Web3: The hype and how it can transform the internet

As the internet has evolved, its influence on us has been profound, shaping everything from what we read, the products we purchase, the entertainment we watch and how we communicate. It seems to know everything about us – our likes, dislikes, friends, shopping habits and favourite cat videos.

This intimate knowledge could be inferred as good or bad. You can be targeted with advertisements for products you didn’t know you wanted and be suggested news articles you didn’t know you wanted to read. This personalization can be convenient but also invasive.

There are concerns abound over who has access to and controls this personal information. Big tech has increasingly come under fire for their use and potential abuse of personal data, combined with their large influence over the internet based on their market dominance. As of 2019, 43% of total net traffic flows through Google (Alphabet), Amazon, Meta (previously Facebook), Netflix, Microsoft and Apple.

This dominance is more acute within their primary categories, with Google controlling almost 87% of the global search market and Meta reaching 3.6 billion unique users across its four major platforms (Facebook, Whatsapp, Messenger and Instagram).

Web3 is a new iteration of the internet that harnesses blockchain to “decentralize” management thus reducing the control of big corporations, such as Google or Meta, and making it more democratic. It is defined by open-source software, is trustless – doesn’t require the support of a trusted intermediary – and is permissionless (it has no governing body).

Web3 draws its named as the third iteration of the internet. The first iteration of the internet consisted of read-only, static webpages (view a BBC homepage from August 2000 as an example). Web 2.0 added the ability to interact with and produce content, making activities such as social media and online banking and shopping possible.

The concept of Web3 has been around for over half a decade, originally coined by Ethereum co-founder Gavin Wood in 2014. It gained traction, however, in 2021 with the proliferation of blockchain technologies, expanding NFT markets, venture capital investments and ongoing calls to reign in the power of big tech.

The current internet, Web 2.0, relies on systems and servers owned largely by big corporations, raising concerns over system vulnerability and control. When Meta’s associated platforms suffered a global outage in early October – exacerbated by the centralization of its servers – there were calls to adopt Web3 and its decentralized architecture.

Proponents of adopting Web3 also advocate for internet activity to be governed by the many rather than the incentives and biases of the few. After all, why should large corporations control our data?

In a Web3 world, activities and data would be hosted on a network of computers using blockchain rather than corporate servers. The internet would likely have the same look and feel, at least initially, but your internet activities would be represented by your crypto-wallet and websites hosted through decentralized applications (dapps), digital applications run on a blockchain network.

The definition of Web3 can differ by source; however, some consistent features will likely be embedded into the system:

Anonymous single-sign-on

Anonymous single-sign-on will allow one username and authentication method across all websites and accounts, rather than individual logins for each site. This login would not require you to relinquish control of sensitive personal data.

This feature differs from current Facebook or Google single-sign-on, which grants access to your personal data until you revoke this access. However, all transactions on the blockchain are public, so technically, everyone can see the assets and data assigned to a specific wallet. This transparency is also why wallets are anonymous, identified only by an address, not a name unless the individual chooses to assign personal details to their wallet(s).

Individual ownership and tokenization

Activities that contribute to Web3 are rewarded by a token (either NFT or fungible, e.g. cryptocurrency) to incentivize participation and distribute ownership.

For example, when posting a new social message, an NFT representing that post would be “minted” (generated) and stored as an asset in a crypto-wallet. This token represents ownership over the message, which can then be traded with others via their wallets. If the post is popular, the returns will go to the token owner rather than to the platform it’s hosted on.

Self-governing

Along with the distribution of ownership is the distribution of decision-making power. Without a central authority, blockchains rely on the entire network to verify an activity via consensus. However, specific systems, such as those used in decentralized autonomous organizations can be established to democratize decision-making based on the quality or volume of a user’s investment into a site or dapp.

For example, based on their share of ownership of a platform, users can vote on the rules that govern a site (e.g. what classifies as misinformation). These rules are then executed by smart contracts.

While several Web3 dapps exist, there is no broad Web3 infrastructure like the current internet. Significant widespread development, consolidation and accessibility efforts are needed before the Web3 vision is realized, if at all.

There are many considerations for widespread adoption, meaning Web3 may not live up to the hype promised. Questions remain, such as can Web3 scale sustainably? Will Web3 really deliver online sovereignty? Can we educate and shift the culture of the masses to understand Web3?

There are no one-word answers to these questions, but we look forward to unravelling the potential and challenges they elude to in future articles.