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The first website in history was created in 1991. You can still view it online today.
The internet has evolved immeasurably from those early days, and it now has more than 5 billion regular users, roughly 63% of the world’s population.
Some people believe that a new paradigm for the internet is coming, called Web 3.0—also often styled Web3. They claim that a next-generation set of technologies could disrupt society just like Web 1.0 did in the 1990s.
Despite these lofty claims, the concept of Web 3.0 can be both confusing and elusive. Let’s take a closer look at the claims and criticisms of Web 3.0 to understand better what it’s all about.
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Web 1.0: The Static Web
The first version of the internet is sometimes called the “static web.” It was made of read-only webpages that, by and large, lacked much in the way of interactive features.
Web 1.0 offered little beyond browsing static pages. Content generation was handled by a select few, and information was hard to find.
Web 2.0: The Dynamic Web
In October 2004, O’Reilly Media and MediaLive hosted the first Web 2.0 conference to highlight a host of new software applications built on the web.
In late 2005, YouTube was launched. The video-sharing site was a big part of the Web 2.0 revolution, which marked the internet’s departure to an era of dynamic content. Users could now interact with web pages, communicate with each other and create content.
For many, the greatest symbol of this era is the emergence of social media networks. Smartphones soon followed, with the first iPhone released in 2007.
Before long, we were all creating, sharing and commenting on content instantaneously from the palms of our hands. If Web 1.0 was the read-only iteration, Web 2.0 could be seen as the read/write upgrade, or what we know as the internet today.
What Is Web 3.0?
This brings us to Web 3.0. Think of it as the “read/write/own” upgrade to the internet.
Because it remains a collection of ideas more than anything else, it’s challenging to nail down a precise definition of Web 3.0. For cryptocurrency developers and enthusiasts, Web 3.0 incorporates the technologies and concepts that are at the heart of crypto: decentralization, token-based economies and blockchain.
This vision of Web3 tends to be a more democratic version of today’s online world. It’s centered around the idea of ownership, removing control from the dominant big data companies and other central authorities and handing it to the masses. This is what’s meant by decentralization.
Decentralization means internet users can transact business peer-to-peer, cutting out intermediaries and removing power from controlling entities. There is a greater focus on user privacy, transparency and ownership.
Here’s where blockchain technology and cryptocurrency come into the equation. Cryptocurrencies and the token economy facilitate this model of decentralization, allowing for information to be stored on a distributed ledger outside the remit of any controlling entity.
Despite claims of democratization made by some crypto projects, with token holders being able to participate in governance, a widely-held criticism of Web 3.0 is that control is concentrated among venture capitalists and early adopters.
Web 3.0 Technologies
There are many different paths that the future development of Web 3.0 could take. Here are a few of the Web3 technologies we’re starting to see deployed today:
DeFi: Decentralized Finance
One of the most intriguing sectors is DeFi, which is short for decentralized finance.
DeFi aims to revolutionize the financial sector, removing the need for central authorities such as banks, payment processors and other intermediaries. In their place would be a peer-to-peer financial system that lives on the blockchain.
Advocates argue that this approach would reduce fees, boost transaction speeds and allocate capital more efficiently.
As with most Web3 applications, there would also be enhanced transparency, given all loan amounts, collateral and other data are available for anyone to see on publicly accessible blockchains.
Importantly for certain jurisdictions, accessibility is also enhanced. DeFi would be accessible to anyone with an internet connection, without the need for paperwork or a third-party verification.
Most of what banks and other financial intermediaries offer can be achieved through DeFi, argue its proponents. This includes bank deposits, lending and borrowing, asset trading and insurance, among others.
A few examples of popular DeFi protocols include Uniswap (UNI), Aave (AAVE) and Chainlink (LINK), which are designed to carry out financial transactions.
NFTs: Non-Fungible Tokens
Non-fungible tokens (NFTs) are a class of digital assets that live on the blockchain.
Each NFT is unique (non-fungible), and no two NFTs are identical. This is in contrast to, say, dollars, which are fungible—one dollar is exactly the same as any other dollar.
Advocates see a wide variety of potential use cases for NFTs, but to date the only widespread use has been for digital artworks. As the crypto market accelerated moonwards in 2021, multimillion-dollar sales of digital art NFTs were commonplace.
But as crypto winter set in in 2020, the NFT market crashed. Professional investors and art world critics derided NFTs as little more than a speculative bubble.
Crypto world has not given up on NFTs, and Web3 proponents see them as useful for verifying intellectual property, authenticating documents and various crypto gaming features.
“NFTs could change multiple different aspects of our daily lives, such as tamper-proof identification, concert ticket sales, and much more,” says Giorgi Khazaradze, CEO of crypto trading platform Aurox. “For now, though, NFTs remain extremely speculative.”
DAOs: Decentralized Autonomous Organization
Decentralized autonomous organizations (DAOs) may sound complicated, but the underlying concept is simple. A DAO is a group formed for a common purpose, with its rules, plans and objectives all encoded on the blockchain.
DAOs are controlled by their members. Proponents claim that a DAO has no hierarchy, no bureaucracy and no red tape. Most commonly they operate based on a democratic structure, where votes are cast in connection to how many crypto tokens users hold.
“What makes a DAO attractive to many users is that all financial transactions are recorded on a blockchain, which eliminates any third-party involvement,” says Felice Gorodo, CEO of eMerge Americas.
“Instead, the transactions go through uneditable, transparent smart contracts. Breaking away from the traditional vertical company structure of executives, board of directors, and investors, a DAO allows all members to be involved and vote if any changes need to be made,” Gorodo says.
How to Invest in Web 3.0
Futurists say that Web 3.0 will become an essential part of the ever-expanding evolution of the internet. If this vision comes to pass, it could unlock speculative potential for investors and developers.
If you believe in the vision of the future, buying cryptocurrency is an easy way to gain exposure to Web3. You can purchase cryptocurrencies that support DAOs and DeFi protocols or buy digital art in the form of NFTs.
Just remember, Web 3.0 is in its nascent stage. Investments of this nature are highly speculative and should be discussed with a financial advisor.