The current iteration of the Internet, known as Web2, emphasizes the creation and distribution of user-generated content. Websites like YouTube, social media apps like Instagram and Twitter, news sites, personal blogs, and more make up a large part of the Internet.
Web2 is a step up from Web1, which was primarily a read-only version of the web full of simple, static sites. Web3 aims to bring decentralization and token-based economies to the Internet.
Web2 versus Web3
The development of several different web protocols in the early 21st century made it possible to link programs and content through read-write interactions. In its current form, Web2 allows users to consume material created by other users and create their own content. Readers are probably most familiar with Web2. As a result of Web2’s autonomy in content production, the era of social networks began and with it the rise of blogs, online forums and online markets.
However, centralized rent-seeking corporations have taken advantage of this free flow of information to monetize user data and habits, despite the undeniable fact that Web2 offered significant benefits to users. The demand for a web controlled by developers and users has increased, mainly due to the breakdown of trust, user abuse and data control.
The goal of Web3 is to support open services based on decentralized applications (DApps) rather than centralized applications controlled by tech giants. Web3 users can connect to applications and protocols directly, eliminating the need for third-party intermediaries in the process. Web3 has been described as a “read/write/own” version of the Internet. Open services built on Web3 support permissionless access, maximize value and ensure verifiability. These services are much more reliable, fair and ethical.
Users are not required to pay recurring fees or provide personal information to use the Technology Platforms; instead, they are invited to participate in the management and operation of the protocols. Participants are stakeholders in the network, not just consumers or goods exploited to satisfy economic demands.
Tokens or coins are used in this setting to symbolize the availability, management and ownership of decentralized networks. In Web2, the user plays the role of the product; in Web3 they assume the role of owner.
Úrsula O’Kuinghttons, director of communications and partnerships at the Web3 Foundation, an organization that supports blockchain and Web3, told Cointelegraph:
“There are two fundamental considerations when considering ownership in Web3. The first concerns how organizations are governed. The current, flawed status quo places ownership in the hands of various powerful individuals who head organizations, institutions, and corporations.”
O’Kuinghttons continued: “A properly decentralized web ensures that the ownership of these monolithic structures is stripped of such hierarchy. It means that networks and communities have much more power in governance and decision-making. It also means that the rewards are shared more fairly. Engineers are building Web3 to harness the power of the peer-to-peer network to create sustainable and efficient blockchain solutions.”
“Another key issue concerns the sovereign ownership of data. Web3 seeks to protect the legitimate claims of individuals to have full control over their data and put privacy at the forefront of their online lives. This goal can be achieved through zero-knowledge protocols, encryption and private keys.”
How Web3 will bring ownership to users
Web3 will bring ownership to users in many ways, one of which is the ability to host websites that cannot be censored or removed. The current web hosting system relies mainly on servers managed by centralized organizations. These organizations may take down websites if they believe they have sufficient reason to do so.
Decentralized file storage networks allow people to create censorship-free websites using Interplanetary file system (IPFS) protocol. Instead of using a central server with IPFS, each individual acts as a server by caching some of the data from the site. When another user visits this site, the data is retrieved from one of the cached users. So, for example, if a million users visit a website to view a photo, the photo file can be retrieved from any of those million hosts when another person visits the website.
This process removes the need for a centralized entity, as the burden of operating the website is distributed among the users who have accessed it. This is possible because the data files have a unique cryptographic hash as the address instead of a user-generated name such as red-car.png. Once a file is requested, the unique hash is looked up and restored from the cache.
Organizations such as the Web3 Foundation provide support for the development of technologies and applications in the field of decentralized web software protocols. They provide grants to teams around the world to help build the Web3 ecosystem. The foundation currently supports 415 projects in the Polkadot ecosystem with its grant program. In addition, over 1,000 subsidy applications were submitted.
Decentralized autonomous organizations (DAOs) also play a large role in the Web3 infrastructure. The next wave of user adoption of Web3 ownership and availability will be driven by community owned and operated DAOs, with non-fungible tokens (NFTs) to help fuel this adoption.
DAOs are self-governing groups whose decisions are made using smart contracts on the blockchain. DAOs eliminate the need for a governing body or single point of authority by connecting individuals with common interests and talents. Moreover, thanks to the distributed structure of the blockchain, all decisions and transactions can be seen and confirmed by everyone.
DAOs can be used to facilitate collective ownership in the context of NFTs. Members decide by voting at regular intervals, and access to built-in cash registers requires member approval. The rising cost of NFTs has inadvertently put many collections out of the reach of individual customers. DAOs can allow users to share the cost and ownership of individual NFTs to level the playing field and promote a decentralized ethos of accessibility and inclusion.
DAOs provide a governance structure for Web3, which increases engagement while reducing the possibility of corruption or censorship. They can be found in several situations, from social media to games where you can earn money. The DAO’s popularity will spread to decentralized finance (DeFi), NFT collections, and philanthropic organizations as DAOs gain traction. In addition, unlike hierarchical organizations, DAOs allow instant decisions once all members agree.
Nonprofits could benefit greatly from the DAO concept. Administrative costs and reluctance to allocate resources are unlikely to offset the benefit of the charity’s excellent work. In addition, the use of DAOs enables the efficient and timely distribution of funds to their intended recipients. As a result, NGOs can have a stronger influence on their ultimate purposes.
DAOs can also be used as a direct route for investment and rapid adoption of DeFi. Peer-to-peer crypto transactions carried out by DAOs are cheap, virtually instantaneous and unregulated by banking laws. As a result, members who take out loans or engage in other activities can get better returns than they would at a traditional bank. There seems to be no end to the tremendous development of this industry.
Using NFTs and DAOs to purchase and store these digital assets expands the creator economy, which is especially significant given the current generation’s obsession with social media and content creation. Because the value of a creator’s work is intrinsically related to their reputation, viewership, and establishment, creators gain. The DAO, like many large organizations and enterprises, will most certainly allow users to access Web3 in the future.