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You may have heard of the newest tech term: web3. Web3, also known as web3.0, is a term that has risen in popularity alongside the advent of cryptocurrency and blockchain technologies. But what exactly is web3?


To start, we have to go back to the beginning of the internet. This was web 1.0, a series of pages hosted on local servers that gave visitors read-access only. This means that you could read a webpage, but not interact with that webpage. Think of it like a book at a library. You can look at the book, read it, even take it home with you. But that’s pretty much it.


web2 fixed this. With the addition of interactivity, the internet could now be used to create collaboratively, communicate, and to edit or push your own ideas to the internet for anyone to see and interact with. These are sites and applications such as Facebook, Wikipedia, Twitter, or Uber. This version of the internet tremendously impacted both the spread of information and the capabilities of peer-to-peer (P2P) communication.



From the WEF


Before we get into web3, we must first discuss the concept of centralization. With web2, many companies were able to offer new and valuable services that you could not receive elsewhere. If you wanted to use these services, you had to join their ecosystem. Sign up for an account, provide contact information, enter your credit card information. Pretty standard, right?


When we discuss centralization, we are referring to the reliance on a particular platform in order to do something you want to do. Say you do your personal banking at Chase, and their website goes down. How will you access your accounts to send money or pay bills? There is only one ‘central’ website to do these things, and if you cannot access it for whatever reason, you are out of luck. Other issues arising from centralization are censorship, data storage, and privacy. We will go more into detail on these in the future, but stay with us.


This web2 type of marketplace for services worked very well, and still works today. We all use services such as Gmail, social media, or online banking. But what if there was an alternative that addressed the issues above? Just as the internet revolutionized the world before, the introduction of Distributed Ledger Technology (DLT) and its user interface, web3, has the same potential to disrupt the traditional way we thought P2P services worked. The scope of DLT is beyond this article, but this article will give you a nice introduction.


For our context, DLT allows users, or peers, to connect with each other directly without the need for a centralized service. You can send money, transfer data, and communicate without the need for a platform. If proper precautions are made, your identity on the DLT can remain completely anonymous. The creator of Bitcoin, Satoshi Nakamoto, remains famously anonymous despite his wallet address(es) being public information.


In web2, you are forced to create a new identity for whichever service you want to use. You know how it goes–a username and password combination for Facebook, Instagram, Netflix, Spotify… it adds up. Web3 reverses this paradigm, where you take your identity with you. Your web3 wallet is your passport, and it can be used to access web3 services without you needing to provide additional information each time you want to use a service. No email, password, or spam emails in your inbox–just connect your wallet and off you go. 


Time for another buzzword that you’ve heard recently: the infamous NFT. Quite simply, an NFT (non-fungible token) is a digitized piece of information. It can be a picture, a movie, or a song. It can be a credit card, a car key, or your driver’s license. It can be a mortgage, a share of a company, or a piece of virtual real estate. The possibilities are truly endless, and the entire thing is predicated on the concept of virtual scarcity. 


At first, this may seem a bit underwhelming. That’s what has everyone all excited about web3? But underneath the hood, it is an underrated mechanism that will change how we interact with businesses and other individuals on the internet.


Part 2 in this series will take a look at how this shift towards digital scarcity will disrupt and impact hundreds of services round the globe. See you then!