Introduction
Before we had the blockchain, web3, cryptocurrencies, and NFTs, we had the regular old Internet. If we want to dive in and understand the decentralized apps and Web3, we need to first understand what are Web1 and Web2, and how the Internet came to be.
In the 1960s, the Advanced Research Projects Agency (ARPA) of the United States Department of Defense funded research into the time-sharing of computers. In computing, time-sharing is the sharing of a computing resource among many users simultaneously by means of multiprogramming and multi-tasking.
In the 1970s, ARPANET initially connected only a few sites in several metropolitan areas of Boston, San Francisco, and Los Angeles. Then ARPANET gradually developed into a highly de-urbanized and decentralized communications network, connecting remote centers and military bases in the United States.
That was the first actual internet - the network of computers that are decentralized.
The technology continued to advance after the TCP/IP protocol was invented, a protocol that sets the standard for how the data is transferred across multiple networks.
ARPANET adopted TCP/IP on January 1, 1983, and from there, researchers began to assemble the “network of networks” that became the modern Internet. The online world then took on a more recognizable form in 1990, when computer scientist Tim Berners-Lee invented the World Wide Web. While it’s often confused with the internet itself, the web is actually just the most common means of accessing data online in the form of websites and hyperlinks.
Today, even though the Internet is decentralized, meaning that you could access it from anywhere in the world, it is still highly controlled. ISPs(Internet Service Providers) can monitor all your traffic, they can block you from accessing certain websites, and the governments of the world are highly involved in what you actually see and what you’re exposed to on the internet, either by blocking you from some services or by placing the content on media websites.
Your identity on the internet is also known by ISPs, and some argue that there is no such thing as true anonymity on the internet.
Web 1.0
The World Wide Web (WWW), just Web for short, represents all websites that can be accessed through the Internet and seen via browsers. The pages and websites are connected through hyperlinks, and we can say that the Web is like an address book - having different protocols to make it so that we can access different pages.
Those web pages are stored on servers across the world and can be accessed from anywhere.
They are written in the language called HTML (HyperText Markup Language), a text-based way of describing how content within an HTML file is structured. HTML describes the structure of web pages using elements or tags and displays the content of these pages through a web browser.
To access one of these pages, a user and their client machine supply a universal identifier to the web server via a browser. This identifier may be a uniform resource locator (URL) or a uniform resource identifier (URI) and is unique to each web page.
A collection of web pages belonging to a URL is called a website.
Web 1.0 is the first version of the web, meaning the interactions on these pages were minimal - they were one-way in a sense, meaning that users could access them to see the content, but that is where it ends. The creators were typically developers who built websites that contained information served mainly in text or image format. Web 1.0 lasted approximately from 1991 to 2004.
Web 1.0 consisted of sites serving static content instead of dynamic HTML, you as a user could not interact with the website to leave comments, upload stuff, or fill forms. Data and content were served from a static file system rather than a database, and sites didn't have much interactivity at all.
You can think of Web 1.0 as the read-only web.
Web 2.0
Web 2.0, also known as the participative web and social web, is the second iteration of the web and it represents websites that emphasize user-generated content, ease of use, participatory culture, and interoperability.
A Web 2.0 website allows users to interact and collaborate with each other through social media dialogue as creators of user-generated content in a virtual community. This contrasts with the first generation of Web 1.0-era websites where people were limited to viewing the content in a passive manner.
Users can chat, leave comments, write blogs, participate in online games together, and much more - Web 2.0 added the social factor to the websites. Now everyone can be both the user and the creator.
Web 2.0 is simple, and because of its simplicity more and more people around the world are becoming creators.
The web in its current form is really great in many ways, but there are some areas where we can do a lot better.
Identity
On the traditional web, while surfing websites, your provider has access to all your data. Web3.0 doesn’t necessarily change this, as you still have to access the websites somehow to use them, but just like ISPs have access to that information, the websites you access do too.
If a company wanted, they can track and store a lot of your data without you even knowing, because your identity is open to them.
On the traditional web, your identity can be seen and tracked. Most websites offer login via services like Google or Facebook, and those websites can track your journey on the internet. Your virtual identity is loosely tied to your real identity, because of the sheer load of the data those websites collect.
Privacy
Privacy in the Web 2.0 world basically doesn’t exist, as everything you do is tied to your online identity and presence, which is continuously tracked. All the time there are reports of leaked databases with user data and login credentials. When registering for the account on any website, you agree to share your data. In the case of the Facebook website, users willingly share their location, their photos, relationship status, and much, much more.
These companies are doing this behind closed doors, their code is a black box and no one outside their specific group of developers knows how the code works and what data it actually collects.
That way, users can’t know if their data and privacy are in good hands - they have to trust the centralized organization with preserving their privacy.
Monetization
The current most popular way of monetizing websites is by - ads! Companies like Facebook, Youtube, TikTok, or Twitter live from sponsors that create ads and place them on the market. Before they get to the point of being profitable, companies usually don’t even care about monetization and their first goal is to get as many users as possible.
The startup launches the website, then that website gains traction, and from then monetizing the user’s data and attention is easy. The more users there are, the more data there is for the company to collect and process, making the ads more personalized which pulls in more sponsors, allowing for more profit and by investing that profit, the company can gain more users. That is the magic circle of large Web2 companies.
Centralization
On Web2, most of the data is centralized - meaning that once you sign up on a website, your personal data is stored on a centralized database owned by that company. Those servers are in their possession, and they are often centralized not just in a governance/ownership aspect, but also in a geographical aspect, meaning they are in the same place. The company that stores your data can then choose to delete your images, remove some data from the site, and have the ability to set up rules about what can or can not be shown on their platform. If someone hacks their database, they can easily access the user’s data.
“Centralized” means in one single place, managed by a single entity that you have to trust to be accountable for your information, money, or anything you want to provide - because they usually don’t have open source code available for viewing by the public.
What is Web3?
As Web 2.0 is an extension of Web 1.0, Web 3.0 is the extension of these two.
While there are many differences, new protocols, and terminology, the core of the Web3 philosophy is decentralization.
Web3 is represented by DApps (Decentralized Apps) that interact with the blockchain via smart contracts to ensure the benefits of decentralization, trustless systems, and privacy.
“Trust without trust” is a concept that users can trust the protocol even if they don’t trust the other person. They can see the actual code of the smart contract and by that, they can see what will happen in the transaction - they don’t have to trust the other party to not trick them, users can see that for themselves by looking into the protocol.
Smart contracts also remove the need for a third party - they act as a medium between two or more parties to interact and make transactions.
This system is permissionless, meaning that anyone can create a transaction without waiting for the permission of a centralized entity.
Another benefit of Web3 is the native payment system. As the underlying technology behind the DApps and smart contracts is the Blockchain, we have the built-in payment system. Blockchain creates the financial incentive for maintainers of the network by rewarding them with a digital currency, and by that we can use those tokens as a native currency.
On Web3 sites, you’ll often see the “Connect Wallet” button. Your crypto wallet, more specifically your address, is your identity on Web3 apps and websites. You can interact with these websites using your wallet to send transactions.
On traditional sites we had to register and create accounts, here we can use a single wallet to access the website’s features. Web3 websites don’t require you to give them your private keys and passwords, so even if these sites get hacked, your privacy will remain protected.
Identity
On the Web3 apps, your identity is equal to your wallet address. All transactions you make are publicly accessible and the whole journey can be seen.
The mainstream idea that the blockchain is “anonymous” or “secret” is false. If someone connects your address to your real-life identity, everything you’ve done online in the blockchain space can be traced back, down to the first-ever transaction.
This maybe was “anonymous” before, when crypto was just starting and people didn’t know much about the technology, but now it’s pretty mainstream and not so mysterious.
There have been multiple kinds of research that, just by looking at the patterns of the transactions, could determine the actual identity behind the address.
Native Payments
The current popular solutions for online payments include complexity, and permissions and are not yet able to provide real worldwide access.
In Web3, due to the nature of blockchain technology, every chain has its native payment system implemented.
Building decentralized apps on top of a blockchain gives developers the opportunity to use the built-in payment system to make transactions.
They can even issue their own token that is built on top of the first layer.
Investing and Crowdfunding
There are a few popular ways to get funded as a startup or a company. Startups usually get into accelerator/incubator programs, or they seek investments by crowdfunding or angel investors. There are also many VC funds that are investing in the startup ecosystem.
Large companies seek IPO (Initial Public Offering), but there are a number of requirements to be met to be able to do that.
Web3 and crypto give us new ways of investing.
ICO, or Initial Coin Offering, is a way for a company to raise funds by issuing their token. Investors are then able to buy the token and invest in the company, thus making the tokens effectively work as the company shares.
This is possible without meeting the requirements for IPO that usually only large corporations meet.
Of course, this opens the possibility of many scams, since the regulation still isn’t clear.
Conclusion
Web3 has many new features changing the way we view how we interact with each other on the internet.
The main point is decentralization and not having to trust a third party, but many more things sprouted out of that.
Blockchain and Web3 are disrupting many industries and many aspects of the digital world.
The philosophy, logistics, finance, economics, investing, technology, and medicine - are just some of the most popular areas that Web3 is changing.
In my opinion, this technology is still too young and early to know the direction it will take.
What’s left is to research and follow current events in the ecosystem and continuously teach ourselves. If you manage to contribute to the space by learning and improving or building new stuff, that’s an even greater achievement!
There’s still room for improvement, and we can all participate in this new phenomenon!