The internet is an evolving entity, re-inventing itself at such a rapid pace, that it’s difficult to stop long enough to describe it. Web3 is the next iteration that is still in the early stages of development.
As with Web1 and Web2, idealistic hopes and plans are abundant. Will the largest tech companies with the most resources dominate the space or will disruptive technologies and new pioneers emerge, fostering a more egalitarian internet?
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Web3 promises a decentralized future of the internet built on the blockchain and Internet of Things technology. But what would that look like and can it be done?
Predicting how the Internet’s next chapter will unfold means re-exploring the web that came before.
Web1 began as a decentralized network connecting individual computers and servers. In the 1970s, the U.S. government developed ARPANET as a communication system linking military command centers. Academic and research institutions soon joined the network and the internet was born as an open-source environment, meaning anyone could freely build on it.
By the 1990s, websites still had one primary function: Displaying information. The first browsers were introduced but at the time, advertising was banned, which seems hard to believe today.
Web2 is the internet as we know it now. It’s a more interactive environment with social media and creator platforms allowing users to post and interact with content.
Web2 ushered in the age of internet marketing and sales with mobile devices and enhanced broadband networks.
In 1996, Steve Jobs made a visionary prediction in a Wired magazine interview, “The best way to think of the Web is as a direct-to-customer distribution channel, whether it’s for information or commerce. It bypasses all middlemen.”
The success of Amazon (AMZN) – Get Amazon.com Inc. Report, eBay (EBAY) – Get eBay Inc. Report, and an increasingly digital shopping experience proved Jobs right. By 2012, eCommerce sales reached $1 trillion worldwide.
With an advertising backbone, Meta (META) – Get Meta Platforms Inc. Report, Alphabet (GOOG) – Get Alphabet Inc. Report, and many others have profited immensely from dominating social media, search platforms, and video streaming services.
However, big tech has been criticized for violating user privacy and that criticism has a price tag. EU data protection authorities have issued a total of $1.25 billion in fines since January 2021.
Lawmakers and users alike continue to question how companies collect and share personal data.
Some of the Internet’s founding fathers, including World Wide Web inventor Tim Berners-Lee, have even questioned if the web as it exists today can be the free and open forum that was promised. On a BBC broadcast in November of 2019, he said,
“If you had asked me 30 years ago where we would be, I kind of hoped we’d be using web tools effectively to promote democracy. But we see now with the exploitation we saw with Cambridge Analytica as well as misinformation, lack of accountability, blocking and censorship by governments, this is not what we are seeing.”
So, is Web3 the solution?
Web3 aims to decentralize the Internet and launch a more multidimensional and immersive environment called the “metaverse” designed for even more participation by users.
Blockchain technology is widely expected to change how information is shared and stored, providing verifiable, trustless, distributed data on peer-to-peer nodes or servers that can enable the creation of new economic sectors and new forms of commerce.
Theoretically, decentralized applications can transfer much of the power and control back to the public, marking a shift to a more user-owned web.
Peer-to-peer buying and selling of assets, like NFTs, are just the beginning. The growing adoption of cryptocurrencies and ever-expanding mobile eCommerce have effectively cut the middlemen out of parts of the economy.
Consider the transaction fees charged to retailers by credit card companies. The seemingly small 1 to 4% adds up moving through the supply chain. The inefficiency of small transactions forces many companies to purchase in bulk and effectively shuts out smaller businesses.
Advocates of ‘Defi’ or decentralized finance are lobbying and pitching for more personalized financial models and even a future without banks and centralized stock exchanges.
Pioneers in the space include OpenSea, the most prominent digital marketplace for crypto collectibles and NFTs, Coinbase for buying, selling, and storing cryptocurrency, and Decentraland, a metaverse environment where users can meet, chat, play games, socialize and attend events.
However, Critics have already begun questioning some of the loftier ambitions of Web3 and warn of potential manipulation.
Former Twitter (TWTR) – Get Twitter Inc. Report CEO Jack Dorsey criticized the Web3 space for the likelihood of being controlled by venture capitalists while appearing to be decentralized.
If Web2 is an example, idealistic projections can be tempered by market forces, industry leaders, and even politics. Can the dream of Web3 be realized or does the past already have the answer?