What Are Web 2.0 and Web 3.0?

What Are Web 2.0 and Web 3.0?

Web 2.0 and Web 3.0 refer to successive iterations of the web, compared with the original Web 1.0 of the 1990s and early 2000s. Web 2.0 is the current version of the internet (a term often used interchangeably with the web) with which we are all familiar, while Web 3.0 represents its next phase.

Web refers to the World Wide Web (WWW), the internet’s core information retrieval system. The WWW initialism used to (and often still does) preface a web address and was one of the first characters typed into a web browser when searching for a specific resource online. Internet pioneer Tim Berners-Lee is credited with coining the term World Wide Web to refer to the global web of information and resources interconnected through hypertext links.1

KEY TAKEAWAYS

• Web 2.0 and Web 3.0 represent successive, advanced iterations of the original Web 1.0 of the 1990s and early 2000s. Web 2.0 is the current version of the web with which we are all familiar, while Web 3.0 represents its next phase, which will be decentralized, open, and of greater utility.
• Innovations such as smartphones, mobile internet access, and social networks have driven the exponential growth of Web 2.0.
• Web 2.0 has disrupted sectors that fail to integrate the new web-based business model.
• Defining features of Web 3.0 include decentralization; trustlessness and permissionlessness; artificial intelligence (AI) and machine learning; and connectivity and ubiquity.

Web 1.0

Berners-Lee pioneered the early development of the internet in 1990 when he was a computer scientist at European researcher CERN.2 By October 1990, Berners-Lee had written the three fundamental technologies that became the foundation of the web, including the very first webpage editor/browser (WorldWideWeb.app):

• HTML: HyperText Markup Language, the markup or formatting language of the web
• URI or URL: Uniform Resource Identifier or Locator, a unique address used to identify each resource on the web
• HTTP: HyperText Transfer Protocol, which allows for the retrieval of linked resources from across the web3

By the mid-1990s, the introduction of web browsers such as Netscape Navigator ushered in the era of Web 1.0. This was the age of static webpages retrieved from servers, a far cry from the slick content that is taken for granted today. Most internet users at that time were delighted by the novelty of features such as email and real-time news retrieval. Content creation was still in its infancy, and users had little opportunity for interactive applications, although this improved as online banking and trading became increasingly popular.

Web 2.0

Web 2.0 refers to a paradigm shift in how the internet is used. Over the past 15 to 20 years, the bland webpages of Web 1.0 have been completely replaced by Web 2.0’s interactivity, social connectivity, and user-generated content. Web 2.0 makes it possible for user-generated content to be viewed by millions of people around the world virtually in an instant; this unparalleled reach has led to an explosion of this type of content in recent years.

The exponential growth of Web 2.0 has been driven by key innovations such as mobile internet access and social networks, as well as the near-ubiquity of powerful mobile devices like iPhones and Android-powered devices. In the second decade of this millennium, these developments enabled the dominance of apps that greatly expanded online interactivity and utility—for example, Airbnb, Facebook, Instagram, TikTok, Twitter, Uber, WhatsApp, and YouTube, to name a few.

The phenomenal revenue growth of these dominant platforms has made many of the Web 2.0-centric companies—such as Apple, Amazon, Google, Meta (formerly Facebook), and Netflix—among the world’s biggest companies by market capitalization (there is even an acronym for them: FAANG).

These applications have also spurred the growth of the gig economy, by enabling millions of people to earn income on a part-time or full-time basis by driving, renting their homes, delivering food and groceries, or selling goods and services online. Web 2.0 has also been tremendously disruptive to certain industries to the point of being an existential threat to some of them. These are sectors that have either failed to adapt to the new web-centric business model or been slow to do so, with retail, entertainment, media, and advertising among the hardest hit.

2004

This year witnessed two notable developments that accelerated the development and adoption of Web 2.0: Google’s initial public offering (IPO) and the creation of Facebook (now Meta). Both companies are part of the FAANG group, which consists of the biggest U.S. technology giants.

Web 3.0

Web 3.0 represents the next iteration or phase of the evolution of the web/internet and potentially could be as disruptive and represent as big a paradigm shift as Web 2.0 did. Web 3.0 is built upon the core concepts of decentralization, openness, and greater user utility.

Berners-Lee had expounded upon some of these key concepts back in the 1990s, as outlined below:

• Decentralization: “No permission is needed from a central authority to post anything on the web, there is no central controlling node, and so no single point of failure...and no ‘kill switch’! This also implies freedom from indiscriminate censorship and surveillance.”
• Bottom-up design: “Instead of code being written and controlled by a small group of experts, it was developed in full view of everyone, encouraging maximum participation and experimentation.

In a 2001 paper, Berners-Lee discussed the concept of what he referred to as the Semantic Web.6 Computers have no reliable way to process the semantics of language (i.e., figure out the actual context in which a word or phrase is used). Berners-Lee’s vision for the Semantic Web was to bring structure to the meaningful content of webpages and enable software that would carry out sophisticated tasks for users.

Web 3.0 has moved well beyond the original concept of the Semantic Web as conceptualized by Berners-Lee in 2001. This is partly because it is very expensive and monumentally difficult to convert human language—with all its subtle nuances and variations—into a format that can be readily understood by computers, and because Web 2.0 has already evolved substantially over the past two decades.

Defining Features of Web 3.0

Though there is as yet no standardized definition of Web 3.0, it does have a few defining features:

Decentralization: This is a core tenet of Web 3.0. In Web 2.0, computers use HTTP in the form of unique web addresses to find information, which is stored at a fixed location, generally on a single server. With Web 3.0, because information would be found based on its content, it could be stored in multiple locations simultaneously and hence be decentralized. This would break down the massive databases currently held by internet giants like Meta and Google and would hand greater control to users.

With Web 3.0, the data generated by disparate and increasingly powerful computing resources, including mobile phones, desktops, appliances, vehicles, and sensors, will be sold by users through decentralized data networks, ensuring that users retain ownership control.

Trustless and permissionless: In addition to decentralization and being based upon open source software, Web 3.0 will also be trustless (i.e., the network will allow participants to interact directly without going through a trusted intermediary) and permissionless (meaning that anyone can participate without authorization from a governing body). As a result, Web 3.0 applications will run on blockchains or decentralized peer-to-peer networks, or a combination thereof—such decentralized apps are referred to as dApps.

Artificial intelligence (AI) and machine learning: In Web 3.0, computers will be able to understand information similarly to humans, through technologies based upon Semantic Web concepts and natural language processing. Web 3.0 will also use machine learning, which is a branch of artificial intelligence (AI) that uses data and algorithms to imitate how humans learn, gradually improving its accuracy. These capabilities will enable computers to produce faster and more relevant results in a host of areas like drug development and new materials, as opposed to merely targeted advertising that forms the bulk of current efforts.

Connectivity and ubiquity: With Web 3.0, information and content are more connected and ubiquitous, accessed by multiple applications and with an increasing number of everyday devices connected to the web—one example of which is the Internet of Things.

Potential and Pitfalls of Web 3.0

Web 3.0 has the potential to provide users with far greater utility, going well beyond the social media, streaming, and online shopping that comprise the majority of Web 2.0 applications consumers use. Capabilities like Semantic Web, AI, and machine learning, which are at the core of Web 3.0, have the potential to greatly increase application in new areas and vastly improve user interaction.

Core features of Web 3.0, such as decentralization and permissionless systems, will also give users much greater control over their personal data. This may help limit the practice of data extraction—which refers to information collected from web users without their consent or compensation—and curb the network effects that have enabled the technology giants to become near-monopolies through exploitative advertising and marketing practices.

However, decentralization also brings with it significant legal and regulatory risks. Cybercrime, hate speech, and misinformation are already difficult to police and will become even more so in a decentralized structure because of the lack of central control. A decentralized web would also make regulation and enforcement very difficult; for example, which country’s laws would apply to a specific website whose content is hosted in numerous nations globally?

The Bottom Line

To use an analogy from the movies, if Web 1.0 represented the black-and-white movie era, Web 2.0 would be the age of color/basic 3D, while Web 3.0 would be immersive experiences in the metaverse. Just as the 2010s were the decade when Web 2.0 became the dominant force in the global business and cultural landscape, it might be Web 3.0’s turn in the 2020s. Facebook’s name change to Meta on Oct. 28, 2021, could well turn out to be an early sign that the shift to Web 3.0 is picking up steam.7

What’s a Real-World Example of How Web 3.0 Will Be Able to Provide Greater User Utility?

For example, if you are making plans for a vacation and are on a budget, you currently would have to spend hours looking for flights, accommodation, and car rentals, trawling through numerous websites and comparing prices. With Web 3.0, intelligent search engines or bots will be able to collate all this information and generate tailored recommendations based on your profile and preferences, saving you hours of work.

Is Web 3.0 the Same as the Semantic Web?

Web 3.0 goes well beyond the Semantic Web envisioned by web pioneer Tim Berners-Lee in 2001. Though Web 3.0 uses technologies based on Semantic Web concepts and natural language processing to make user interaction more intuitive, it also has other features, such as widespread use of artificial intelligence (AI) and machine learning, and trustless/permissionless systems, such as blockchain and peer-to-peer networks.

Which Newer Technologies in Finance Will Be Facilitated by Web 3.0?

Because of its key decentralization feature, Web 3.0 lends itself to technologies such as blockchain, distributed ledger, and decentralized finance (DeFi) .