What Is Web 3.0? The Next-Generation Network Built on Blockchain

You've probably heard the term Web 3.0 everywhere by now, regardless of which resources you access, which forums you open, or which social media platform you use.

Alongside Web 3.0 come many terms that can be confusing if you're not already in the loop — blockchain, cryptocurrency, non-fungible tokens (NFT), and more. No one knows exactly how long Web 3.0 will last, or whether Web 4.0 will eventually replace it. But without understanding the general principles behind the technology, a business won't last long.

In this article, we take a detailed look at Web 3.0.

What Is Web3? The Decentralized Internet of the Future

The World Wide Web (WWW) once blew open the "marketplace" of online information, and today it sits on a network that anyone, anywhere on the planet, can potentially access using the internet.

Web 2.0 fundamentally changed the principles of communication. Web 3.0, on the other hand, places weight on value and meaning. Web 2 was an interface revolution; Web 3 is a back-end revolution.

Reference: The Characteristics and Differences Between Web 1.0, Web 2.0, and Web 3.0

The term Web 3.0 itself was coined in 2014 by Ethereum co-founder Gavin Wood. Put simply, Web 3.0 is a decentralized way of communicating over the internet, in contrast to the centralized storage that Web 2.0 provides.

This dramatically raises the level of security and safety for personal data — and all of this is made possible thanks to blockchain systems.

What Is Blockchain?

Blockchain technology is a database unlike other similar decentralized networks. No single owner can use the information stored there at their own discretion by right of ownership.

Instead, participants collectively manage the blockchain database, and anyone can use it. At the same time, this surface data becomes extremely difficult to steal. The idea is that everything a user does — from shopping to social media — goes through the same secure process, delivering both privacy and transparency.

In a blockchain system, cryptographic principles are used for protection. Information is stored in blocks, which together form a single whole lined up in a chain. To tell the blocks apart, each one has its own timestamp, data, and a hash pointing to its content.

These shares can be controlled by anyone holding enough tokens or crypto. Holding enough of these tokens grants the right to vote on the network. For example, owners of governance tokens can use their holdings to vote on the future of a decentralized lending protocol.

What Is Crypto in Web 3.0?

Whenever you hear about Web3, you'll notice cryptocurrency is part of the conversation. That's because cryptocurrency plays a key role in many of these protocols.

It also provides a financial incentive (tokens) for anyone who wants to create, manage, contribute to, or improve one of these projects.

These protocols can offer many kinds of services:
・Computation
・Storage
・Bandwidth
・Identity
・Hosting

Consumers of these services typically pay to use the protocol, much like they currently pay a cloud service provider.

Cryptocurrency has created a powerful, ever-growing market for decentralized finance (DeFi). In many cases, Web3 applications are built on a technology called Ethereum, which, like Bitcoin, rewards users who help maintain the network. This coin is called Ether, and it has a market capitalization of $511 billion.

An app itself can also have a linked token that serves not only for paying for services, but also as a voting share that governs the app's development and fee structure.

What Are Decentralized Apps in Web3?

Web3 applications run on a blockchain, on a decentralized network made up of many peer nodes (servers), or on a combination of both, forming a crypto-economic protocol. These are decentralized apps.

At the heart of Web3 are decentralized applications (or DApps) built using the Ethereum blockchain, which pays users to keep the network online.

DApps play the same role for Web 3.0 that the App Store has long played for the Apple ecosystem.

The DappRadar tracker lists more than 8,700 active decentralized applications, including numerous crypto trading platforms and games.

The line between the two is sometimes blurry. Many games require players to earn and trade non-fungible tokens, or NFTs — virtual characters or collectibles that can carry very high price tags.

Most decentralized apps today are used for cryptocurrency exchange or NFT trading. Only a small portion of DApps are games you can play to earn money in cryptocurrency.

Web 3 and NFT

Speaking of games... In the Web 2.0 era, gamers could do little more than complain about the number of bugs in the next sequel to their favorite title. In Web 3.0, users can vote on the changes they want using tokens, and effectively build the game the way they want it.

NFTs have also caught on in the gaming industry. Game fans are buying items placed in virtual reality.

And more broadly, music, museum photos, any kind of meme, and even your cat could potentially be tokenized today. That's how one of the infamous NFTs from the Bored Ape Yacht Club sold for $3.4 million in 2021.

In the past, early venture capitalists put in their own money to fund the development of a game (or any other product) and dictated to the creator the terms under which they would profit in the shortest possible time. Now, anyone can take part financially.

A company announces the release of X tokens, gives 10% to early investors, puts 10% up for sale, and sets aside the rest for future payments to contributors and funding the project. Some people find this principle a little too close to a financial pyramid scheme.

That said, all blockchain data is fully public, so buyers have complete transparency into what's happening. By contrast, network marketing companies that don't avoid fraud tend to keep everything secret.

The Outlook, Issues, and Challenges of Web 3.0 Ahead

The idea of a decentralized internet sounds appealing. We instantly imagine liberation from the "capitalist oppression" that dominates every corner of daily life. But not everything is rosy.

So who is investing the most in Web 3.0 right now?

Venture capitalists with hundreds of millions of dollars in capital, big tech companies, and hedge funds. As a result, the latest blockchain networks are distributed unevenly. In other words, crypto keys worth hundreds of millions of dollars remain in the hands of a small number of large investors.

Simply storing information in multiple locations makes it extremely difficult to control. Even so, if you hire many representatives at once to become participants in a decentralization scheme, the whole idealistic principle ends up going to waste.

Some experts go even further, arguing that Web 3.0 is just the same centralized organization under a different name. There's no need to overstate it, but Elon Musk has said Web3 feels more like a "marketing buzzword" than reality.

Some cybersecurity experts point out that while hacking data stored in blockchain form is harder, preventing such hacks in the first place is also nearly impossible.

In the end, the question isn't whether people can access data easily, but whether they know how to manage it safely. Widespread cryptocurrency theft is one example of this kind of problem.

Many projects run online chat groups for support, yet don't even list a contact number. If you make a typo and send funds to the wrong account, that money can be lost forever.

Calling your bank's customer service won't solve the problem either. After all, if banks used to be the ones safeguarding your finances, in Web 3.0, heaven helps those who help themselves. Freedom comes with a responsibility that not everyone can handle.

Skeptics believe that many of the requirements underlying Web3 — decentralized architecture, decentralization itself — could be better implemented without blockchain at all, since building a decentralized structure on top of a centralized one changes nothing fundamental.

Summary

So, is Web 3.0 technology, which still hasn't taken root in everyday life, no longer justified? As with every innovative solution, there will always be people who just want to make money through fraud — but also enthusiasts who set out to build something truly great.

Is Web 3.0 a genuine breakthrough, or just a slightly updated Web 2.0? We'll see over the next 10 years. Either way, the outcome will depend heavily on how the major players behave.

Miichisoft always strives to stay at the forefront of the latest technology. For us, Web 3.0 isn't some distant future — it's a very real, tangible field our staff are closely engaged with. So if you're interested in development in the Web 3.0 space, please feel free to contact us.

Source: The App Solutions (What is Web 3.0? Internet Next Era Based on Blockchain)