What is Web3? The Basics

About eight years back in 2014, Gavin Wood coined the phrase Web 3.0 which is now called Web3. Gavin lives in Switzerland and helped develop Ethereum, the cryptocurrency that is second only to Bitcoin in prominence and market size. Now he runs the Web3 Foundation, which supports decentralized technical projects. He also runs Parity Technologies, a company focused on building blockchain infrastructure for Web3, the latest buzzword in Silicon Valley tech communities. Venture Capital firms like Andreessen Horowitz have been promoting Web3 for last couple of years.

So what is Web3? First let us look at Web 1.0 and Web 2.0.

• Web 1.0 - started the era of decentralized open protocols during the 1990s for the internet in which most online activity involved navigating to individual static web pages. Every user stored their web pages in a private server.
• Web 2.0 - (current status quo) ushered in the era of centralization, in which a huge share of communication and commerce takes place on closed platforms owned by a handful of powerful corporations like Google, Facebook, and Amazon. These platforms are subject to nominal control of centralized government regulators. We do hear almost every week of penalties imposed by regulators in US and Europe on some of these companies for monopolistic practice.
• Web3 - the goal is to break the world free of that monopolistic control and almost get back to a decentralized online ecosystem.

At the basic level, Web3's decentralized ecosystem will be built on the blockchain platform. Apps built on Web3 would not be owned by a central gatekeeper, but rather by users who will earn their ownership stake by helping to develop and maintain these services.

Blockchain is a social construct with a set of rules with no one with arbitrary powers within the system. In other words, Web3 is a larger socio political movement that is moving away from arbitrary authorities into a much more rationally based liberal model. It uses both cryptography and certain game theory economics to deliver its services. The node infrastructure of the internet makes blockchain the ideal base to operate in a peer-to-peer network. Please refer to an article I wrote few years back on the basic technology of blockchain.

Recently Jack Dorsey (ex CEO Twitter) made some remarks on how the VC community is hijacking Web3 for profit. That created some backlash from the VC world, specially from Andreessen Horowitz., which has a large crypto fund for investing in Web3 startups. Dorsey's other company Square (now called Block) has a deep interest in Bitcoin for its transactions.

Will Web3 be able to bust platform monopolies like Google and Facebook? We don't know yet. As per Metcalf's law (1980), the value of a network (it's worth to the population) is proportional to the square of the number of users. As number of users on Web3 grows, the value will grow fast just like the telephone network and the internet.

The question is when will Web3 happen and is there a danger that big players will push Web 2.0 in disguise as Web3. No one knows the answer. But the tech community is all hyped up to move to a new world of legitimately open, transparent & decentralized peer to peer platform like blockchain.