The internet has become the most important part of modern society. The internet we know today has evolved since its origin, from simple static text-based web pages to the advanced internet we know today. In the present world, we are currently on Web2 which consists
of modern-day social media, e-commerce, and all the other online services. Web2 is great at all these things but as we know every single thing has some pros and cons. But we also need to learn about web3 and decentralization in this guide, as well Web2 has some issues such as:
Lack of Privacy: The user data is not completely secure, the online services collect the data without the permission of the user, which leads to issues of spamming of ads and emails.
Limited Control: In Web2 the control of the internet is in the hands of big tech giants like Google, Microsoft, Amazon, etc, the users don’t have full control over their digital identities
Centralized Dependence: Centralized groups of companies like Google, and Amazon manage data in Web2 Internet. The users must trust these companies to manage their online profiles and data.
To solve these problems the next generation of the internet Web3 comes into the picture. This portrays a decentralized form of the internet that provides the user with more control over their data and digital identities. This removes the interference of the middleman and centralized authorities.
But the question is what exactly is Web3? How does it work? and how it can be the future of the internet. Now let’s dive into the world of Web3 and understand how it exactly works, what are its key features, and possible challenges we might face while working with Web3, What could be the impact of it on the digital world?
What is Web3?
The Web3 is the next evolution of the internet, which provides more control directly to the user, eliminating the middlemen and the centralized authorities. Right now, Services like Amazon and Google manage these type of data. This means when you search, post, or buy something from the internet the data. Some companies collect data for you using these types of web activities. Further distributed to other companies which then bombard the users with personalized ads and spam.
Using Web3 we can change this, Web3 uses blockchain technology, in which the information provided by the user is stored in a very secure manner that can’t be altered or controlled by any single company. In Web3 the user data is distributed in a decentralized network instead of storing it on a single central server managed by some big companies. This gives the user full control of their data and digital properties.
With Web3 we don’t need to depend on the banks to complete the online transactions or the social media platforms to store and manage your profile and data. The interactions between users through Web3 happen directly without any interference from middlemen. This is done through smart contracts, which are programs on the blockchain technology that run automatically, ensuring everything works smoothly and fairly.
In a nutshell, Web3 makes the internet:
- More private: The user controls their data.
- More secure: Only the user can do the Data alternation and deletion.
- More Open: The interactions between users are processed without the involvement of the middlemen which controls what the user can or can’t do.
Evolution of the Internet
The internet has gone through a lot of phases since its origin. Each phase improves the previous version and solves the issues of the previous one.
1. Web1 (1990s – Early 2000s): The Read-Only Web
- Web1 is the earliest form of the internet. This contains simple static pages with simple text and images, there were no interactive elements in the web pages.
- In this, the users can only view the contents but they can’t interact with the webpages, like commenting, liking, and sharing features were missing.
- The big tech companies completely managed these websites, with zero user-uploaded data, if the user wanted to upload their data on the web, the only way to do that was to make their website from scratch.
Examples: Yahoo! Directory, early news websites, personal blogs, etc.
2. Web2 (Early 2000s – Present): The Interactive Web
- The introduction of Web2 had a big impact on the Internet, the websites under Web2 introduced interactive features, which made the webpages more dynamic. This allowed the users not just to read the content on the web pages but also interact with the web elements. Adding features like posting comments, uploading videos, and connecting with other users online.
- This gave birth to social media platforms like Facebook, Instagram, and YouTube, which allowed users to become content creators. The people could share their thoughts, images, and videos, on these platforms, which other people can like, share, and comment on the shared content, making the web more interesting and interactive.
- Large tech companies like Google, and Amazon became more and more dominant over time. These companies offered free services to the users while collecting their data and using this data to show personalized ads, recommend the user data as per their interests, and track the behavior of the users. While this made the internet a lot more exciting it also raised some concerns about the privacy and security of the users.
- Due to the centralized model of Web2, in which large tech companies own and control the user data and digital profiles, they can ban accounts, censor content, and monetize the user’s information without obtaining the user’s consent.
These limitations of Web2 push the focus to Web3.
3. Web3 (Emerging Now): The Decentralized Web
- Web3 aims to solve the problems in Web2, this is done by removing the central control over the user’s data and making it more private, by giving full control over their data, digital identity, and assets. Hence blockchain, which prioritizes transparency, security, and decentralization of the data.
- Instead of the websites being controlled and owned by some big tech company, Web3 distributes the data across the network of computers(nodes), this makes the data harder to alter, censor or delete. This ensures more privacy and security for the users.
- Web3 eliminates the need for middlemen or banks for interactions between users. This is done using self-executing scripts or agreements which are known as smart contacts. These contacts make interactions like money transfers, and exchange of property direct person to the person removing the need for a third party.
Examples of Web3 innovations include Ethereum (a blockchain for DApps and smart contracts).
Key features of Web3
Decentralization: This plays a very crucial role in making the Internet more open, user-controlled, and transparent, this protects the user’s data from being controlled by big tech companies. In Web3 the control is distributed across some computer networks known as nodes this is different from the standard centralized control of Web2. This change in control authority ensures that no single company has full control over the user’s data reducing the risk of content censorship, and data alteration, and improving the privacy and security of user’s data.
If you wanna learn more about Decentralization: Wikipedia
Blockchain Technology: Blockchain is one of the most important parts of Web3, due to which we get a protected and transparent way to manage the data and transactions between users without depending on any middlemen. The blockchain is a technology that uses a distributed digital ledger that stores the user’s information and data on multiple nodes instead of a single storage owned by a single authority, making it decentralized.
Wanna Learn more about Blockchain visit: TechOn Boom
Cryptocurrencies and Tokenization: Web3 introduces a new system of managing finances which is built around the concept of cryptocurrencies and tokenization. These allow the users to conduct transactions in a decentralized way without the need for any middlemen like banks and other institutions. Cryptocurrencies are based on blockchain technology hence government can’t control them. This makes the transactions more transparent and secure
What are Cryptocurrencies?
The user owns the digital assets that are cryptocurrencies that are the future of money. This acts as the medium of exchange just like traditional money. Cryptocurrencies like Bitcoin (BTC), Ethereum (ETH), and Solana (SOL) use cryptographic techniques to make the money transfer system more secure. This also reduces the risk of counterfeiting the currency because they use blockchain technology which does not allow changes in the data. However, the transfer of cryptocurrencies does not require the involvement of a bank. But doing so with the traditional money requires it. Transferring the currency this way reduces transaction fees and increases the accessibility of financial services, especially for the ones who do not have access to banking services.
What is Tokenization?
Tokenization is a process in which real-world assets or digital ones are converted into tokens that work on the blockchain technology. That makes the ownership of the assets absolute. These tokens can represent anything from ownership of real-world physical assets to digital assets (like NFTs, and in-game assets).
There are some different types of tokens in Web3:
- Utility Tokens: These tokens are used to access the services that are contained within the decentralized application (DApps).
We can use Ethereum’s ETH to pay for transactions and for executing smart contracts. - Security Tokens: These tokens are used to show the ownership of real-world assets like stocks, bonds, or real estate. This provides more investment opportunities without the involvement of any middlemen or brokers.
- Non-Fungible Tokens (NFTs): These are token’s unique digital assets that prove the ownership of art, music, videos, in-game items, and much more. These tokens can’t be replaced or duplicated which makes them much more valuable in the digital world.
4. Smart Contracts: Smart contracts are one of the most important aspects of Web3, it is the backbone of Web3. Smart contracts are self-executing agreements that are written in code and are stored on the blockchain networks. Unlike traditional contracts that need a lawyer or a middleman to enforce them or in simple language to execute them. Smart contracts are self-executing and can be executed on their own when a pre-defined condition is met without the involvement of any middlemen.
How Do Smart Contracts Work?
Now let us discuss how a smart contract works. A smart contract is like a digital vending machine — when we provide an amount (input) to the contract, it automatically provides us with a product (output) according to the provided input, without the involvement of any human activity. This reflects the core idea of Web3 and decentralization, where transactions and processes run independently without relying on centralized control
Decentralized Applications (DApps): Decentralized Applications or in short DApps are applications that work on blockchain technology rather than on a centralized server. Unlike traditional apps like Facebook, Instagram, or other banking apps. Which are owned and controlled by some particular companies, DApps work on decentralized networks. This means that no single company is claimed to be the owner of an application or has control over it. Instead, the apps are distributed on decentralized networks which contain multiple nodes, which can control the app. The management of apps in this way makes them more secure, and transparent and restricts censorship.
How Do DApps Work?
The operation of DApps is managed through smart contracts, which are self-executing agreements that work on their own instead of depending on middlemen. These apps store the data on a decentralized network using blockchain technology, reinforcing the core principles of Web3 and decentralization. This ensures that no single entity can alter or remove the data.
Self-Sovereign Identity: This allows users to control and own their digital profiles without the involvement of third parties like the government, or banks. In Web2, we can make our accounts on social media platforms, and websites by providing the platforms our personal information and data. The centralized database stores it. Storing the data on a centralized server or database can give full control of our data to the companies. This will make it vulnerable to attacks like data leaks, hacks, and misuse of the data.
Interoperability: In Web3, interoperability is a way to connect all the different blockchain networks like decentralized Applications, and digital. This makes them communicate and interact with each other, in the current phase of the internet operating on Web2. The online platforms work on a silo-based system, which means that data that is stored on Facebook can’t be accessed or used by Twitter or nowadays X, and money in PayPal or any other payment app can’t be directly transferred to Apple Pay or other payment apps without the involvement of some other platform. Which helps users and developers move their data from one platform to another without any difficulties using blockchain-based systems.
Benefits of Web3
- Data Ownership and Privacy: Unlike Web2 where the user’s data is controlled and managed by different companies users do not have full control over their digital identity and are prone to threats like data leaks, and misuse of data. To make the data more user-controlled these issues are solved in Web3 by using a decentralized storage system working on blockchain technology
- No Middlemen (Peer-to-Peer connection): One of the biggest benefits of Web3 is removing the middlemen. Making the transactions and interactions between users smoother by using blockchain-based cryptocurrencies. Hence removing the involvement of banks and any other middlemen and making the transaction more direct.
- Transparency and Security: Web3 is based on blockchain technology and the immutable nature of blockchain. Which makes the data stored in it more transparent and secure. Every transaction is verified multiple times to ensure the data is trustworthy. This reduces data leaks and fraud.
- Financial Inclusion: Due to decentralized blockchain-based cryptocurrencies the transaction of assets became available to all the users of the internet. This has a major impact on people who do not have access to banking services. This will give them access to save, invest, borrow, or lend money without the need for any involvement of banks.
- Censorship Resistance: Due to the non-involvement of middlemen like the government and other corporations the content censorship and blocking becomes much more difficult ever next to impossible. This gives much more freedom to content creators to explore the new age of the internet.
Challenges of Web3
While Web3 has a lot of benefits, everything has its pros and cons. Web3 is still in its early development phase, which produces a lot of shortcomings of Web3 like.
- Scalability Issues: One of the biggest challenges of Web3 is scalability. Centralized payment networks like PayPal and Visa are much faster than the new blockchain-based cryptocurrencies like Ethereum. This is because the transaction done using cryptocurrencies needs to be verified by multiple nodes, making the transaction process slow and expensive.
- Complexity and User Experience: The Web3 applications are not beginner friendly the application can be confusing to new users. Like managing a crypto wallet, managing private keys, and understanding the workings of blockchain networks can be overwhelming.
- Security Risks and Scams: While Blockchain is secure, hackers can exploit vulnerabilities in smart contracts and decentralized applications to misuse data and cause data leaks. The hackers have exploited smart contracts and stolen millions of dollars from DeFi systems. The Web3 space is full of scammers and scams, like fake token generators, making it risky for inexperienced users.
- High Energy Consumption: Blockchain networks and cryptocurrencies require a lot of resources to work. This will lead to high energy consumption and can be very expensive to produce and manage.
Conclusion
Web3 is the new age of the internet, which will completely change the internet we know today. Smart contracts and DApps will make the internet decentralized and more user-controlled, and transactions will be made without the involvement of middlemen by using smart contracts and DApps. This shift towards Web3 and decentralization will make the Internet more secure and transparent, reducing fraud and data leaks. While this can be true, the state Web3 is in today’s time is still in early development. Due to this, we face many difficulties like government regulations and smart contract exploitation. This can make the development and implementation of Web3 and decentralization much more difficult. However, Web3 will eventually evolve, gain its potential, and make the internet a better place.
