What is Web3? Crypto’s Plan to Retool the Internet
The tech world is buzzing with Web3 and its possibilities, but what is it exactly? QuickTake’s Nicole Sy and Bloomberg Tech’s Zheping Huang break it down.
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Crypto enthusiasts don’t only dream of revolutionizing the world of money. They want to reinvent the World Wide Web. That vision, which goes by the name of “Web3,” is of a decentralized environment built on crypto technology in which swarms of collaborators take back control of the web from giant tech companies. It’s a threat that those tech firms — including Facebook owner Meta Platforms Inc. and Twitter Inc. — are starting to take seriously.
1. Why Web3?
The idea is this: The early web was composed of static pages of text and simple images. In what became known as Web 2.0, users began to interact with one another, sharing pictures and videos that they could upload quickly now that bandwidth was plentiful. But users needed to coalesce around big platforms for anyone else to see their stuff. So a development that seemed to put us in charge instead created today’s landscape of giant corporations sucking up data from the activity on their sites and using it to make billions by selling ads. Web3 advocates — many of them anti-establishment libertarians — argue that governments can’t force the tech giants to serve our interests through regulation, so it’s time for a new model where we create and own the web experience we want.
2. How would it work?
Proponents of Web3 say blockchains and related technologies reduce the power of intermediaries like Amazon.com Inc. or Instagram, and facilitate direct relationships between people who want to collaborate with colleagues, communicate with friends, or buy and sell goods and services online. Indeed, it was the co-founder of the Ethereum blockchain, Gavin Wood, who coined the term Web3 in 2014. Blockchains record information in a way that is very difficult to hack or alter. Their most obvious use right now is in cryptocurrency transactions. But blockchains can be used for all manner of peer-to-peer interactions. Users can come together to develop anything from apps to knowledge bases or search tools. The functionality would be supported by a multitude of users so no single entity gets to control them.
3. What’s in it for me?
If you create or help to develop an app in Web3 (known as a “dapp,” or decentralised app), you can receive tokens that give you a say in the fees it charges, how it evolves or the working groups formed to oversee it. Tokens can also be sold or given to a dapp’s users, for example to reward them for winning a battle in a blockchain game, or sharing their computing bandwidth. Token owners can form communities known as decentralized autonomous organizations (DAOs) and get to vote on how the dapp’s funds are distributed. The rules are set via a “smart contract,” effectively a line of code that triggers an exchange of value once a set of mutually agreed conditions are met. The transaction is irreversible and in theory dispenses with the need for a centralised authority to oversee and enforce it. There are already places where you can see Web3 apps in practice, such as Helium’s decentralized wireless network. The network has grown to cover 240,000 hotspots across 21,000 cities by paying people to deploy their wireless hotspots in exchange for Helium’s token.
4. What else can I do in Web3?
More than 9,100 active dapps are listed on tracker DappRadar. They include lots of crypto trading platforms and video games. Game developers have been early adopters of Web3’s open technologies because they make it easy for players to earn tokens and in-game items that can be traded via decentralized exchanges. Many dapps allow you to buy and sell non-fungible tokens — things like digital monsters and dragons.
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