What Are the Similarities and Differences between Web3 and the Metaverse?

Over the past year, many people have turned their eyes to the Metaverse, hoping that the Metaverse can change the world. However, Web3 has always been discussed alongside the Metaverse and has received a lot of attention in the recent past. So what exactly is Web3? Why is Web3 always mentioned when talking about the Metaverse? What’s the difference?

What is the Web3?

Web3 (also known as Web3.0 and sometimes stylized as web3) is an idea for a new iteration of the World Wide Web based on blockchain technology, which incorporates concepts such as decentralization and token-based economics. Some technologists and journalists have contrasted it with Web2.0, wherein they say data and content are centralized in a small group of companies sometimes referred to as “Big Tech”. The term “Web3” was coined in 2014 by Ethereum co-founder Gavin Wood, and the idea gained interest in 2021 from cryptocurrency enthusiasts, large technology companies, and venture capital firms.

Some experts argue that Web3 will provide increased data security, scalability, and privacy for users and combat the influence of large technology companies. Others have raised concerns about a decentralized web, citing the potential for low moderation and the proliferation of harmful content, the centralization of wealth to a small group of investors and individuals, or a loss of privacy due to more expansive data collection. Others, such as Elon Musk and Jack Dorsey, have argued that Web3 only serves as a buzzword.

There is no accepted definition of web3. Specific visions for Web3 differ, and the term has been described by?Bloomberg?as “hazy”, but they revolve around the idea of decentralization and often incorporate blockchain technologies, such as various cryptocurrencies and non-fungible tokens (NFTs).?Bloomberg?has described Web3 as an idea that “would build financial assets, in the form of tokens, into the inner workings of almost anything you do online”.

Some visions are based on the concept of decentralized autonomous organizations (DAOs). Decentralized finance (DeFi) is another key concept; in it, users exchange currency without bank or government involvement. Technology scholars have argued that Web3 would likely run in tandem with Web2.0 sites, with Web2.0 sites likely adopting Web3 technologies in order to keep their services relevant.

The relationship between Web3 and the Metaverse

The similarity of the conceptual descriptions of Web3 and the meta-universe has led many to believe that they are the same. Actually, they are two different concepts. So what is the relationship between Web3 and the Metaverse? What is the difference?

The first thing that needs to be clear is that the Metaverse is a grand concept like “universe”. The Metaverse does not refer to a technology or an industry, but a huge social and economic system or a virtual world. However, building a virtual world is easier said than done. Therefore, the Metaverse related projects are still in the stage of conceptual hype.

So, what should the true form of the Metaverse look like? Tim Sweeney, CEO of well-known game developer Epic Games, said that the Metaverse will be an unprecedented large-scale participatory medium where all users can participate, create, share and profit from it. The Metaverse is not the same as virtual space, virtual games, and virtual platforms. It will not be controlled by only one company. Users’ digital avatars can travel freely between different platforms, and everyone will have their own universal identity and universal wallet.

The concept of Web3 is, for example, that people can use avatars to buy clothes in Amazon’s virtual store, and then wear the clothes to buy tickets to play in Disney’s virtual park, and then send the play records to virtual social media. In this process, people do not need to register different accounts on each platform, do not need to use different settlement methods, do not need any third-party verification, and all data will be recorded in the same digital identity account. The idea of Web3 is to create a more democratized Internet. No single entity can control the flow of information, let alone disrupt the network just because someone who owns the hardware can “pull the plug.” In theory, the servers, systems, and networks where applications in Web3 run, as well as where data is stored, will be owned by users themselves, who vote to determine the rules and regulations of the network.

The Metaverse is a virtual world, while Web3 is an idea or vision. The concept of the Metaverse is in the same vein as Web3, and Web3 is the cornerstone of the ongoing operation of the Metaverse. The Metaverse has several important elements: distributed databases, encryption technology, edge computing, and other underlying technologies. With the maturity of these technologies, we can say that the era of Web3 is coming. In the end, the above technologies, together with display technology (AR/VR), artificial intelligence, etc., can be said to have completed the landing of the Metaverse.

One reason the two are often conflated is that they do overlap in some very important ways. The technologies used to build Web3, including blockchain and blockchain-based Crypto, such as Bitcoin and Ethereum, and NFTs, have a huge impact on the way we utilize and experience virtual worlds for work, play, socialization, and learning Impact.

The challenges of Web3

As a new thing, it will inevitably encounter many challenges in the process of its development and popularization. Today, Web3 is more popular in the Internet technology circle and venture capital circle, and there is still a long way to go before it can be implemented on a large scale.

First and foremost is the technical challenge. When it comes to Web3, the first technology application that many people think of is blockchain. Web3 is inseparable from blockchain technology as the cornerstone of a “decentralized” architecture. For Web3 to be the basic form of the next-generation Internet, a blockchain network with high throughput and low latency is needed to satisfy various applications on Web3. Especially in complex application scenarios such as finance and data transactions, the throughput and latency of the network will greatly affect the application experience and applicable scenarios. However, currently, the most powerful Ethereum platform has a throughput of 20 TPS. This throughput is difficult to cope with the operations, transactions, etc. that are currently required in real life. In addition, to achieve higher throughput, more costs are required. Is anyone willing to bear the cost of platform expansion? Web2.0 also has profitable Internet companies to absorb these costs, so who will absorb the costs of Web3?

Platform congestion is also a problem. Although the platform is decentralized, the number of people currently using it is still relatively small. Ethereum can complete transactions quickly, but the number of users is much smaller than that of traditional payments such as credit cards, so transactions can be completed in about the same time. However, when Web3 is implemented, more people will use the blockchain network to pay, which will cause payment congestion. In fact, there is currently platform congestion in Ethereum, which leads to the problem of soaring platform fees. Who wants to buy an item at Web3 and wait an hour to complete the transaction? Currently, the Bitcoin blockchain can only process 3–7 transactions per second, while the transaction processing system of payment giant Visa can process tens of thousands of transactions per second.

Then there are the regulatory challenges. No matter how decentralized Web3 is, regulatory issues will always be an unavoidable issue along the way. How to combine Web3 with government supervision, the technical, legal, and administrative circles jointly discuss a set of effective supervision policies, which will be the necessary guarantee for the sustainable development of Web3.

The decentralization concept proposed by Web3 essentially places high requirements on supervision. This is also why Zuckerberg encountered strong resistance from various countries when he proposed to establish a Libra digital currency alliance (now renamed Diem and announced for sale in early 2022) many years ago, and finally let it go. How to establish a set of operating rules suitable for the Web3 era, and what role each party should play, requires long-term discussion, exploration, and trial and error.