How Far Away is the Popular Web 3?

Since the second half of 2021, two new concepts have become hot topics: the metaverse and Web 3 (also known as "Web 3.0"). The Metaverse is a virtual world of a full experience, which is both mapped from and independent of the real world.

The concept of Web 3 came from the co-founder of Ethereum in 2014, Gavin Wood. In his view, Web 3 is described as a "blockchain-based decentralized ecosystem". Blockchain is the cornerstone of Web 3 technology, which enables no single network participant to control the data and protocols on the network by building a decentralized consensus network. Based on Web 3, people are able to build a community (DAO) without a centralized platform to set and supervise the rules of the game, where a group of participants joins together; Payments and settlements do not require a financial institution such as a bank to provide "credit", and peer-to-peer payments can be made directly on Web 3; People's identities and data are not stored on a centralized platform, and they can truly "own" and dispose of their own data; People can create "non-fungible tokens" (NFTs), so that songs and digital pictures they create can be collected, circulated, and auctioned like sculptures and stamps in the past.

Source: Freepik

Web 1.0 and Web 2.0 Era

Since the invention of WWW by Professor Tim Berners LEE of Oxford University in 1991, the development of the Internet has brought earth-shaking changes to mankind. In terms of access to information, from initial portals to later search engines to today's personalized recommendations; In terms of people's communication, from the initial email VoIP to the current WeChat and WhatsApp; In terms of dissemination of information, from the original electronic media to social media, and then to the current self-media. The rapid development of the Internet has facilitated our lives and greatly accelerated the course of human knowledge accumulation and progress.

Generally speaking, the period from 1991 to 2004 is considered to be the Web 1.0 era. The main characteristic of the Web 1.0 era is that people get information from the Internet, and information and knowledge are produced and organized by commercial organizations. The Internet has entered the era of Web 2.0 since 2004. Knowledge and information are more produced by users, and commercial organizations build platforms to organize and distribute information, giving rise to mega platform companies such as Facebook, Twitter, Ali, and Tencent.

However, it has gradually become apparent that more than two decades ago, the Internet was a decentralized platform where everyone could publish websites and then link to other websites. But nowadays, when the Internet becomes a global infrastructure, some "BIG TECH" seems to take control of the Internet, which brings more and more attention to the problems of data privacy abuse, big data killing, induced click, information cocoon, and group consciousness manipulation.

Source: Freepik

The Applications of Web 3

Based on Web 3, the following applications are now widely recognized in the industry.

• Decentralized Autonomous Organization (DAO): In a DAO, there is no central figure (such as a general manager) to manage the organization, and all the rules for running the organization are written in smart contracts, which run automatically. The decision rules are transparent and visible to all organizational members, which is very different from the current organizational form, where the decisions are often made by a few people and are not known to all the members. Members are free to join and leave a DAO. If a DAO is well designed, it will attract more and more members to participate, and vice versa. The success of a DAO depends on the quality of its protocol. The operation of the protocol is automatic, transparent, and group decision-making and is not controlled by any participant.
• Decentralized Finance (DeFI): In DeFI, transactions between users can be carried out directly without going through a credit intermediary. This means that users in DeFI don't require a bank account to make payments and transfers, which allows DeFI to serve people in areas with less developed financial systems, 2 billion people in the world are said to be without bank accounts. Meanwhile, the peer-to-peer direct transaction makes the transaction cost much lower.
• Identity and data sovereignty: In Web 3, user identity and data information are stored throughout the decentralized network, rather than on a specific server or a specific participant. This allows users to have true data sovereignty and be able to handle their own data independently and autonomously.
• Creator Economy: In Web 3, the emergence of "non-fungible tokens" (NFTs) allows creators to have unique warrants for their work in the digital world that cannot be copied. NFT can be either a mapping of real-world objects in the digital world or a digital work itself. With NFT, a creator's work can be bought, sold, circulated, and rented just like in the real world. At the same time, the decentralized platform allows creators to receive more rewards.

Source: Freepik

The Challenges of Web 3

It is true that Web 3, as a new thing, is more popular in the Internet technology field and venture capital field now, and there is still a long way to go before it can really be implemented on a large scale. The large-scale implementation of Web 3 has to overcome at least three challenges.

• Technology Challenge: From the current point of view, the technology stack of Web 3 cannot be separated from blockchain technology as the cornerstone of "decentralized" architecture, so it requires a high-throughput and low-latency blockchain network, especially in scenarios such as finance and data transactions, the network throughput and latency will greatly affect the application experience. At present, the throughput of Ethereum is in the dozen TPS, which is still a long way from the large-scale applications required in real life. What's more, there are many challenges to overcome from technological breakthroughs to ecological construction.
• Governance Challenge: The goal of Web 3 is to build a "decentralized" ecosystem, where no central figure can "control" the data and protocols on the network. We should note that the ability of the blockchain lies "in the scope of formalization of all business information, the computer system can prove its innocence". However, in real life, we have a great deal of information that cannot be formalized or even expressed. And because of the "decentralized" form, the traditional centralized adjudication mechanism based on judicial and arbitral organs cannot be implemented on Web 3 but depends on the unification of group consciousness, which makes the mechanism of Web 3 may bring more friction and efficiency loss in slightly complicated scenarios.
• Regulatory challenges: No matter how rosy a vision Web 3 paints, the services on Web 3 and even itself are still under government regulation. The combination of Web 3 and government regulation, with the technical, legal, and administrative communities working together to make a set of effective regulatory policies, will be a necessary guarantee that Web 3 can continue to grow.

Source: Freepik

Conclusion

As an emerging concept, Web 3 is still in the early stages of development, and it depicts a better world of the Internet in the minds of idealists. In the world of Web 3, no centralized organization can monopolize and control the Internet. Small and medium participants of the Internet can get more rewards, and the services provided by the Internet can benefit more people in the world. However, there will be many technical, governance, and regulatory challenges in the process of Web 3 implementation. While Internet technology is pushing human society forward, the form of the Internet itself is also profoundly affected by human society, and the interaction between the two is driving each other forward. Anyway, making "society more equitable and inclusive, and improving people's overall well-being" has always been the goal of technological development, the vision of Web 3, and the original intention of all of us.