People born after 1990 can scarcely imagine life without the Internet. In the 2000s, social media scaled rapidly, significantly influencing societies.
We may not see changes over time when it’s omnipresent in the background. The truth is that the Internet changed dramatically from static Web1 to interactive Web2. The transition to Web3 is accelerating, promising even more transformative changes.
One thing to remember is that the tech divide still limits internet access to millions worldwide who are at the mercy of inadequate telecom infrastructure. In some places, data is expensive, connections are slow, and access to streaming video is limited. In other words, the global shift to Web3 won’t be an even transition for all countries.
Innovation Scales from Web1 to Web2
Web1, the “read-only web,” refers to the early days of static web pages and few images. Search functions and browsers were rudimentary. The user experience lacked interactivity and participation, with limited content creation options.
Web2, on the other hand, has characteristics most of the world knows well. The exponential rise of user-generated content, social media platforms, and interactive web applications makes Web2 more familiar.
Web2 introduced dynamic websites, online collaboration, and personalized experiences. Search engines matured, and browsers improved. Most importantly, Web2 enables users to contribute to the web’s content.
Web2 also marked the rise of widespread user data collection, nurtured by sophisticated browsers and a parade of social platforms that birthed an incredibly lucrative online advertising industry. Netscape, Google, Bing, MySpace, Facebook, Twitter, Napster, Instagram, Pinterest, TikTok, and YouTube helped transform the internet into a social and interconnected ecosystem.
Below is a fascinating cross-section of global connectivity as of April 2022.
Enter Web3
Innovation in Web2 quickly outpaced regulatory capacity to bracket the negative effects. Today, even as people connect globally in ways our grandparents could never have imagined, there are legitimate concerns about data privacy, false news, social media’s effect on young people, and Big Tech’s centralization of power.
Web3 is often called the “decentralized web” or “Web of Trust” and addresses the excesses of Web2 – offering greater personalization and efficiency as well as increased privacy and decentralization. A few interconnected megatrends are shaping Web3, such as AI, big data, and blockchain technology.
Blockchain technology, the backbone of Web3, is a ledger system invented by Bitcoin’s founder. Bitcoin itself was a direct response to the excesses of the centralized financial system that led to the 2008 financial meltdown. Today, blockchain’s use cases extend far beyond cryptocurrency.
At blockchain’s core is a decentralized and distributed ledger, or database, that records transactions across multiple computers, eliminates intermediaries, and ensures transparency by providing a tamper-proof and verifiable record of every transaction.
Despite massive investment in the blockchain sector, it is unclear how much of the centralized web and networked databases will transition to blockchain. Some technologists argue that blockchain is oversold, that existing database tech can adapt to most needs, and that blockchain is “a solution in search of a problem.”
Smart contracts are programs stored on the blockchain that run when they meet predetermined conditions, increasing the opportunity for automation and efficiency. Naysayers aside, blockchain has the potential to revolutionize or even disrupt industries like real estate and banking, which depend heavily on the “middle man” and fee revenue.
Decentralization and User Empowerment in Web3
Unlike Web2, where power and control reside with centralized platforms, Web3 distributes control to individual users. In the ideal version of Web3, users have greater privacy via control over digital identities. Users can choose which data to share with whomever, ensuring their personal information remains secure and protected. Web3 platforms leverage cryptography to enhance users’ control over their digital lives.
Critical Differences Between Web2 and Web3
Below are some differences between Web2 and Web3. Keep in mind that Web3 tech is still in the early stages. The Web3 advantages listed below are the ideal version that may or may not survive contact with the mainstream.
- Control and ownership of data: In Web2, centralized platforms retain control over user data, often exploiting it for targeted advertising or selling it to third parties. In contrast, Web3 enables users to maintain ownership of their data and decide how to use it, creating a more transparent and user-centric ecosystem.
- Trust and security mechanisms: Web2 relies heavily on trust in centralized authorities, leaving room for data breaches and privacy violations. Web3 leverages blockchain technology’s inherent security and transparency to build trust without intermediaries.
- Monetization and economic models: Web2 platforms generate revenue primarily through advertising, relying on user attention as a commodity. Web3 introduces new economic models, such as decentralized finance (DeFi) and NFTs, where users can participate directly in value creation and earn rewards for their contributions.
- Interoperability and seamless experiences: Web2 platforms are often seen in a silo, making it challenging to transfer data or interact seamlessly across different applications. Web3 promotes interoperability, allowing users to seamlessly move their data and digital assets across various platforms, creating a more cohesive and integrated internet experience.
Challenges and Limitations of Web3
Grand visions tend to gloss over the reality that change happens over time, in fits and starts. Here are some challenges Web3 faces as it expands:
- Scalability and performance concerns: Web3 applications built on blockchain networks often need faster transaction speeds and higher energy consumption, hindering mass adoption and widespread usage. Web3 developers are creating innovative solutions to increase the efficiency of on-chain transaction processing.
- User adoption and education: Users appreciate the convenience and familiarity of Web2 platforms. The Web3 user experience – dealing with wallets, crypto exchanges, and Discord – has a long way to go in creating an appealing UX. The use of credit cards for NFT and crypto transactions is one current bridge from Web2 to Web3.
- Regulatory and legal complexities: As we are seeing with the SEC activity clamping down on crypto exchanges, Web3’s decentralized nature introduces regulatory and legal complexities. In addition to the future of money, addressing issues such as identity verification, data protection, and dispute resolution are essential for the widespread adoption of Web3.
The Future of the Internet: Web3 Adoption and Impact
Web3 can potentially revolutionize various industries and sectors, creating a more equitable and user-centric internet. Some industries where consumers stand to benefit significantly from Web3 include finance, supply chain management, healthcare, and content creation.
Web3’s decentralized infrastructure can improve these sectors’ transparency, security, and efficiency. At the same time, powerful entrenched interests don’t want decentralized control and more transparency. Disruption always hurts some as it lifts others; for example, people may lose their jobs if smart contracts can automate their function.
For these reasons and more, the social and economic implications of Web3 are uncertain. Consumers and the general public will have a lot of influence on how Web3 evolves. When citizens understand the potential of Web3 and push for change that benefits the public, Web3 holds the promise of paving the way for a more inclusive and equitable digital society.
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The above is for general info purposes only and should not be interpreted as professional advice. Please seek independent legal, financial, tax, or other advice specific to your particular situation.
