Revision as of 13:59, 27 January 2023

Web3 refers to a proposed new decentralized web architecture built upon blockchains and related technologies such as cryptocurrencies to deliver a paradigm shift in the world wide web.^[1] The original concept and naming of Web3 came about in 2014 from Gavin Wood, a co-founder of Ethereum, who saw the blockchain as the key for a new, decentralized, and democratic web. ^[2] Proponents of Web3 claim that the current state of the web (Known as Web2 or Web 2.0) is too centralized with massive organizations having total control of platforms necessary for daily life. ^[3] However, some high-profile figures in the tech industry have pointed out flaws in Web3. In December of 2021, Jack Dorsey, founder of Twitter and Square, argued "You don't own 'web3'. The VCs and their LPs do. It will never escape their incentives. It's ultimately a centralized entity with a different label." ^[4] via Twitter.

Evolution of the Web

Beginning in 1989 and throughout the 1990s, the majority of content online was static with little to no interactivity from the user's perspective. ^{[1] [5]}As an information delivery system, the web at this time encouraged the growth of some modern tech-giants including Yahoo, Google, and Amazon to help web users sift through content online to find the most relevant information or products. ^[5] Due to its status as the first iteration of the modern, world wide web, this architectural format of the web is now defined as Web 1.0. ^{[1] [5]}
The next iteration of the web, Web 2.0, was first coined by Tim O'Reilly in 2005 and signaled the beginning of the cloud-based infrastructure necessary for dynamic web pages and user input. ^[5] These technological developments led to the emergence of user-generated content and inter-user communication. ^[6] Similarly, the emergence of social network platforms such as Facebook and Twitter emerged during this phase. ^[5]
Both Web 1.0 and Web 2.0 rely on the "client-server model" for users to access online content. This design involves the user's web browser making requests to a server and then displaying the response. ^[1] Proponents of Web3 claim that while this model facilitates interactions between users, the means of communication are controlled by a small number of technology companies. ^[6] Conversely, Web3 would introduce a "peer-to-peer" architecture built upon blockchain technologies which would create a decentralized web.^{[1] [6]} Proponents of Web3 claim that this architecture would lessen the control of large corporations over the internet landscape. ^[1]

Key Technologies

Blockchain

A blockchain is a decentralized digital database that operates across a network of computers. ^[1] Transactions on blockchains allow agents to transfer value (usually cryptocurrency) without the use of a third-party such as a bank to transfer said assets. ^[6] Bitcoin is representative of a prototypical blockchain system and was the first decentralized ledger. Today, it has the largest market capitalization amongst all cryptocurrencies at

Smart Contracts

Smart contracts are self-enforcing agreements written as immutable programs, where the execution of the smart contract enforces its terms. ^[6] Since they are stored on a blockchain, smart contracts are public, transparent, immutable, and decentralized. ^[6] As a result of these factors, after deploying the software to the public blockchain, no one can revise the logic of the program. ^[7] The use of smart contracts has grown to such a point in recent years that billions of dollars are exchanged daily using them. ^[7]

Decentralized Applications

Where Web 2.0 applications were centralized and ran on servers, Web3 makes use of decentralized applications (DApps) which are designed to run over a blockchain network. ^[1] These applications are characterized as being open source to ensure the possibility of third-party audits, internally supporting cryptocurrency, leveraging decentralized consensus to prevent centralized control of the system, and having no central point of failure since the hosting and execution of the app will be decentralized. ^[7]

Cryptocurrencies

Non-Fungible Tokens (NFTs)

Companies and Projects

Brave Browser

Gemini

OpenSea

Criticism

Security Concerns

If one's wallet were hacked or if the underlying cryptosystem was broken, then those affected may not be able of using their account and related services. ^[1] Additionally, both the National Institute for Standards in Technology (NIST) and the National Security Agency (NSA) have warned the public regarding the capability of large-scale quantum computers to break the public-key cryptosystems responsible for keeping internet communication and blockchain networks secure. ^[8] For reference, quantum computers are estimated to require somewhere between 1000 to 3000 qubits at minimum to potentially break the current cryptographic standards in use today, and the most powerful quantum computer currently houses 127 qubits.^[8]

Business Incentives

Web3 as a Buzzword

Concentration of Control

Environmental Impact of Blockchain

Certain Web3 platforms can use a significant proportion of energy depending on the energy efficiency of the blockchain. ^[1] The Bitcoin blockchain was estimated to be responsible for approximately 110 Terawatt Hours per year in 2021, equivalent to 0.55% of global energy usage. ^[9] However, energy consumption does not necessarily equal carbon emissions with the difference varying significantly between regions with global predictions for the proportion of Bitcoin's energy usage ranging between 39 and 73 percent. ^[9] The Ethereum Blockchain has switched from proof-of-work to proof-of-stake to help alleviate the energy usage concerns, and reported a decrease from approximately 78 Terawatt Hours per year to 0.0026 Terrawatt Hours per year. ^[10] These figures were confirmed by a report released by the Crypto Carbon Ratings Institute which estimated that proof-of-stake Ethereum used approximately 2,625.48 Megawatt Hours per year (0.0026 TWh) ^[11]

References