Web3, the third epoch of the internet, aims to build a decentralized, trustless, and more intelligent web. We’re certain Emily Tran will continue to write opinion pieces that are equal parts balanced analysis and engaging prose, mixing technical insight with real-world applicability. Through her writing, she demystifies blockchain, focusing on practical infrastructure, real-world solutions and incisive, but hopeful, analysis. This article is intended to serve as an introductory, non-technical primer on Web3—what it is, how it works, what it can do, and what it can’t. Our goal with this miniseries is to provide readers with a basic understanding of the still-emerging Web3. This understanding will help them develop a knowledgeable point of view regarding its long-term effects.
Understanding Web3
Web3 is the next iteration of the internet, designed to avoid much of what has gone wrong before. Web 1.0 encompassed mostly static, read-only content. As opposed to this, the Web 2.0 concept is all about monopolistic platforms. Today, Web3 has a similar dream of a more decentralized, user-controlled web. This latest evolution hopes to continue to return the agency back to the user, providing more control over their data, identity, and online experience.
The core principle of Web3 is decentralization. Web3 applications and services Web3 apps and services are decentrally organized on distributed networks. They favorably rely on blockchain technology, which enables them to operate without centralized servers and intermediaries. Web3 decentralizes data and computing across many different nodes. This decentralized approach greatly reduces the risk of censorship, removes single points of failure and prevents data manipulation. This move to decentralization has the potential to foster a more open, transparent, resilient internet.
So another big pillar of Web3 is this idea of user ownership and control. In the current Web 2.0 environment, users have no real power over their own data. These megacorporations, on the other hand, gather, analyze, and profit immensely from this data while providing no control to the user. Web3 equips consumers with the tools they need to manage their data. It does this by implementing decentralized identity solutions paired with a host of other privacy-preserving technologies. You can determine who is given access to your data and how it’s used. This creates a more equitable and privacy-respecting digital ecosystem.
A. Core Principles of Web3
These are some of the foundational principles of Web3 that make it unlike any past version of the internet. These principles underlie the creation and deployment of Web3 technologies and applications. In doing so, they influence a vision of a more decentralized, user-centric, intelligent web.
Decentralization: This is the cornerstone of Web3. Decentralization involves distributing data and control across a network of nodes, rather than relying on centralized servers. This approach enhances security, reduces the risk of censorship, and promotes a more democratic internet. Blockchain technology, with its distributed ledger system, is often used to achieve decentralization in Web3 applications.
User Ownership: Web3 aims to give users greater control over their data and digital assets. Through technologies like non-fungible tokens (NFTs) and decentralized identity solutions, users can own and manage their online identities, content, and digital possessions. This shift empowers users to participate more directly in the value they create online.
Transparency: Transparency is another key principle of Web3. Blockchain technology provides a transparent and auditable record of transactions and data, enhancing trust and accountability. This transparency helps to ensure that users can verify the integrity of the system and that no single entity can manipulate the data.
Artificial Intelligence and Semantic Web: Web3 envisions a more intelligent internet that can understand and process information in a more human-like way. Semantic web technologies and artificial intelligence (AI) are used to enhance the ability of machines to interpret and connect data, leading to more personalized and relevant online experiences.
B. Potential Benefits of Web3
Web3 is full of challenges and opportunity. When paired with innovative technologies like augmented reality, it has the potential to transform how we live, work, travel, and connect. These benefits increase across multiple domains, ranging from improved privacy and security to expanded economic opportunities and more democratic governance.
Enhanced Privacy and Security: By leveraging technologies like zero-knowledge proofs and decentralized identity solutions, Web3 can provide users with greater control over their personal data and enhance their online privacy. Decentralization reduces the risk of data breaches and censorship, as there is no single point of failure.
New Economic Opportunities: Web3 is creating new avenues for economic participation and value creation. Through decentralized finance (DeFi) platforms, users can access financial services without intermediaries, while NFTs enable creators to monetize their digital content directly. These new opportunities can foster greater financial inclusion and empower individuals to participate in the digital economy.
Improved Data Ownership and Control: One of the most significant benefits of Web3 is the ability for users to own and control their data. This means that users can decide who has access to their data and how it is used, rather than relying on centralized platforms to manage their information. This shift can lead to a more equitable and privacy-respecting online environment.
Greater Transparency and Trust: The use of blockchain technology in Web3 promotes transparency and trust. All transactions and data are recorded on a public ledger, which can be easily audited and verified. This transparency helps to ensure that the system is fair and that no single entity can manipulate the data.
Exploring Web3 Technologies
Web3 is an ecosystem fueled by advanced technologies such as blockchain, AI, IoT, and more that make its decentralized, user-centric, and intelligent capabilities possible. These technologies are iterating and accelerating one another, creating a virtuous cycle of innovation that will define the future of the internet.
Blockchain technology is the backbone of many popular Web3 applications. Blockchains are a type of distributed ledger technology that records transactions in an immutable, secure, and transparent way. This innovative technology is what developers are using to build the decentralized applications (dApps) of the future. It enables smart contracts, self-executing agreements that automate processes and eliminate the need for intermediaries. Ethereum is one of the largest and most widely used blockchain platforms in the world, supporting Web3 apps. There are many other platforms out there, each with their own respective strengths and weaknesses.
Decentralized identity (DID) solutions are the other major technological innovation in Web3. DIDs enable individuals to own and control their digital identities independently, eliminating the need for centralized identity providers. This provides users with more transparency and control over their personal data, creating a better experience that improves privacy. DIDs serve to authenticate users, verify credentials, and orchestrate access to online services.
A. Blockchain Technology
Blockchain is the underlying technology that powers Web3, enabling decentralized applications and secure data storage. It’s important to develop a foundational understanding of blockchain technology in order to truly understand what Web3 can and can’t do.
At its core, a blockchain is a type of distributed ledger technology that securely and transparently records transactions. Each transaction is collected into a block, which is then cryptographically added to the chain in chronological order. These blocks are cryptographically chained together, making it impossible to go back and change any one block or tamper with the data in any way. This immutability and transparency are two of the most important characteristics of blockchain technology.
Public blockchains, such as Bitcoin and Ethereum, in contrast, are permissionless, meaning anyone can join the network and interact with it. Private blockchains, by contrast, are permissioned and governed by a private entity or consortium. Consortium blockchains are a middle ground, with several organizations working together to secure the network.
B. Decentralized Identity Solutions
Decentralized identity (DID) solutions are foundational to Web3. More importantly, they empower users to take control of their digital identities and personal data. In the Web 2.0 world, users often rely on centralized identity providers like Google or Facebook to authenticate themselves online. This grants these companies deep access and thus power over users’ data and opens up various privacy risks.
DIDs provide a new and different solution, giving users the flexibility and control to create and manage their own identities independently of centralized third parties. A DID is a decentralized identifier, essentially a unique address or identifier that users own and control. They can employ it to authenticate their identity on different platforms and applications. Security and Privacy DIDs are usually anchored on a blockchain or other decentralized ledger, making them secure and tamper-proof.
Aside from providing an effective solution for security risks, one of the most attractive features about DIDs is that they allow users more control over their personal data. Users can select what data to share with whom and can withdraw consent at any point. This would go a long way in terms of protecting users’ privacy and thwarting identity theft. DIDs offer the potential for innovative new interactions online. For one, they provide users with self-sovereign identity, which enables users to verify their own credentials without revealing their personal information.
Current Limitations and Challenges
We can’t forget that Web3 is full of promising, thrilling opportunities. Alongside the promise come a number of challenges and limitations that must be tackled to enable broad adoption. The complexities include technical challenges, regulatory issues and major usability hurdles.
Perhaps the most frequently cited challenge is the scalability of blockchain technology. With the exception of a few uncommon blockchain networks, most public blockchain networks are incapable of processing a large scale of transactions. This concern frequently leads to lagging transaction speeds and increased costs. This is an important roadblock for more advanced Web3 applications that demand higher throughput and lower latency. Researchers and developers are working on various solutions to improve the scalability of blockchain networks, such as layer-2 scaling solutions and sharding.
The second major hurdle — the educational piece — is the confusing nature of Web3 technologies. Here’s the problem though Most Web3 applications are clunky, complicated, and outright confusing, pushing potential mainstream users away from ever adopting them. While there has been progress in recent years toward improving the user experience (UX) of Web3 applications, the bar is still incredibly low for user-friendliness. This means reducing the complexity of the overall user experience, including a focused user interface, step-by-step but effective instructions, and improved support and governance documentation.
A. Scalability Issues
Scalability is a major hurdle for Web3. In addition, blockchains such as Ethereum often experience a bottleneck in transaction speed and inflated gas fees during periods of heightened network activity. This makes dApps practically unusable for the average consumer looking to engage in simple transactions.
The development of layer-2 scaling solutions, such as rollups and sidechains, allow the network to scale efficiently. These third-party solutions handle transactions off-chain and then periodically batch finalize them onto the main chain, alleviating congestion and lowering transaction fees. They are accompanied by their own trade-offs in security and decentralization.
Sharding is a third possible solution that would see the blockchain split into multiple smaller sections, or shards. Each shard can process their transactions independently and in parallel, increasing the overall throughput of the network. Sharding is a highly complicated technology that is not fully fleshed out yet. It has its own obstacles, most notably around maintaining data integrity and a lack of inter-shard communication.
B. Usability and Accessibility
Usability and accessibility are crucial for the mass adoption of Web3. It’s true—most Web3 applications are still over-engineered and not intuitive enough for average users to want, or know how to, engage with. This can be a significant point of friction for those unacquainted with the nuances of blockchain technology and cryptocurrencies.
One of the biggest usability issues is the fact that users have to handle their own private keys and wallets. For non-technical users this task can seem daunting. For a holdout on the other side of the coin, losing their private keys could result in a loss of valuable digital assets. Developers are working on solutions such as multi-party computation (MPC) wallets and social recovery mechanisms to address these concerns. Yet, these breakthroughs remain nascent.
A second usability concern is the absence of user-friendly and easy-to-navigate interfaces for Web3 apps. Often, dApps are riddled with interfaces that confuse users even more than the world of crypto already does. Creating a better user experience for Web3 applications is the key to attracting the mainstream users that will create real, long term adoption.
The Future of Web3
What’s next for Web3 is still an open question. In reality, it presents an immense opportunity to change the internet and many other aspects of our lives for the better. As this technology matures, Web3 is set to radically change the way we interact online. These simultaneous social changes will lead to thrilling new economic possibilities and social arrangements.
Envision a future where the internet is more open, decentralized, and focused on users’ needs. In such a world, users will benefit from increased agency over their data and digital assets. It will help to make the internet a more equitable, inclusive, and civil space. Users will increase their ability to participate in the value that they themselves help create. Let Web3 motivate us to dream bigger and create new internet governance models. Users will be empowered to meaningfully engage in rulemaking proceedings and play a role in determining the future of the internet.
A second, more optimistic alternative future is that the Web3 technologies are adopted by today’s existing Web 2.0 applications and platforms. This would likely be the basis of a more hybrid approach. Users will reap the benefits of the best of both centralized and decentralized worlds. Social media networks can use blockchain technology to validate posts and help combat fake news. Simultaneously, they’re able to keep a shared, centralized infrastructure for how user accounts are managed and where user data is stored.
A. Potential Impact on Various Industries
Every iconic industry from finance and healthcare to media and entertainment will be disrupted and recreated by Web3. Web3’s decentralized and user-centric nature provides opportunities for unique business models. It further increases productivity and increases transparency throughout all areas of the economy.
In the finance space, Web3 would allow for decentralized finance (DeFi) applications that deliver financial services directly to individuals, eliminating the need for third-party intermediaries. This would provide economic empowerment to underserved communities and increase consumer savings. Through smart contracts, DeFi platforms would allow users to lend, borrow, trade, and insure cryptocurrencies and other assets—all without intermediaries.
Web3 could have major implications for data privacy and security across the healthcare industry. It gives patients the tools to manage their medical records and securely exchange them with caregivers. Such improvements can bring more efficient, higher quality and more coordinated care, while empowering patients to take a more active role in their own health. You can apply blockchain technology to track and verify the authenticity of pharmaceuticals. This dramatically reduces the chances of fake medicines making it onto the market.
B. Challenges and Opportunities Ahead
Web3 as a concept holds great challenges and great opportunities as it emerges and evolves. Addressing the technical limitations, usability issues, and regulatory uncertainties will be key for unlocking Web3’s complete promise. The opportunities for innovation and disruption, though, are enormous and the rewards will be great.
Their biggest problem is the lack of collaboration and strong standardization across the entire Web3 ecosystem. The lack of interoperability between different blockchain platforms and applications can hinder adoption and limit the potential for network effects. Efforts like these to establish common standards, practices, and protocols will be critical to creating a more unified and integrated Web3 landscape.
The second challenge is the fact that there’s a large education and awareness deficit around Web3. There’s a huge digital divide as most people are unaware of Web3 principles and technologies. This unfamiliarity creates challenges for them as they struggle to understand the possible benefits it can provide. Enabling the public to understand Web3 is crucial to empowering them to adopt. In the end, that just means it’s better at helping create a more informed and engaged community.
Navigating the Web3 Landscape
We all know that the Web3 world can be a hard space to navigate, particularly for early adopters. A myriad of projects, platforms and technologies are just waiting for you to dive in. It’s confusing what the best first step would be! Yet, with a little know-how and instruction, people from all walks of life can start to take part in the Web3 revolution.
The easiest way to dip your toes into Web3 is through dApps. We now have dApps for every conceivable use case, including social media, gaming, finance, productivity and much more. Users can dive into the different dApps to get a better understanding of what Web3 has to offer. This hands-on approach allows them to be educated on the various technologies that power it.
One of the most distinct ways to engage with decentralized technologies is through their communities. Perhaps more than most industries, Web3 projects are driven by strong communities across Discord, Telegram, Reddit, and more. Sign up for these communities to network with like-minded UAV advocates. Learn what’s new and be a part of shaping the future of this exciting new climate ecosystem!
A. Tips for Getting Started
Getting started with Web3 can be intimidating at first. Yet, with enough preparation, you can make this process much more exciting and rewarding. Here are some tips to help you navigate the Web3 landscape:
Do Your Research: Before investing in any Web3 project or technology, it's important to do your own research and understand the risks involved. Read whitepapers, explore the project's website, and follow the project's community to get a sense of its potential and limitations.
Start Small: Don't try to learn everything at once. Start with a few basic concepts and gradually expand your knowledge as you become more comfortable with the technology. Try out a few dApps, experiment with different wallets, and participate in online communities to get a feel for the Web3 ecosystem.
Protect Your Private Keys: Your private keys are the keys to your digital assets, so it's essential to protect them carefully. Use a strong password, store your keys in a secure location, and consider using a hardware wallet for added security.
Be Aware of Scams: The Web3 space is still relatively new and unregulated, which means that there are many scams and fraudulent projects. Be cautious of projects that promise unrealistic returns, and always do your own research before investing any money.
B. Resources for Further Learning
Here are some helpful resources to get you started:
Online Courses: Platforms like Coursera, Udemy, and edX offer courses on blockchain technology, cryptocurrencies, and Web3 development. These courses can provide a structured and comprehensive introduction to the field.
Online Communities: Platforms like Discord, Telegram, and Reddit host vibrant communities of Web3 enthusiasts. These communities are a great place to ask questions, share knowledge, and connect with other people who are interested in Web3.
Industry Publications: Websites like CoinDesk, CoinTelegraph, and Decrypt provide news, analysis, and insights on the latest developments in the Web3 space. These publications can help you stay up-to-date on the latest trends and technologies.
Developer Documentation: If you're interested in building Web3 applications, the developer documentation for platforms like Ethereum and Solana can provide valuable information and guidance. These resources can help you understand the technical aspects of Web3 development and get started building your own dApps.
Ethical and Societal Implications
As Web3 inevitably continues to unfold, we should ensure we are foregrounding its ethical and societal implications. We strongly believe that Web3’s decentralized, transparent, and user-centric nature can, if applied responsibly, help create a more equitable and democratic internet. With this innovation comes greater challenges and pressures.
One of the more significant ethical concerns is how Web3 may deepen existing inequalities. This disparity can further be exacerbated by Web3 technologies, where access is only afforded to a privileged few deepening the digital divide. To do so would deepen the marginalization of disadvantaged communities. The opportunity here as we continue to develop Web3 is to make sure it’s easily accessible to everyone, not just those with privilege or means.
A second ethical issue relates to the fact that Web3 may provide an avenue for legal or illicitly harmful behavior. Because of the decentralized nature of Web3, regulating and controlling what’s happening will be difficult. Consequently, scams, fraud and other illicit activities are free to flourish. We’re never going to be able to stop and avoid these incidents. Yet, concurrently, we need to support decentralization and user choice.
A. Privacy Concerns
Privacy is one of the hottest topics in the Web3 space today. In theory, while Web3 will allow users to have more control over their data, it increases privacy risks. Moreover, because blockchain transactions are pseudonymous, they are generally not tied to a user’s real-world identity. With sufficient data analysis, it is possible to deanonymize users and trace their online behavior.
Privacy-enhancing technologies (PETs) have begun to be created and implemented to respond to these privacy issues. These technologies include zero-knowledge proofs, which allow users to prove that they have certain information without revealing the information itself, and secure multi-party computation (MPC), which allows multiple parties to compute a function on their private data without revealing the data to each other.
The second major privacy issue comes from data breaches and hacks. Inherently secure as blockchain technology may be, vulnerabilities can and do sneak between the cracks in smart contracts or other Web3 applications. Developers should adopt secure coding best practices and conduct regular third-party audits of their code to identify, remediate and scour for backdoor attacks.
B. Regulatory Considerations
The regulatory landscape for Web3 is a work in progress. Governments across the globe are still trying to figure out how to regulate cryptocurrencies, decentralized finance (DeFi), and other Web3 technologies. Others have been more proactive and have a well-defined regulatory framework. Some have adopted a more timid, wait-and-see approach.
One of the foremost regulatory challenges facing the commission is protecting consumers and investors. We need to create space for innovation. On the one hand, overly strict or unintentionally broad regulations may impose undue compliance burdens that would inhibit innovation and push Web3 activity and talent elsewhere.
