Introduction
Web3 represents the future of the internet based on blockchain technology and governed collectively by its users. The internet, as we know, is constantly evolving, with its underlying code undergoing continuous changes. Web3 was created by computer scientist Gavin Wood, and has become prominent among digital visionaries in recent years.
Web3 envisions a novel, decentralised internet constructed on distributed ledgers or blockchains, with communal control by participants. As blockchains operate collectively, the full realisation of Web3, which is already in progress, could usher in a new internet era. This era would prioritise community-run networks for usage and access, in contrast to the current centralised model where a few corporations dominate Web2.
What is WEB3
Web 3.0 refers to the third generation of technology that empowers the World Wide Web. It doesn’t constitute a single standard or a fixed set of standards, but rather encompasses an evolving array of trends and technological approaches. For instance, one of its early components, the Semantic Web, was initially proposed by Tim Berners-Lee, the inventor of the World Wide Web, in 1989 to facilitate the organisation of data relationships on web pages.
Web 3.0 is also closely linked with the idea of a decentralised web, where there’s no central authority governing interactions. A key element of this decentralised approach involves the utilisation of distributed ledger and blockchain technologies.
Web 3.0 relies on various blockchain-based technologies, including cryptocurrency, decentralised applications (dApps), and non-fungible tokens (NFTs). Additionally, it emphasises the expanded use and integration of artificial intelligence within web operations.
How Does it Work
- Decentralised Network: Instead of relying on a single hosting provider, cloud service, or vendor, the fundamental concept behind a decentralised network is the absence of a central authority dictating what is permissible. The core idea of this decentralised approach is to prioritise user data and freedom of choice.
- Blockchain-Based: Web 3.0’s decentralised structure is supported by blockchain technology. Blockchain uses a distributed record of activities and transactions that is cryptographically protected and intrinsically immutable.
- Cryptocurrency-Powered: While most e-commerce on Web 2.0 involves government-backed currency, Web 3.0 leans toward using cryptocurrencies as the preferred means of conducting transactions for goods and services.
- Smart Contract Services: Services like smart contract-enabled Apps and decentralised finance are essential components of Web 3.0. Software code contains policies that specify these services.
- Operational Transparency: The mechanisms of transactions on a blockchain provide increased transparency. Furthermore, the rules governing specific transactions are outlined in smart contracts that are collectively agreed upon by participants
- User Empowerment: Web 3.0’s decentralised design gives consumers more control over their data, which is frequently safely kept on the blockchain using both public and private key cryptography.
- AI and Machine Learning: AI and machine learning are progressively integrated into the very fabric of the web to enhance responsiveness and predict user needs and intentions. The developing Web 3.0 world is characterised by this embedded intelligence
- Metaverse Integration: Increasingly, Web 3.0 technology intertwines with elements of the metaverse, a 3D graphics-based virtual space seen as a key feature of the next-generation web. The evolution of the metaverse and Web 3.0 is closely intertwined.
Countries Adapting to WEB3
Web3 is active all over the world, but there are certain regions and countries where it is more active than others. According to a report by McKinsey, North America has the largest share of the global Web3 market, followed by Europe and Asia-Pacific
Here are some of the countries where Web3 is particularly active:
- United States: The US is home to many of the world’s leading Web3 companies, including Coinbase, Circle, and Alchemy. It is also a major hub for Web3 development and investment
- China: China is another major Web3 hub, despite a recent crackdown on cryptocurrencies. The nation is home to a sizable and active Web3 development and user community
- India: India is a rapidly expanding Web3 market globally. Many of the nation’s youthful and sizable citizens are enthusiastic about emerging technologies like Web3
- South Korea: South Korea is another country with a strong Web3 presence. The country is home to a number of successful Web3 startups, including Axie Infinity and KakaoPay
- Brazil: Brazil is another rapidly growing Web3 market. The country has a large and young population, many of whom are interested in new technologies like Web3.
Pros of Web3
- Control: A decentralised model reduces the risk of being locked into a specific system, granting users greater authority over their online identity and data
- Transparency: Users gain enhanced insight into transaction processes and decision-making within a decentralised framework
- Resilience: The distributed structure of decentralised networks, free from dependence on a central authority, enhances the resilience of application delivery
- Personalisation: The Web 3.0 paradigm has the potential to offer increased customisation and personalisation for online interactions
- Predictive Intelligence: Incorporating AI and ML can endow Web 3.0 with heightened intelligence, making it more responsive to user needs compared to previous iterations
- Privacy: Web 3.0’s decentralised nature opens up possibilities for enhanced user privacy that were previously unattainable in earlier web generations
- Decentralised Finance: Web 3.0’s capacity for conducting transactions, including purchasing, selling, and securing loans, without central authority approval, constitutes a significant advantage for many users.
Cons of Web3
- Complexity: Web 3.0’s utilisation of blockchain, decentralised networks, and smart contracts introduces a considerably higher level of complexity, making it challenging for the average user to grasp compared to Web 2.0
- Security: The intricacy of these foundational Web 3.0 technologies also presents a substantial challenge for individual users to maintain the security of their activities, particularly in light of widely reported cybersecurity incidents and the increasing awareness of the numerous risks associated with blockchain applications and cryptocurrency exchanges
- Regulatory Challenges: The absence of a central authority in Web 3.0 makes it more resistant to regulation. Consequently, the regulatory and compliance frameworks that typically ensure the safety of online commerce and other web activities for users are either absent or ineffective
- Technology Requirements: The resource-intensive nature of Web 3.0’s blockchains and distributed applications often means they will not function optimally
- Interoperability Gap with Web 2.0: Web 2.0 predominantly operates within a centralised model, while Web 3.0 is decentralised. This implies that web users are likely to continue using both versions for an extended period to access the benefits of Web 2.0 applications.
Real Life Example
The count of Web3-supported transactions is steadily increasing. The McKinsey Technology Trends Outlook for 2023 highlights four instances:
- In November 2022, JPMorgan Chase conducted its inaugural cross-border blockchain transaction, involving tokenised Singaporean dollar and Japanese yen deposits. This operation was part of Project Guardian, a collaboration between JPMorgan Chase and DBS Bank
- Securitise, a digital-asset securities company, joined forces with the global investment firm KKR to introduce a tokenised fund on the Avalanche blockchain. Tokenisation simplifies private equity access for individual investors by digitising processes and reducing investment thresholds
- The esports and lifestyle brand, 100 Thieves, enticed fans with an NFT of a diamond necklace if they established a digital wallet on the platform within a 75-hour window. Remarkably, over 300,000 individuals redeemed this NFT
- Nike, after acquiring the Web3 studio RTFKT in 2021, launched its own Web3 platform in 2022 named ‘Swoosh’, Since then, the platform has offered blockchain-based NFTs to customers. Swoosh is intended to serve as a central hub for new product launches and as a space for customers to share virtual apparel designs.
Recent Update
A number of mainstream companies began to adopt Web3 technologies in 2021 and 2022. This is a relatively recent development, but it is accelerating rapidly. Some of the most notable examples include:
- Meta (formerly Facebook) is developing a metaverse platform that will be powered by Web3 technology
- Twitter has announced plans to integrate Web3 features into its platform, such as allowing users to tip each other with Bitcoin and to display NFTs as their profile pictures
- PayPal has begun allowing users to buy, sell, and hold cryptocurrencies.
- Visa has begun allowing merchants to accept cryptocurrency payments.
- Mastercard has announced plans to launch a platform that will allow merchants to accept and settle cryptocurrency payments in real time.
These are just a few examples of the many mainstream companies that are beginning to adopt Web3 technologies. As Web3 continues to develop and mature, we can expect to see even more mainstream companies adopt it in the coming years.
Conclusion
Web3 represents a promising vision of the future – a decentralised internet that reimagines the way we interact, transact, and connect online. It offers a profound shift from the current centralised model, promising increased privacy, security, and control over our digital lives. Web3 technologies, such as blockchain and decentralised applications, hold the potential to empower individuals, foster innovation, and disrupt traditional power structures.
However, as with any emerging technology, Web3 is not without its challenges. Scalability, regulatory concerns, and the need for widespread adoption are just a few of the hurdles that must be overcome. The transition to a fully decentralised internet is a complex and ongoing process that will require collaboration from all stakeholders, including governments, businesses, and users.
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