Web3 \u2014 or Web 3.0 as crypto boomers like to call it \u2014 is a topical buzzword with only a very vague definition. Everyone agrees it has something to do with a blockchain-based evolution of the internet but, beyond that, what is it really?<\/strong><\/p>\n Yet, the conversation surrounding the meaning and prospects for Web3 has become very fashionable in crypto communities. The term gets thrown about by big corporates trying to muscle in on the space while avoiding the negative connotations of \u201ccrypto.\u201d<\/p>\n But, without an agreed-on definition, it can\u2019t be properly evaluated.<\/p>\n \u00a0<\/p>\n \u00a0<\/p>\n \u00a0<\/p>\n \u00a0<\/p>\n Crypto influencer Cobie<\/a> is among those deriding<\/a> Web3\u2018s lack of specifics:<\/p>\n \u201cDespite the deluge of undistinguished think pieces issued by the dominie of the day, nobody really agrees on what Web3 even is. Depending on which tribe you belong to, Web3 is a scam, Web3 is the future, Web3 is tokenizing the world, Web3 is VC exit liquidity, Web3 is just another name for crypto, you get the idea.\u201d<\/p>\n<\/blockquote>\n He adds: \u201cEven the crypto community can\u2019t make their mind up on whether Bitcoin is Web3.\u201d<\/p>\n Like many important terms in crypto, a key early crypto thinker coined the phrase and the community has had a few years to figure out what it means. There\u2019s been a lot of reverse engineering driven by diverse ideologies and commercial realities.<\/p>\n What\u2018s becoming clearer is that Web3 is not just one simple idea. It is a series of ideas. It was arguably first coined<\/a> in a blog post from Ethereum co-founder Gavin Wood in 2014. According to him, Web3 could foreseeably bypass the geopolitical data boundaries and his definition included \u201ctrustless transactions\u201d as part of its tech stack. Wood went on to create the Web3 Foundation and the Polkadot network, which trades on being a Web3 alternative future.<\/p>\n \u00a0<\/p>\n Web 3.0 will once again shake the world it will empower users on the internet where you can earn extra income with ad views and smart gadgets it will explode exploding like how the traditional internet appeared 30 years ago\u2026#PiNetwork<\/a> pic.twitter.com\/Ijd6NXEtFQ<\/a><\/p>\n \u2014 Pi Network News🚀🌓 Game App Developer VietNam (@DevelopersVN) January 24, 2022<\/a><\/p>\n<\/blockquote>\n \u00a0<\/p>\n The 2013 Etheruem white paper had earlier given devotees a chance to imagine what a DAO, for example, might look like.<\/p>\n Web3 is now peppered with various concepts: sovereign digital identity, censorship-free data storage, data divided by multiple servers and other ideas requiring an exegesis of Biblical proportions such as decentralized autonomous organizations. These various concepts and ideas interlace discussions about the \u201cWeb3\u201d movement and its viability.<\/p>\n One thread links these concepts and Cobie\u2019s starting definition of Web3. Web3 should include the \u201cdecentralization of power\u201d and the \u201cownership of value\u201d of one\u2019s own content and data.<\/p>\n Like many, though, he\u2019s cynical about the prospects of a utopian future coming to pass, noting that he wouldn\u2019t be \u201csurprised if crypto founders are too rich to care anymore and the new web gets built by late-stage capitalism greedcorps that make you buy a fractionalized micropayment NFT on Cardano to operate your electric toothbrush.\u201d<\/p>\n \u00a0<\/p>\n \u00a0<\/p>\n The concept of Web3 has numerous critics who argue that it isn\u2018t practical or achievable. Critics like Moxie Marlinspike (creator of sslstrip and Signal\/TextSecure) can never see a day where people run their own servers, as might be imagined<\/a> by Web3. Protocols are much harder to create than platforms, he argued, in a much-commented upon piece in early January.<\/p>\n While that may be true, some projects like file storage protocol IPFS split data between servers and allow users to select which jurisdictions to share their data between.<\/p>\n Yet, complete decentralization is a hard problem to solve. Blogger suhaza replying<\/a> to Moxie noted:<\/p>\n \u201cPeople don\u2019t want to run their own servers\u2026 companies have emerged that sell API access to an Ethereum node they run as a service\u2026 Almost all DApps use either <\/i>Infura<\/i> or <\/i>Alchemy<\/i> in order to interact with the blockchain. In fact, even when you connect a wallet like MetaMask to a DApp and the DApp interacts with the blockchain via your wallet, MetaMask is just making calls to Infura!\u201d<\/i><\/p>\n<\/blockquote>\n So, here are the questions that need to be answered: What is Web3? Is it viable? Will it really be that decentralized?<\/p>\n This is a story all about how the Internet got flipped-turned upside down\u2026<\/p>\n First, there was the vision. Free for content creation and accessible by everyone. It was popularized by decentralized open-source believers including\u00a0the internet\u2019s inventor Tim Berners-Lee.<\/p>\n And, then there was the reality: data trade-offs for content creation and accessible for a price.<\/p>\n Web1 was like a huge Wikipedia page married to a massive Craig\u2019s List. No ads, no logins and a private carve-up of its web pages. Web 2 is the current era of algorithmic targeted advertising and usually free usage in exchange for signing away your privacy and data.<\/p>\n \u00a0<\/p>\n 25 years ago today, the web became public domain. Thanks to @timberners_lee<\/a> and countless others who contributed to an open web.<\/p>\n We recently wrote our thoughts on Web 3, a future for the web we believe would make Tim Berners-Lee proud. #BUIDL<\/a> #Web3<\/a>https:\/\/t.co\/6CbzvWrgcy<\/a> pic.twitter.com\/VzXyyKNp88<\/a><\/p>\n \u2014 Gitcoin \u2013 (🤖 , ❤️) (@gitcoin) April 30, 2018<\/a><\/p>\n<\/blockquote>\n \u00a0<\/p>\n Centralized by large corporates, our data is savaged by those giants. The internet is also fragmented by geopolitical walls such as the Great Firewall of China and their obtuse data localization rules.<\/p>\n Berners-Lee is desperately disappointed with how the internet has turned out and, so, a decentralized Web3 reflects<\/a> Berners-Lee\u2019s original vision: \u201cNo permission is needed from a central authority to post anything\u2026 there is no central controlling node and, so, no single point of failure.\u201d He now runs Solid<\/a>, his own Web3 data storage play.<\/p>\n So, Web3 begins with data privacy and decentralized servers.<\/p>\n \u00a0<\/p>\n \u00a0<\/p>\n Decentralized storage of data is a key component of the emerging Web3 tech stack. In Web2, companies control closed databases. Large conglomerates including Facebook, Google and the other usual suspects go to massive lengths to hoard, control and monetize the data they collect. Web3 seeks to shift that.<\/p>\n \u00a0<\/p>\n \u00a0<\/p>\n \u00a0<\/p>\n According to Gartner, five companies currently control<\/a> 80% of the global cloud infrastructure market: Amazon, Google, Microsoft, Alibaba and Huawei. Web3 seeks to disrupt this status quo.<\/p>\n Decentralization means augmenting those power structures by giving participants partial direct ownership of the network. In Web3, users own their data on open encrypted networks. There are many projects in this space.<\/p>\n Censorship-resistant P2P data file storage and data sharing applications like Filecoin and IPFS have led the charge. A common characteristic for Web3 storage providers such as Filecoin is that data is replicated in multiple nodes across the network.<\/p>\n Yet, the emerging tech stack and ideology still leave many unresolved questions.<\/p>\n Ryan Kris, chief operating officer of Verida, which is building in this space, described his \u201cWeb3 vision\u201d to Magazine as \u201cempowering people to control their own data.\u201d<\/p>\n Verida\u2019s target audience is Software Development Kits (SDKs) that solve problems in the Web3 stack: identity, messaging, personal storage and data interoperability.<\/p>\n An ambitious suite of applications? \u201cYes, but it\u2019s a frontier technology,\u201d he says, \u201cwithout walled gardens.\u201d Pragmatically, they are not only targeting crypto clients and are currently building a credentialing system for decentralized health in Bermuda.<\/p>\n But, how will Web3 bring us a fairer internet by enabling the individual to be a sovereign? Kris, who has a decades-long background in telecoms, finance, cyber security and blockchain consulting, acknowledges that it is a tough ask:<\/p>\n \u201cThere are also some good business questions as part of the viability of Web3,\u201d he says. \u201cHow can personal data locked in centralized platforms be taken back by users? How are startups incentivized to build the products and tools to enable this transition? How are existing second- or third-tier Web2 companies incentivized to pivot to a Web3 business model so they can compete with existing market leaders?\u201d<\/p>\n Kris notes there are regulatory and practical issues too with the new technologies:<\/p>\n \u201cOn storage, IPFS is great for sharing public data in a redundant and distributed manner, but it isn\u2019t designed for securing private personal data. It is distributed in a way that users can\u2019t own control. This introduces regulatory issues when data can not be guaranteed to be stored in a particular country.\u201d<\/p>\n<\/blockquote>\n There are also various levels of decentralization in each project. If DApps use centralized storage, they are no longer considered \u201cWeb3\u201d companies by the diehards. But, fully decentralized tech is extremely difficult to build.<\/p>\n \u00a0<\/p>\n The evolution of the web #web3<\/a> #revolution<\/a> pic.twitter.com\/XDc85hyV5S<\/a><\/p>\n \u2014 Tegan.eth | Hiring ✨ (@theklineventure) January 24, 2022<\/a><\/p>\n<\/blockquote>\n \u00a0<\/p>\n Some argue that what we\u2018re actually building at present is Web2.5, referring to businesses that are crypto-native but not fully decentralized in operation. This distinction is important. For example, the NFT itself might live on a blockchain but then there are centralized repositories of data connected to it such as OpenSea. If the server went down, valuable data could be lost.<\/p>\n OpenSea is the most high-profile platform for NFT sales, but it is \u201cnot exactly community-led,\u201d notes Apollo Capital crypto analyst David Angliss. In 2021, OpenSea also took in major VC investing and made a failed Nasdaq IPO attempt, much to the chagrin of crypto folk.<\/p>\n This is where the Web2.5 definition is emerging.<\/p>\n \u201cWeb3 is not a segment in crypto. Web3 can be anything that uses a blockchain for censorship resistance, including NFTs and DeFi gaming platforms,\u201d Angliss tells Magazine.<\/p>\n \u201cWeb3 will enable users to be sovereign over their data and identity. This does not exist in the Web2 digital landscape.\u201d<\/p>\n \u201cWeb2 is similar to feudalism, as in walled-off ecosystems, governed by a select few. For example, an honest user-owned (the account name) \u201cMeta\u201d on Instagram, Facebook then rebranded and then had to make up a reason for suspending that innocent user\u2019s long-term account. Web3 can stop that from happening again. In Ethereum\u2019s name service, if I bought \u2018Ethereum.ens,\u2019 there\u2019s no way Ethereum can take that off me.\u201d<\/p>\n Angliss cites OpenSea as an example of a Web2.5 business. Being too decentralized, as in fully-censorship resistant, can be commercially unpalatable for a large business like OpenSea. For example, OpenSea \u201cfacilitates buying and selling of NFTs. But, in instances, it also disabled the sale of stolen Bored Apes.\u201d<\/p>\n \u00a0<\/p>\n \u00a0<\/p>\n \u00a0<\/p>\n \u00a0<\/p>\n Web3 (or perhaps Web2.5, depending on what is being referred to) has been described<\/a> as just another way to privatize the internet.<\/p>\n \u201cJust because it exists in the crypto ecosystem doesn\u2019t make it Web3,\u201d says Angliss. The big danger is that we could just see centralized closed ecosystems rather than a burgeoning Web3.<\/p>\n Community-led platforms that are more decentralized than OpenSea are emerging including LooksRare and OpenDAO. LooksRare has even been conducting a \u201cvampire attack\u201d on OpenSea (stealing users away with greater incentives) which means a Web3 competitor to the Web2.5 NFT king could find favor.<\/p>\n The introduction of a token allows more options for these new NFT platforms\u00a0in how they want to build customer loyalty. For example, OpenSea charges a fee, none of which is directed back to the community. LooksRare charges a similar fee (2% for every swap) on every basic sale, with LOOKS token stakers earning 100% of those trading fees.<\/p>\n So, maybe Web3\u2019s time is coming?<\/p>\n \u00a0<\/p>\n Saw a bunch of journalists asking about web3 from a tech perspective today.<\/p>\n Look \u2014 it\u2019s not hard: web3 is just people trying to privatize the internet.<\/p>\n You know the basic libertarian \u201cherp derp we should privatize all of society\u201d stuff?<\/p>\n It\u2019s that, but digital.<\/p>\n The end.<\/p>\n \u2014 Travis.web1 (@coloradotravis) December 20, 2021<\/a><\/p>\n<\/blockquote>\n \u00a0<\/p>\n Sustained criticisms over the extent of decentralization in Web3 platforms may mean we\u2018re just too early. New business models and spaces like the Metaverse and play-to-earn games mean users want to own and house their in-game assets and NFTs on decentralized platforms. This is where Web3-native start-ups like Arweave, Sia and Aleph.im offer a different approach.<\/p>\n Web3 being truly decentralized requires the creation of new off-chain models that side-wipe cloud computing and Web2.5 definitions.<\/p>\n According to the 2021 Messari Report: \u201cArweave and Sia emerged this year as formidable competitors.\u201d They seek to protect the risk of an NFT being lost because part of the data on a centralized server was hacked.<\/p>\n \u00a0<\/p>\n \u00a0<\/p>\n \u00a0<\/p>\n Another Web3 cloud competitor, Aleph.im, seeks to replace the cloud computing layer with an alternative service network. It\u2019s a decentralized computing network supporting multiple blockchains by communicating with them through a messaging protocol to retrieve and encrypt important data.<\/p>\n Johnathan Schemoul, founder of Aleph.im explains to Magazine that: \u201cthe solutions that the Aleph.im network provides are a truly decentralized alternative where it\u2019s needed the most: storage and computing. Blockchains are not designed to address large storage volumes or high-performance computing, as they typically focus on consensus and security.\u201d<\/p>\n That means that large volumes of data are often stored off-chain, increasing the data storage risk for centralized databases like OpenSea.<\/p>\n Aleph.im enables users to rely on both blockchains as well as off-chain decentralized cloud technologies to provide true ownership of digital assets.<\/p>\n \u201cTo build a robust decentralized web, we need to extend the decentralization beyond layer 0 and 1 where consensus and security is handled. The growth of the Aleph.im ecosystem is proving that Web3 can be decentralized and we\u2019re committed to continue this effort.\u201d<\/p>\n<\/blockquote>\n Aleph.im raised $10 million in mid-January 2022, and its network is used by gaming company Ubisoft for its NFT storage, for example. This is the first time a mass consumer gaming studio has given this level of decentralized ownership to users.<\/p>\n Importantly, it also suggests Web3 could succeed as a B2B model, even if the average consumer doesn\u2019t care about \u201cdecentralization.\u201d Crypto trends often start with gaming.<\/p>\n \u00a0<\/p>\n \u00a0<\/p>\n \u00a0<\/p>\n Consumer adoption of Web3 is a different realm. All of this attention on decentralization may not be something the average user cares about. The question of our time remains: How much do people value privacy over convenience? Can tokenomics overcome the privacy versus convenience conundrum?<\/p>\n Jonathan Hooker, managing director at Holon Global Investments suggests to Magazine that human internet behaviors will change. He starts his Web3 explanation by asking: \u201cDo you own Bitcoin? How does owning and controlling your own self-sovereign wealth make you feel?\u201d And, then:<\/p>\n \u201cWhat if told you could own and control your own data like you control your Bitcoin?\u201d<\/p>\n<\/blockquote>\n \u201cThe business model must find the thing that is important to that person,\u201d he says. \u201cIs that person suspicious of the government or placing their own health records on centralized systems they don\u2019t control?\u201d<\/p>\n \u201cHow important is it for that person to have those medical records at a critical time anywhere in the world? Filecoin and IPFS can solve these data concerns.\u201d<\/p>\n Competition for NFT storage will be important for Web3 adoption. Filecoin launched<\/a> its NFT.Storage in April 2021, also providing free off-chain storage of NFT metadata and assets.<\/p>\n One of the most significant implications of denationalization and blockchain technology is in the area of data ownership and compensation for lending, staking or using that data. This is the ground-breaking claim of Web3. Web3 provides value to users through tokenization and by enabling complex integrations with smart contracts.<\/p>\n Tokenomics can provide an \u201cInternet of value over just the internet,\u201d says Hooker.<\/p>\n Yet, as many simply sign into Web2 apps through a Facebook API without thinking twice, we have to question how much tokenomics can truly change human behavior. The big players, the Googles, Baidus, Tencents and the Facebooks (and its parent company Meta) all already own our data. Is it too late to get it back?<\/p>\n Maybe not. \u201cData is like fruit, at the beginning it is fresh but it decays over time,\u201d he says. \u201cBig tech\u2019s data on us will have a shelf-life.\u201d<\/p>\n \u00a0<\/p>\n \u00a0<\/p>\n Kris, the Web3 founder, agrees with Hooker that \u201cprivacy is not the issue, value for data is the issue.\u201d People accept that they will lose their data privacy, so they might as well tokenize it. People give up their data readily, why not get paid for it?<\/p>\n \u201cPersonalized data offering is valuable in a personalization context,\u201d he says. \u201cI\u2019ll sell my social media data but I won\u2019t sell my health data, for example.\u201d<\/p>\n Others dispute this optimism about data tokenomics. Aaron Levie, founder of cloud computing company Box, while noting its great potential, questioned<\/a> the viability of Web3 models in a Tweet thread:<\/p>\n \u201cWhy? Because data nearly always works in the context of an app. Twitter social graph, YouTube channels, Spotify playlists, Airbnb listings, Shopify stores: these develop over *years* within the context of a product and APIs that moved quickly to build value and trust over time.\u201d<\/p>\n Levie argues further that tokenomics may make things more difficult. \u201cWith Web3 ideals, we\u2019ve likely added community governance and tokenomics into the mix, which adds a new negotiation vector.\u201d<\/p>\n This is the ease of adoption problem: \u201cThese are hard problems about human coordination, not about software or blockchains.\u201d Many will choose a Facebook API for ease of use. It\u2019s the business model and UX\/UI experience that is crucial.<\/p>\n For example, there\u2019s a common meme about the ease of logging to Web3 by the crypto faithful that is quite misleading. It goes something like: In Web1 there were usernames and passwords. In Web 2, you could sign in through a Google, Facebook or Twitter API and in Web3 you just connect your wallet. Sign in to MetaMask and pay with Ethereum, for example.<\/p>\n But, in truth, Levie is right. This meme ignores the stress of key management for blockchains. Even seasoned crypto folk have a heart attack every now and again, let alone the newbies.<\/p>\n Kris, the start-up founder argues that: \u201cWeb3 needs a better UX, public-key cryptography is a different way to login, it needs to be improved. What does key recovery look like for a user?\u201d<\/p>\n And, at this stage, any possible solution is most likely not 100% decentralized. So, there\u2019s room for improvement in Web3 key management. \u201cThe second someone loses control of their keys, it\u2019s no longer Web3,\u201d says Angliss.<\/p>\n So, fully decentralized key management remains a major problem for Web3 purists. Add this task to the too-hard basket for now.<\/p>\n \u00a0<\/p>\n \u00a0<\/p>\n Web3 needs to solve various problems first before it will be embraced by the mainstream. Importantly, it needs to be better and cheaper \u2014 or have other significant advantages \u2014 over Web2.5.<\/p>\n Scalability without sacrificing decentralization protocols remains a clear goal for Web3. But, decentralization is hard and centralized services are more user-friendly in many ways.<\/p>\n\n
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Highly critical<\/h4>\n
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Web3 history is driven by the disappointment of Web2<\/h4>\n
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Web3 starts with decentralized data storage<\/h4>\n
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Empowering users to control their own data<\/h4>\n
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More like Web2.5?<\/h4>\n
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Whose data is it anyway?<\/h4>\n
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Will tokenomics help Web3 adoption?<\/h4>\n
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Key management is a problem for both Web3 purists and mass consumer adoption<\/h4>\n
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Is 2022 the year of Web3?<\/h4>\n