If Bitcoin’s white paper is the foundational text for crypto, Web3 is the broader philosophy that has emerged from it. The concept refers to a new era of the internet—one that exists mostly in theory for now—where the web is controlled by user-owned networks whose constituents use cryptocurrencies like voting chips.
To understand Web3, it’s necessary to understand what came before it. Web1 refers to the Internet populated by the simple HTML pages of the 1990s and early 2000s. These sites were barely interactive, and mostly for reading. Web2 is the “read/write” phase of the Internet, where reading and producing content became an integral part of the experience.
Web2 sites—Twitter, Facebook, and YouTube among them—are now known as Big Tech. Although these companies connected the world through free services, Big Tech critics argue that they turned the consumer into the product by selling their data to third parties. Critics also claim that global communication lines are now disproportionately controlled by a small cabal of tech bros, who can censor content at will and kick out anyone they don’t like.
Web3 is an attempt to solve the problems of Web2. Web3 protocols are not run by companies that monetize user data but are owned and governed by their communities; anyone can own a share by buying (or earning) tokens. Imagine a Facebook where its users voted on how the algorithm worked or on what kind of ads it showed.
The Web3 vision of a user-owned internet is possible because crypto projects are, at least in theory, cooperatively run by decentralized communities. Those communities use crypto to vote on protocol decisions, most often through informal bodies called decentralized autonomous organizations (DAOs). While Web2 protocols make money by selling user data, Web3 protocol users profit when token prices rise.
Web3 is commonly referred to as the “read/write/own” phase of the internet. A lot of this activity takes place on smart contract platforms, and relies on the scarcity of digital assets that blockchains provide.
Despite the lofty ideals, however, most Web3 projects are driven primarily by rampant token speculation. Most governance proposals are ignored, and—for now at least—the outcome remains the same as Web2: The richest users on the network make the decisions.
Go deeper:
Brian Brooks, former OCC head, explains Web3 to Congress
Why Web3 matters—Chris Dixon, Andreessen Horowitz general partner
Introduction to Web3—Ethereum Foundation
See also:
What is the metaverse?
What is cryptocurrency?
What are NFTs?
Try it:
Decentraland—metaverse game