Everything about web3
Updated: May 1, 2022
You've probably heard about Web3 unless you've been living under a rock. Web3 is widely regarded as the Internet's future, and Web3 applications have recently become popular. What is Web3, and what benefits will it offer to users? How can developers create Web3 applications and dApps? The notion is having a moment, as shown by VC funding, lobbying blitzes, and odd corporate declarations. However, figuring out what all the buzz is about may be challenging.
Web3 symbolizes the next phase of the internet, and maybe of organising society, according to believers. According to legend, Web 1.0 was the period of decentralised, open protocols, when the majority of internet activity consisted of visiting individual static websites. Web 2.0 is the period of centralization, in which a large portion of communication and commerce occurs on closed platforms controlled by a few super-powerful corporations—think Google, Facebook, and Amazon—and subject to the nominal supervision of centralised government authorities. Web3 is meant to liberate the globe from monopolistic domination.
There are a few key distinctions between web2 and web3, but decentralisation is at the heart of both.
By introducing a few additional capabilities, Web3 improves on the internet as we know it today. web3 stands for:
• Distributed and dependable Payments that are already embedded into the system
Web3 developers seldom create and deploy apps that operate on a single server or store data in a single database (usually hosted on and managed by a single cloud provider).
Instead, web3 apps are built on blockchains, decentralised networks of numerous peer-to-peer nodes (servers), or a hybrid of the two.
Bitcoin is often cited in discussions about web3. This is because many of these systems are primarily reliant on bitcoins. Anyone who wants to help establish, manage, contribute to, or enhance one of the projects gets a monetary reward (tokens).
These protocols might offer a variety of services formerly provided by cloud providers, such as compute, storage, bandwidth, identity, hosting, and other internet services.
People may earn a livelihood by taking part in the protocol in a variety of ways, both technical and non-technical.
Consumers of the service often pay to utilise the protocol, just as they would pay a cloud provider such as AWS today. With the exception of web3, money is sent directly to network members.
You'll see that, like with many kinds of decentralisation, needless and frequently wasteful intermediates are eliminated.
Payments to indigenous peoples
Tokens also enable a truly borderless and seamless native payment layer.
These methods are extremely complicated, and they still don't allow for genuine international interoperability among players. In order to utilise them, you must also provide up sensitive information and personal data.
Web3 apps may use crypto wallets like MetaMask and Torus to make international payments and transactions simple, anonymous, and safe.
Solana offers latency in the hundreds of milliseconds and transaction costs that are a fraction of a cent. Users do not have to go through the many, time-consuming processes required by the current financial system to connect with and participate in the network. They just need to download or install a wallet to begin sending and receiving money without any restrictions.
A novel approach to business formation
Tokens also imply the concept of tokenization and the establishment of a token economy.
Consider the present status of establishing a software firm. Someone has an idea, but in order to begin construction, they need money to maintain themselves.
To get funds, they hire venture capitalists and give up a portion of the firm. This investment instantly establishes misaligned incentives that will, in the long term, prevent the greatest user experience from being built.
Also, even if the firm succeeds, it will take a long time for everyone engaged to enjoy any of the value, which might result in years of labour with little actual return on investment.
Instead, imagine announcing a fresh and innovative idea that answers a genuine need. From the beginning, anybody may help construct it or invest in it. The corporation announces the release of a certain amount of tokens, of which 10% will be given to early builders, 10% will be sold to the general public, and the remainder will be used to compensate contributors and support the project in the future.
Stakeholders may vote with their tokens on changes to the project's future, and those who helped construct it can sell part of their holdings to profit when the tokens are distributed.
People who believe in the initiative may purchase and keep shares, while others who fear it is heading in the wrong path can sell their shares.
Purchasers have complete transparency over what is happening because blockchain data is completely public and open. This is in contrast to purchasing stock in a private or centralised company, where many details are generally kept hidden.
What are the advantages of Web3?
The key benefit of this notion is that it gives users back control over their data. Its advocates argue that we are now at the whim of huge online power brokers like Twitter and Google, as well as anybody else that gathers, catalogues, and exploits our data for personal gain. Anyone who has ever been presented with an unnervingly well-targeted ad understands the sinking feeling that makes you wonder how much information companies you interact with online — and even those you don't — have about you.
Web3 promises to address this issue by reclaiming control of your data as well as all of your developed and owned digital assets. It will do so by issuing you and all of your assets with unique digital tokens that Web3's fundamental technology will be able to track throughout the internet. This would function similarly to the central ledgers that allow cryptocurrencies to track each bitcoin, ether, or dogecoin as it transfers from one owner to the next throughout the globe. Unlike the existing web, that ledger would be managed by everyone and accessible to everyone while protecting each user's privacy. This final aspect is critical since it means that other individuals you contact online will be able to use that central ledger to verify your and your assets' legitimacy, without having access to any of your data or assets without legal authorization.
Finally, Web3's ultimate form would be a utopian internet in which all users, data, networks, and stakeholders were treated equally. You'd have the same right to your own data as Verizon or Comcast, and the same opportunity to profit from it as they have now.
That is, of course, the perfect version of the notion. Anyone who remembers the initial, utopian vision of social networking should be able to observe how well online ideals and reality match up. All they'd have to do is compare those early promises of good connectedness and collaborative development to the dystopian reality that many of us are now confronted with. Sure, you'll be able to keep up with the happenings at your cousin's bakery or your friend's newborn today, but you'll also have to filter through false news, misinformation campaigns, cyberbullying, and everything else that has sprung up during the Web 2.0 period.
This is already taking place in the web3 world.
Radicle (a decentralised GitHub alternative) is one example of an app that enables stakeholders to engage in project governance. Tokens have been issued by Uniswap, SuperRare, The Graph, Audius, and a slew of other protocols and initiatives to allow ownership, participation, and governance.
DAOs (Decentralized Autonomous Organizations), which provide an alternate method to create what we've historically thought of as a corporation, are garnering a lot of traction and funding from both conventional developers and venture capital organisations.
These organizations are tokenized, and they flip the concept of organisational structure on its head by providing real, liquid, and equitable ownership to a wider number of stakeholders, as well as aligning incentives in novel and exciting ways.
Friends with Benefits, for example, is a decentralized autonomous organisation (DAO) of web3 builders and artists that is roughly a year old, has a market worth of about $125 million as of this writing, and just secured a $10 million financing round from a16z.
DAOs could fill a whole article on their own, but for now, I'll just say that I believe they represent the future of developing goods and (what we used to think of as) businesses. A decent overview of the present DAO landscape may be found here.
In Web3, how does identity work?
Identity in web3 functions in a very different way than it does now. The majority of the time, IDs in web3 applications are related to the wallet address of the person engaging with the app.
Unlike web2 authentication approaches like OAuth or email + password, wallet addresses are completely anonymous unless the user decides to attach their own identity to it publicly (which almost usually require users to send over sensitive and personal information).
If a user chooses to use the same wallet for various dapps, their identity is smoothly transferred across them, allowing them to build up their reputation over time.
Developers may already include self-sovereign identification into their apps using protocols and technologies like Ceramic and IDX to replace conventional authentication and identity layers. The Ethereum Foundation also has a working RFP for establishing a "Sign in with Ethereum" standard, which would assist give a more streamlined and documented manner to accomplish this in the future. This is also a fantastic thread that discusses how this might improve typical authentication processes.