Web3 promises many lofty goals and ideas, but what is it? Are we close to realizing the dream? The term Web3 is often used as an acronym to talk about the new phase of the Internet. Centralized social networks, massive e-commerce platforms, and achieving a utopia of user-driven data. Web3, in a colloquial sense, is simply a general marketing term meaning anything bordering on crypto
Understanding this critical information is invaluable for investors to separate facts from fundamental misconceptions.
The blockchain web and the decentralized web
Marketing buzz or technical revolution? makes a clear distinction between the “blockchain web,” which is the integration of blockchain technology into the web, and the trusted, permission less, and decentralized alternative to the Internet known as the “decentralized web.” The blockchain web has fueled the growth of non-fungible tokens, decentralized autonomous organizations (DAO), and game-fi ecosystems that veterans of the crypto-verse will know about. Ideally, these ecosystems lack central authority, and value is derived from creating scarce digital assets. The report shows how blockchain technology can extend these ecosystems to the real world, bringing new efficiencies to traditional industries.
The decentralized web seeks to end the oligopoly of content delivery sites in today’s Web2 world. This goal is achieved by building a new web around permissionless decentralization (anyone can participate) and restlessness (code so strong that third-party authorities are not required).
Are we there yet? No.
There is still work to be done in implementing the ideological principles of decentralization in both the blockchain and the decentralized web. The blockchain web, built on the current internet infrastructure, requires hosting services to communicate between users and applications. Unfortunately, 60% of all these nodes on Ethereum are hosted on Amazon Web Services. This allows a centralized authority to shut down much of the entire blockchain network. The report shows how even DAOs are encountering the problem of a small group of whales consolidating voting rights along with low user participation.
Unfortunately, the decentralized web isn’t much better, but there’s a reason for optimism. Currently plagued by monopolies like Google, Amazon, Meta, Apple, Microsoft, and Tencent, there is minimal standing in the way of decentralization when users go online. However, alternatives using technologies such as distributed hash tables are beginning to make it possible to create decentralized versions of popular applications.