web 3.0 (proposed)

Web 3.0 is the next step in the evolution of the web, allowing it to process data with nea human intelligence through the deployment of AI systems that can run clever programmes to help users.

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What are Cryptocurrencies?

A cryptocurrency is a digital money that is decentralised and does not rely on a bank or central body to validate transactions. This means that no single central authority has complete control over a cryptocurrency network, making regulation and oversight impossible to implement. Any cryptocurrency is built on top of a specifically designed decentralised programme that uses blockchain technology to keep a public ledger that each node on the network copies. This approach gives the ledger the advantage of being tamper resistant, making the entire system impervious to alteration.

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What is Blockchain Technology?

It’s a collection of records that can continue to grow endlessly. To handle the movement of data between multiple nodes(also called as blocks), blockchain employs peer-to-peer networking.

“Blockchain” is a chain of blocks, as the name implies. Depending on the application’s design, the number of blocks can vary. A block is a programme instance, and numerous instances of the same programme can run on the same machine or on different machines. Different algorithms are used to find the address of a particular block in the entire chain. Each block has an address of a block preceding it, as well as the block succeeding it. Each block keeps the same data as the others, and whenever there is a legitimate addition of data on the network, it is distributed to all blocks, who update their copies of the ledger accordingly.

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Web Form Evolution: From Web 1.0 to Web 3.0 Essay

Web 1.0: also called the Read-Only era represented the static websites where the user got limited to reading information presented to him. It represented a one-way information flow just like a school library. It missed the interchange of information between consumers and the producers of information. The examples are the many static websites during the DotCom boom which presented the internet before 1999 (Mike, 2006). Many experts call it the hot-mail and fully static website era. The webmaster got concerned with updating the website and providing information to the users. Today’s users get concerned with more than just information. This leads to the birth of web 2.0.

Web 2.0: also known as write-read-publish when the webmasters realized that the consumers of information needed more than just information. This got attributed to the lack of interactivity in web 1.0. Now users can read, write, publish, and edit information and share it with the rest of the world without fear of punishment. It has brought about active interaction of users with the webmasters. It got born in the year 1999 with the contributors being LiveJournal and Blogger. With the birth of this technology, even non-technical users can easily interact and contribute to blog platforms. In Web 2.0, it took users a few seconds to publish information compared to Web 1.0. It required effort and co-ordination among users, webmasters, and developers to do a minor change in Web 1.0. Some of the examples of Web 2.0 are YouTube, FaceBook, Twitter, Wikipedia, Flickr, etc (Neil, 2008). The webmaster shares the responsibility with the internet audience to make sure the internet becomes more informative and educative.

Web 3.0: also known as Semantic web has been able to provide analytical abilities and intelligence searching. It has brought about a gradual transformation of the web from an overloaded and dumb medium to an intelligent medium. It gets built-in cloud computing and the information can be shared in any computer architecture i.e. desktops, laptops, mobile devices, I-pads, etc. The search engines get built incorporating intelligence contextual searching avoiding keyword searching (Eduard, 2008). One of the examples of Web 3.0 is the Google search engine.

The following will be the benefit for businesses migrating from Web 2.0 to Web 3.0 (Mike, 2006):

• Contextual Searching: the queries get interpreted just like a human brain. The info agents fill the gap in the tailor-made search thus deducing the best possible answer for your query. This saves the business time and they get the right information.
• Tailor-made Searching: Web 3.0 will provide the business with easier searching for information. Direct answers get provided for any queries. It will save the business from wasting time on million of meaningless results.
• Personalized Searching : Web 3.0 can read and understand personal preferences. The business has its unique web profile based on its browsing history. The business can get results based on web profile and preference.
• Evolution of 3D Web: the businesses will reap the benefits of 3D technology, hence reaping the benefits of the virtual world. The businesses will also get the advantage of cloud computing or service-oriented architecture, where the business will be able to share applications without having to develop their own.
• Interoperability: businesses will benefit from easier customization and device-independent provided by Web 3.0. Applications can run in all technology architecture i.e. computers, TVs, hand-held devices, microwaves, etc.

Eduard, H. (2008), Web 3.0 . Web.

Mike, E. (2006), The Evolution of the Web-From Web 1.0 to Web 4.0 . Web.

Neil, S. (2008) Education 2.0. Designing the web for teaching and learning , Web.

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IvyPanda. (2021, April 13). Web Form Evolution: From Web 1.0 to Web 3.0. https://ivypanda.com/essays/web-form-evolution-from-web-10-to-web-30/

"Web Form Evolution: From Web 1.0 to Web 3.0." IvyPanda , 13 Apr. 2021, ivypanda.com/essays/web-form-evolution-from-web-10-to-web-30/.

IvyPanda . (2021) 'Web Form Evolution: From Web 1.0 to Web 3.0'. 13 April.

IvyPanda . 2021. "Web Form Evolution: From Web 1.0 to Web 3.0." April 13, 2021. https://ivypanda.com/essays/web-form-evolution-from-web-10-to-web-30/.

1. IvyPanda . "Web Form Evolution: From Web 1.0 to Web 3.0." April 13, 2021. https://ivypanda.com/essays/web-form-evolution-from-web-10-to-web-30/.

Bibliography

IvyPanda . "Web Form Evolution: From Web 1.0 to Web 3.0." April 13, 2021. https://ivypanda.com/essays/web-form-evolution-from-web-10-to-web-30/.

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