What Is Web3? A Comprehensive Guide

What is Web3 and how does it differ from Web2 and Web1? Here, we break down the history of the web and its vision of a decentralised future.

Key Takeaways:

• Web1 (1989-2004), also called ‘static web’, was ‘read-only’ and decentralised.

• Web2 (2005-present) is interactive but centralised.

• Web3 (the future) will be more human-like, with a return to the original decentralised structure, but with improvements to data privacy and security.

The Evolution of the Web

The internet has evolved a great deal since its inception in 1989. Its historical, current, and projected evolution is generally partitioned into three separate stages: Web1, Web2, and Web3. 

The first iteration (Web1), mainly consisting of static web pages that were purely informational, lasted approximately from 1989 to 2004. This was followed by the much more interactive and user-friendly Web2 — dominated by centralised platforms like Facebook, Twitter, and YouTube — which is the current version of the internet. Web3 represents the next generation of the internet, and one that’s getting quite a lot of buzz. 

The concept of Web3 started gaining traction in 2021 thanks in large part to the proliferation of evolving technologies like blockchain. Sometimes referred to as the ‘decentralised web’, Web3 aims to solve many of the shortcomings associated with Web2, particularly those relating to privacy, security, and centralisation. Though still in its infancy, Web3 will rely heavily on decentralised protocols to tilt back the scale of power to users. 

Here, we delve into each phase of the web, from their differences to the unique challenges they face. 

Web1

Web1 generally refers to the first phase of internet evolution. It was the internet as we first came to know it, and what spawned the dot-com boom. Unlike today’s web, which is highly interactive, Web1 was fairly passive and all about reading and consuming information. This is why it is sometimes referred to as the ‘read-only’ web. 

Web1 in Short

• Decentralised
• Websites were purely informational 
• Facilitated one-way communication from the network to users
• Sites offered static content instead of dynamic HTML
• Largely composed of web pages joined by hyperlinks
• Pages built using server side includes (SSI) or common gateway interface (CGI)
• Examples of Web1 include: AOL, Yahoo!, Craigslist, Ask Jeeves, and WebMD

What Was Web1?

This first iteration lasted approximately from 1989 to 2004. It was invented by British computer scientist Sir Tim Berners-Lee and known as the World Wide Web (WWW). As a very rudimental form of the internet, Web1 was essentially a directory of static information hyperlinked together with no Cascading Style Sheets (CSS).

Websites were built using Server Side Includes (SSI) or Common Gateway Interface (CGI), and they were hosted on web servers run by internet service providers (ISP) or free web-hosting services. In contrast to what we’ve become used to today, information and products on Web1 were simply presented (much like you’d see in a catalogue or brochure), with no opportunity for users to interact (like/share/comment) or contribute. Only a small number of people created content, with the majority of participants as passive consumers.

Web2

While Web1 was all about accessing information, Web2 is about creating and contributing. It has become the basis for the commercialisation of the internet, and it is during this phase that e-commerce, social media, and virtual communication platforms have taken off.

Sometimes referred to as the participative (or participatory) web, social web, or ‘read/write’ web, this second generation of web services focuses heavily on interaction, interoperability, and connectivity. It is the version of the internet that we know today, and is largely driven by the advent of mobile, social, and the cloud.

Web2 in Short

• Centralised 
• Responsive, dynamic content 
• Wide societal use
• Interaction-based with technologies like AJAX, Javascript, HTML5, and CSS3
• High levels of user participation and user-generated content
• Interoperability across different services
• Improved usability for end-users
• Seamless communication
• Dominated by companies that provide services in exchange for personal data
• Examples of Web2 include: Instagram, YouTube, Facebook, and Google Maps
• Applications include social media, blogging, voting, tagging, social bookmarking, and podcasting

What Is Web2?

The term Web2 was popularised by Tim O’Reilly and Dale Dougherty at the first O’Reilly Media Web 2.0 Conference in late 2004. More user-friendly and dynamic than the original web, Web2 has ushered in the era of user-generated content, changing the way we interact forever. 

Upon launching, and for the first time, anyone with access to the internet could participate and exchange knowledge, ideas, and experiences on platforms like Wikipedia, MySpace, and WordPress. They could run entire businesses on Etsy and Depop, post reviews on Amazon and TripAdvisor or images on Flickr or Pinterest, upload videos on YouTube, and promote homes on Airbnb — the list goes on and on.

Companies have benefited too. Heightened connectivity has facilitated better interaction and communication between organisations and their customers, leading to improved customer satisfaction and increases in revenue. It has also decreased the time-to-market for products while reducing the costs of communication, travel, and operations. Marketing has become more targeted and measurable than ever before, and access to competitive knowledge outside of an organisation is only one click away.

But all of this empowerment and access has come with trade-offs — most notoriously at the cost of users’ personal privacy.

Problems of Web2

These platforms we have all come to depend on (both personally and professionally) are centralised in servers owned by a small number of large corporations. This means that a tremendous amount of power and control is concentrated in the hands of just a select few — a fact that has drawn much concern in recent years. 

This power has the potential to hurt user privacy. Users eventually ‘pay’ to use these platforms by handing over the rights to personal data. Everything from one’s name, birthdate, and IP address to device, browsing history, and shopping habits can be collected, stored, and then sold to advertisers — often without the user ever being consciously aware. 

Why? Because data points deliver important marketing information that companies can use and profit off: Facebook (Meta) in 2021 pocketed a staggering US$114.93 billion in ad revenue, with Google almost doubling that to the tune of US$209.5 billion, according to Statista.

In short, whereas in Web1, where users were the consumers, some say that in Web2, they are the product. 

Users as the Product

Additionally, users of these platforms can also be censored and de-platformed. If a user posts an image or comment that the platform disagrees with, they risk having it removed or — in some cases — having their account closed indefinitely. And this ban wouldn’t necessarily apply only to that one platform, but potentially all other platforms that a parent company controls.

So why don’t users just walk away from these platforms? Because, for a long while, there weren’t too many options. As mentioned earlier, technology today is dominated by only a handful of companies (think Alphabet [Google], Meta, Amazon, Apple). It is suggested that their incredible access to data, coupled with near-infinite resources, grants these behemoths an unfair advantage over the competition, making it almost impossible for small businesses to get a shoe in. 

These companies have created closed ecosystems — known as ‘walled gardens’ — which are designed to keep users on their platform, whilst making it less convenient for them to use alternatives. (Interested readers can check out this deep-dive into Apple’s ecosystem and how it works.) 

Sure, a user might quit Facebook for one or more of the reasons stated above, but then they may not be able to access certain other platforms or apps that require Facebook integration. They might even unwittingly transition to a platform that shares the same parent company anyway. Plus, in the case of platforms like Facebook, by walking away, users lose access to their data — pictures, conversations, and connections they didn’t even know they wanted to keep. However, thanks to advancements in technology, things are changing.

Which brings us to Web3.

Web3

Sometimes referred to as the semantic web, Web3 is all about reading, writing, and owning. 

Widespread concerns about Web2 relating to data mining, online surveillance, algorithm manipulation, exploitative advertising, and subjective banning have led many to seek out alternative platforms. These alternatives have become the foundation of Web3, as they bypass content silos and internet monopolies and are oriented around personal ownership of data. 

Through the use of blockchain and related technology, Web3 aims to take power away from giant tech companies and put it back into the hands of users, where they can own their part in the web, rather than simply being users or consumers.

Web3 in Short

Though still a work in progress, Web3 encompasses some ideologies that most agree form its backbone:

• Decentralised
• Trustless and permissionless
• Uncensored 
• Self-governing
• Higher levels of privacy and security 
• More user control
• Silo-less
• Improved search engine readability 
• Native built-in payments

What Is Web3?

The concept of Web3 was first introduced by Berners-Lee in a 2001 paper published in Scientific American, where he identified a glaring communication gap between humans and computer applications. Machines, he acknowledged, were unable to process the semantics of language, meaning that they couldn’t decipher meaning or context from data. He proposed a web that would one day be readable by humans and machines. 

While technology has not quite evolved to the stage where this part of his concept can be entirely fulfilled, other aspects — in particular, those relating to decentralisation — have. 

Web3 promises to use decentralisation technologies to return to Berners-Lee’s original vision of a web where “no permission is needed from a central authority to post anything…there is no central controlling node, and so no single point of failure…and no ‘kill switch’.” 

How Decentralisation Works in Practice

It is a version of the internet that will be more intelligent, autonomous, and open than any that have preceded it. Based on blockchain technology, Web3 aims to remove the need for centralised authorities, meaning that users will be able to interact with any individual or machine in the world without having to rely on or trust third-party middlemen. Unlike Web2, where data is owned by the network, data in Web3 is shared. The users are, in theory, able to engage in the management of internet protocols and (finally) own their data. 

Prominent technologies behind Web3 include: artificial intelligence (AI), blockchain, machine learning (ML), augmented reality (AR), and 3D graphics. 

Examples of Web3 include: decentralised protocol Bitcoin, blockchain-based social platform Steemit, NFT marketplace OpenSea, and cryptocurrency exchanges like Crypto.com.

The Paradigm Shift to Decentralisation

Returning the control of data back to end-users and away from large corporations is a huge component of this new version of the web. Decentralised social networks aim to enable content creators to engage with audiences in a peer-to-peer (P2P) manner and have the final say on their content without fear of being censored or de-platformed. 

For instance, non-fungible tokens (NFTs) already provide creators with better and more equitable compensation by allowing them to directly profit from their work through built-in royalties.

Cryptocurrency will play a huge role in Web3, with tokens acting as a financial incentive for users to participate in the web’s governance. Token owners can form communities, known as decentralised autonomous organisations (DAOs), and vote on how the funds of a decentralised app (dapp) are distributed. Blockchain-based games, dubbed ‘play-to-earn’ (P2E) games, are a great example of this system in action. 

In P2E games, players are rewarded for their time and participation with digital cash or NFTs, which can then be traded on decentralised exchanges (DEXs). Games like Axie Infinity have empowered many gamers to earn tokens for an activity they would have normally undertaken without such incentives. In some cases, like with Idle Mystic, players can participate in the governance of the game by using their tokens to vote on a decision.

Further, crypto wallets will remove the need to rely on centralised, third-party electronic payment systems, which require users to provide sensitive information and personal data. Many participants in this space believe this will help with financial inclusion for unbanked populations, as decentralised services do not rely on traditional credit scores.

Challenges of Web3

There is some debate about the feasibility of Web3. Some question whether it can ever be truly decentralised. They argue that centralisation is inevitable, as people and companies simply do not want to run their own servers, since maintaining a server is not only expensive, but laborious and energy-intensive, as well.

Consequently, in order to run, many dapps rely at least as much on traditional centralised web servers as they do on blockchains. In fact, most dapps today use either Infura or Alchemy to interact with the blockchain, which in turn rely on third-party cloud servers hosted by centralised companies (such as Amazon, in Infura’s case). 

Since blockchain technology is extremely costly and energy-intensive, many are concerned about both scalability and sustainability. Also, transaction speeds are considerably slower on decentralised protocols than on their centralised counterparts and remain a significant roadblock to adoption. 

What About Regulation?

Additionally, decentralisation brings with it novel legal and regulatory questions. If there is no single authority, then who is responsible for policing cybercrime, harassment, and misinformation? 

Finally, there’s the technical barrier to entry. This ranges from usability to security — both of which will be far more complex for the average user to navigate. A certain amount of tech savviness is required with Web3. Users will need to understand and keep up with information regarding blockchains, smart contracts, wallets, protocols, and more in order to participate in this rapidly changing space. 

This steep learning curve is further compounded by the oftentimes slightly underwhelming user experience of many Web3 products and services, as both the user experience (UX) and user interface (UI) design process typically comes at a much later stage of the development cycle; the lack of integration in modern web browsers makes Web3 less accessible to many users.

Final Thoughts

It goes without saying that the web has transformed the way the world interacts and operates — mostly for the better. There’s no telling how far off we are from Web3, but elements of it are already forming part of our current internet. Experts predict that, at least for the foreseeable future, Web3 technologies will work alongside Web2 — but not fully supplant it. Whether you’ve jumped on the Web3 bandwagon or not, you have to admit — it is all rather intriguing. 

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