On Web 3.0

3min read

The web has evolved over the years – from web 1.0 to web 2.0 and now, web 3.0.

Web 1.0 was the first iteration of the web, characterised by static content created by the developers, with no interactivity, i.e. users could only consume information but not communicate back. Hence, it was known as the “read-only” web. 

Web 2.0 is the second iteration and the current state of the web as we know it now, popularly referred to as the “read and write” web. Applications are built to enable anyone and everyone to be a content creator. While web 2.0 is quite an improvement from web 1.0, it still has several drawbacks: how data is managed. Data is centrally stored. Every time we interact over the internet, copies of our data get sent to the server of a service provider, and every time that happens, we lose control over our data – this raises the issue of trust. Most social applications like Twitter, Facebook, and Instagram are free to use, but we know they are businesses, so how do they make money? – by advertisement or selling personal data gathered from the users.

Another demerit to data being stored centrally is that centralised servers can easily be shut down.

Web 3.0, which is the next version of the internet, and referred to as the “read, write and own” web, rather than just using free tech platforms in exchange for our data, users can participate in the governance and operation of the protocols themselves.
This means people can become participants and shareholders, not just customers or users.

The core of web 3.0 is decentralisation; applications (dApps) on web 3.0 are built on a blockchain. As opposed to a centralised database, the blockchain relies on a decentralised network of users to validate and record transactions, which is a significant shift from entities managing transaction flows end to end with little transparency in web 2.0.

dApps are run on smart contracts; this establishes the term of the agreement that is self-executed as code running on a blockchain. Smart contracts are settled automatically when predetermined conditions are met, doing away with intermediaries that inject cost and risk into transactions.

Cryptocurrency is also a major part of web3.0; it provides a financial incentive for anyone who wants to create, govern, contribute to, and or improve one of the projects. dApps have their cryptocurrencies or “tokens”, and users need to purchase the dApp’s native token to interact with it.

One of the critical aspects fueling the rise of decentralised networks is the aspect of ownership through Decentralised Autonomous Organisations (DAOs).

DAOs are community-led entities by individuals with collective interests. Smart contracts lay the foundational rules and execute whatever decision is agreed upon.

Here’s how funding takes place in DAOs; tokens are issued, then sold, and whatever funds are made from sales are used to fill the treasury. In return, token holders are given voting rights in proportion to their holdings. For rules to change and even when making critical decisions, a consensus must be reached by members voting.

Identity works differently in web 3.0. Identities are tied to the wallet address of the user interacting with the application. Wallets enable users to hold and manage assets without the risk of being confiscated or blocked by a third party or a government. It also lets them carry their digital assets across web 3.0 and represents a gateway to applications that run on blockchains - like Decentralised Finance (DeFi), Gaming, and Non-Fungible Tokens (NFTs). In addition to being a necessity for the DeFi world, web 3.0 wallets do not require you to complete daunting KYC/AML processes, therefore preserving your privacy and anonymity.

Ultimately Web 3.0 is still in the early days, and we will continue to track use cases and adoption.