What is this Web3? An introduction by Chris Skinner

Let's set things straight. What is Web3 and why isn’t it Web 3.0?

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February 3, 2022

Lots of folks are talking Web3, but what is Web3 and why isn’t it Web 3.0?

I guess, like with all things, we abbreviate and so Web3 is the next wave network that will revolutionize everything. So what is it?

Web3, as envisioned by the Web3 Foundation, will be a public internet where data and content are registered on blockchains, tokenized, or managed and accessed on peer-to-peer distributed networks.

Web3 promises to be a decentralized, immutable version of the web, free of intermediaries and built with the same cryptographic verifiability that has given rise to cryptocurrencies, non-fungible tokens (NFTs), and new types of decentralized applications underpinned by a distributed ledger, or Dapps.

No idea what that’s about? Well, I have. The basics are that Web1 was the basic structure; Web2 created commerce and social services that are now dominated by a few Big Techs; Web3 will change all that, using Ethereum and other services to decentralise everything, particularly finance which, as we now know, is DeFi … Decentralised Finance.

Except that …

In fact some believe that Web3 is morphing into a monster that looks, talks and acts like Web2, but with the shiny addition of the blockchain. What’s the problem with this? Well, the core issue is too much power in too few hands. The power should be in the hands of the people and yet, instead, it’s in the hands of Jeff Bezos, Mark Zuckerberg and Pony Ma.

And why is Ethereum so integral to Web3?

Ethereum is by far the largest Web 3.0 and DeFi ecosystem, maintaining 30% of all full-time developers working in the space since 2017 … There are over 18,000 monthly active developers in the DeFi and Web 3.0 ecosystem that provide various contributions to projects. Of that tally, over 4,000 work on Ethereum, accounting for over 22% of all the developers working in the space, according to research by Electric Capital.

Using Ethereum tokens on a registered ledger, the view is that we can give power to the people through decentralised finance. Yet, it’s not happening. As Jack Dorsey, founder of twitter and Square (now called Block) stated:

In other words, there’s a huge battle that continues between centralisation and decentralisation. TBH, ethereum can enable both but, the way Web3 is panning out, it leans towards the former rather than the latter. We now have a crowd of people however who want to change this. As Tim Berners-Lee, the guy who created www, states:

“I’ve always believed the web is for everyone,” wrote Tim Berners-Lee, the well-known (and knighted) creator of the World Wide Web. The web has evolved into an engine of inequity and division; swayed by powerful forces who use it for their own agendas,” he added. “Today, I believe we’ve reached a critical tipping point, and that powerful change for the better is possible — and necessary.”

Working with the Massachusetts Institute of Technology (MIT), Tim has created a project called Solid.

Solid “is a proposed set of conventions and tools for building decentralised social applications based on Linked Data principles”.

He’s not the only one working on this, in fact many are, but the core is how to give the power to the people and not to the centralised structures. If they succeed, the structures impacted are not just Big Tech, but Big Banks and Big Gov.

The 2020s will be a fascinating decade to watch to see how that dream develops.

If you want to delve further into Web3 btw, this article by Cobie is great.

This piece is a repost from Chris Skinner’s blog Thefinanser.com.

Chris Skinner
Chris Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, TheFinanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News.
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February 3, 2022