Since Web3 emerged in 2014 as a term to describe the new types of protocols that enable decentralized consensus, it has now come to describe an entire ecosystem of public blockchains, applications, and even design philosophies. As with other great esoteric ideas, the question “What is Web3?” elicits a torrent of answers that are as varied as the people articulating them. For some, new jargon can be alienating, so in this blog post, we cover nine ideas that describe Web3 with plenty of examples to understand these ideas in practice.
1. Web3 is the new trendy name for the decentralized web.
Since 2015, Joseph Lubin, founder and CEO of ConsenSys has been giving talks, writing, and supporting teams building Web3 and the decentralized web (as we used to describe it in our style guide). Web3 is the philosophical touchstone that guided all of ConsenSys’ early investments and projects. MetaMask is now the primary way in which individuals can access the Ethereum blockchain, and many more Ethereum-compatible networks. It is a way to generate a public-key securely on your phone or desktop, but what it enables is a new principle for interacting with the web — one where only you have access to your accounts and data and choose what to share and what to keep private. Another way to describe MetaMask is that it is a cryptographic consent manager.
When we referred to the decentralized web, we also referred to the rest of the stack beyond decentralized money and identity. Other aspects of the decentralized web, such as decentralized storage are just becoming essential parts of the stack to persistently store files (such as IPFS and Arweave), decentralized storage (Golem, W3BCloud and others), and decentralized data (Graph Protocol).
Now, Web3 is the catch-phrase for an entire investment category of a16z and other big venture capital firms, which means it is also the subject of both lengthy Twitter threads, irony, derision, and confusion. It was only a matter of time until Web3 became a large enough part of the public internet discourse that the jesters came for the protocol priests.
2. Web1 is read-only, Web2 is read-write, Web3 is read-write-own.
When I asked my brother, a Web3 developer, how he explains Web3, his short answer is that Web1 was read-only, Web2 is read-write, Web3 is read-write-own. The initial version of the Web was built on open source protocols such as TCP, IP, SMTP, and of course HTTP. A protocol as a standard way that multiple computers agree to talk to one another. These foundational protocols govern the flow of information and messages on the internet, and if you want to build an application or service using their rules, you don’t have to pay for access.
Web2 describes the next evolution built using the free and open source protocols of the internet. An important shift was that unlike static, read-only versions of Web1 websites, individuals could add content to the web. What initially started as upvotes on Digg message boards became microblogging and now over 2 billion Facebook profiles. Another subtle shift happened, too. Rather than maintaining your own server to display your websites, Web2 companies paid the bills. In exchange, however, they also created a silo of user data, behavior, and actions to construct a social graph that is very valuable to advertisers. In Web2, the individual user is the product.
Ownership for Web3 means that the builders, operators, and users of a platform own a piece of what they use. Bitcoin and Ethereum are the earliest examples: in return for updating the ledger and keeping other actors honest, they receive a reward in BTC or ETH in exchange for securing the network. Token-based networks built on Ethereum and other smart contract blockchains have even introduced new models of ownership that are not necessarily the same as a cooperative or shareholder equity model. For example, ownership might be given in the form of a token provided for a service, such as providing liquidity for a trade, and that same token could also be used for governing the future changes to the network. The grand vision is that participants of any network will be able to own a piece of the products and services that they use everyday.
3. Web3 is a reaction to social networks not keeping our data secure, and selling it for their own profit.
Facebook owns much of the data on your social graph. Even if you quit the service, the data is still tied to Meta’s servers. Gavin Wood, who by some accounts coined the contemporary term Web3, argued in 2014, “Web 3.0, or as might be termed the ‘post-Snowden’ web, is a re-imagination of the sorts of things we already use the web for, but with a fundamentally different model for the interactions between parties. Information that we assume to be public, we publish. Information we assume to be agreed upon, we place on a consensus ledger.” The Cambridge Analytica scandal in 2018 revealed that 87 million people’s personal information had been harvested by a firm attempting to create psychographic voter profiles and influence elections. While this revelation grabbed headlines, significant data breaches happen all the time, affecting millions of Internet users, simply because we entrust companies to store our data, and can’t revoke permissions when we move on to a different service.
Remember when we described MetaMask as a cryptographic consent manager? The principles of Web3 application design is that individuals “push” information to trusted sources, instead of applications pulling from sources that own your data. For example, in the Web2 world when you “sign in with Google” an application may pull personal identifying data that you don’t consent to. The opacity of the data you give to different applications on the web is one of the reasons why social media networks could create such a dominant position — this information is extremely valuable, and for the most part, we give it all up as soon as we sign a platform’s terms of service.
Web3 can be considered a reaction to the extractive relationship between users and platforms on the internet today, one where users will always get to choose what to share, and what to keep private.
4. Web3 is a new patron model for the internet.
The increasingly vague “creator economy” is a term used to describe internet spaces meant to help creators monetize in new ways. OnlyFans, Twitch, and other platforms promise platform users freedom to earn directly from their fans instead of relying on an ad-driven, attention-based monetization model. However, unlike Web3 networks, creators can be booted from the network capriciously, and don’t own the content that they share.
For writers and journalists, the allure of earning income directly from their audience has been amplified over the past year with platforms like Substack, Ghost, and Lede. Yet none of these enable writers to forge a direct relationship with their fans through ownership. Mirror, a Web3 blogging network, lets users sell their work as an NFT and redefines the writer and patron model with “crowdfunds.” The crowdfund feature lets patrons deposit ETH to fund an idea, in exchange for a token which represents your proof of patronage, and can be further used for gaining entrance to a DAO or accessing future rewards from the publication. The token has utility, but also could signal your early support for an idea or writer, and worth more as more people similarly support the crowdfund. As Kyle Chayka, a New Yorker staff writer who funded Dirt.xyz through Mirror put it, “Subscription is certainly a sustainable business model for many forms of media, but it does not necessarily suit all forms of content or experimental work, which collectors and patrons are ideally suited for. NFTs can provide support for the collector and patron relationships, as can the kinds of tokens that Mirror is supporting, like $ESSAY or Emily Segal’s $NOVEL. I want to see blogs, series, and think tanks funded by tokens and NFTs rather than just readers and recurring payments, with rewards for both creators and patrons.”
With fungible or non-fungible tokens as a part of the patron-artist relationship, artists also have a direct line with their earliest supporters — a collection of Ethereum addresses or ENS names that can be used for mailing lists, entry pasess, and payment systems for artists to engage their fans no matter the platform they are using.
5. Web3 is still not decentralized at every layer.
Anyone who has been around in the Web3 ecosystem long enough is aware of the design tradeoffs engineers encountered when attempting to adhere to maximally decentralized architectures, easy to use applications, and scalable infrastructure. As the founder of Signal, Moxie Marlinspike, recently wrote in his own exploration of Web3, “The premise for web1 was that everyone on the internet would be both a publisher and consumer of content as well as a publisher and consumer of infrastructure. We’d all have our own web server with our own web site, our own mail server for our own email…However – and I don’t think this can be emphasized enough – that is not what people want. People do not want to run their own servers.”
He shouldn’t have been too surprised then to learn that much of Ethereum’s applications call data from trusted API sources. Or that the current number of Ethereum full nodes is 5,433, 40% of which are currently being run in the United States. This was also one of the first design decisions that MetaMask made — that instead of requiring every user to run a self-hosted Ethereum node, they would instead connect to Infura to serve Ethereum data so that developers could focus more on the applications they were building, rather than running network infrastructure. As MetaMask founder Dan Finlay writes, “This allowed users to get started right away and without constantly draining their laptop batteries. It was a game changer for adoption, and it kind of demonstrated what Moxie said here: People don’t really want to host their own server (certainly not one that is designed to consume a full laptop of capacity).”
The Ethereum community has a lot of teams dedicated to improving decentralization, yet the success of some newer, more centralized, crypto networks proves that users might not care as much. However, there is no reason to think that the current status quo of Web3 infrastructure will look the same in the future — especially as more people experience the advantages of fully decentralized networks.