Web3 refers to the decentralized web, and usually encompasses both decentralized applications (or DApps) and decentralized finance (or DeFi), including cryptocurrencies, assets, or tokens.
But web3 is much more than a new way of coding or managing finance. It’s a whole new philosophy for how the web should be managed and users should access it: in a web3 world, we’re no longer dependent on monolithic, centralized authorities like governments, Big Tech, and Wall Street.
Or, as investor Chris Dixon noted, web3 is “…an internet owned by users and builders, orchestrated with tokens.” In web3, control is in the hands of the individual.
In this article, we’ll discuss:
How web3 differs from web 1.0 and 2.0
What web3 is (and what it’s not)
The benefits and shortcomings of web3
How you can safely access web3
A brief history of the web: 1.0 and 2.0
Web 1.0 spanned the early days of the internet, roughly through 2005. It was marked by static content (rather than dynamic HTML), with data and content served from a static file (rather than a database). In web 1.0, websites didn’t have much interactivity. You could read things that other organizations had published, but that was about it. Think of magazines and newspapers, only with comment threads turned off. There wasn’t much social media, and not much chance for users to create or post their own content, other than very early blogs.
Web 1.0 is often referred to as the “read-only web,” because that was about all you could do: read content that somebody else published.
Web 2.0, by contrast, is the web as most of us know it today. It’s the web of social media, instant website creation, and platforms that easily allow you to upload content anyone can search and view. It’s also the web of apps you can log in to, for everything from banking to grocery orders to ridesharing. Think of Facebook, YouTube, Wikipedia, online banking, e-health, review sites like Yelp!, retail sites that allow customer reviews… Almost any site you can post to, publish from, or log in to is considered web 2.0. The site is dynamic HTML, and the content is rarely static and often served from a database.
Web 2.0 is often called the “social web.”
Readers note: You may notice that web 1.0 and 2.0 are spelled with decimals, while web3 is not. There’s no particular reason for this, other than expedience. While some do write “web 3.0,” the “web3” designation is just an additional indicator that things are different in the decentralized web.
The dark side of web 2.0—Privacy
While web 2.0 is the web we’ve known and loved, there are some real downsides. First and foremost: It’s a nightmare for privacy.
Web 2.0 apps are often “free,” in that there’s no charge for users to use the service. But these companies have to make money somehow. So instead they “monetize” their users: They collect mountains of personal data about users, and profit off it in the form of highly targeted ad space they sell to online advertisers.
Consider the example of online shopping. In web 2.0, if you shop for a pair of shoes online, you’ll be followed by disturbingly accurate ads for those same shoes on other websites, in your newsfeed, or even your email inbox. The data collection that powers this following (or “retargeting”) has led to massive data leaks, where Big Tech gets hacked for millions of user credit cards or social security numbers.
The challenge with web 2.0 is users often have no control over whether their data gets collected, how it’s stored, or what tech companies do with it. Basically, you trade your data to use the app. Since tech companies aren’t making money directly from their products, you (or more specifically, your data) become the product they sell.
The dark side of web 2.0—Centralized authority
The other major downside of web 2.0 is that it relies on centralized authority. Think governments, Big Tech, and Wall Street. These central authorities verify your identity, authorize online transactions, control who can publish content (and what kind of content), and more. Essentially, web 2.0 companies act like a benevolent dictatorship: They decide who’s allowed in or out, how long they can stay, and what they can do.
Consider the example of online banking. Whatever bank you use for checking and savings holds your assets. They determine how you access it (think debit cards and ATMs, or mobile banking apps). They determine who you can transact with. And, most importantly, they validate your identity—and access—based on the info from other centralized authorities like the government (think of social security numbers or ID cards).
And this is just one simple example. Behind the scenes, Big Tech is used to validate your identity and grant you access to thousands of services. Most people have no idea how often Facebook and Google are used as authentication services for other apps.
In web 2.0, the individual has very few individual rights. Things like Europe’s GDPR and California’s CCPA do grant users more rights to disclose what’s collected, how, where it’s stored, and how it’s destroyed. But in the end, the core problem persists: centralized authority.
What web3 is…and is not
Web3 is often called the “Decentralized web,” and generally encompasses both decentralized applications (or DApps) and decentralized finance (or DeFi) like cryptocurrencies, assets, or tokens.
These rely, respectively, on two new technologies: decentralized networks, and blockchain.
Decentralized networks are ones in which the code that powers an application is distributed across hundreds of servers. And a “server” in this case could mean a black box in a server farm, or even the computer you’re working on right now: in decentralized networks, individual users can offer their machine to be part of the network and in some cases be rewarded for their efforts.
Blockchain often goes hand-in-hand with DApps, and they follow a similar philosophy. A blockchain is like a database, or what’s sometimes referred to as a distributed ledger, because each new entry is added atop the row below it, in a possibly endless chain.
Just like traditional databases, a blockchain can contain records of things (like financial transactions). But unlike traditional databases, in blockchain the ledger has no centralized authority or host. It can exist simultaneously on thousands of computers and servers, and be both used and shared by everyone in this large, decentralized group. Essentially it’s an open, publicly accessible, distributed ledger that can record transactions between two parties.
Blockchain requires that all history in the ledger is consistent with every other computer in the chain. This is especially meaningful for the verification of transactions, say for a trade of a crypto asset. In blockchain, if one party wishes to sell Bitcoin to another, the ownership of the seller must align with the information in the identical ledger hosted on thousands of other computers. For this reason, it’s much more resilient against hacking.
Blockchain is the technology at the heart of Bitcoin, Ethereum, and other cryptocurrencies. DApp infrastructure is often used for online gaming, DeFi lending protocols, and cryptocurrency tools, but in theory any application could be run as a DApp.
Web3 is trustless and self-governing, meaning it does not require blind faith in the benevolence of some central authority to manage your data safely (or that you read—or more likely ignore—opaque privacy disclosures full of legal-ese). By default, it is much more secure.
Despite what you might’ve heard, web3 is not the “dark web,” a haven for hackers or data leakers, or really anything nefarious. It’s simply a new kind of infrastructure, a new way of building the things you’re already used to using.
The shortcomings of web3
To be sure, web3 has its shortcomings. It can be extremely difficult to understand, especially for newcomers, as the old analogies (your data is like files, a database like a file cabinet) no longer apply. It can be resource intensive and use massive amounts of energy. And, because there’s no centralized authority, it can still be open to fraud: If all of the entries in a ledger are deliberately false, it can ruin the accuracy of the entire blockchain.
But overall, the benefits still far outweigh the risks. And web3 is still in its infancy. Innovation is happening daily, and the more developers switch to working in web3, the more these early-days problems will be solved.
How to (safely) access web3
You can access web3 from nearly any computer, phone, or tablet. If you trade cryptocurrency, or have a crypto wallet, you’re likely using web3. If you game online or access some online streaming services, you might be using web3. There’s a decent chance you’ve already used a web3 DApp and not even known it. You can download them from app stores, visit them in your web browser by typing in a URL, or clicking a search result.
Often, web3 apps are built as browser extensions, which can be inherently unsafe because they’re easily spoofed (replicas of the app can trick users into sharing their data, financial info, and more). To safely access web3, it’s best to use a privacy web browser like Brave. By default, Brave blocks invasive ads and trackers that follow you around the web and steal your data. It has a native crypto wallet that does not rely on risky extensions. It even offers a VPN that can protect your entire device.
Web 1.0 can be thought of as the “read-only” web.
Web 2.0 can be thought of as the social web. While it democratized publishing, it’s been dominated by centralized Big Tech, and a nightmare for privacy.
Web3 is the decentralized web. It’s marked by decentralized apps (DApps), decentralized finance (DeFi) like cryptocurrency, and blockchain technology. It’s much stronger on personal privacy.