Understanding Web3

Table of Contents

February 24, 2022 6 min read

Understanding Web3

The new phase of the internet founded on Blockchain Technology

Web3 (also known as Web 3.0 or web3) is steadily rising to fame and has the world eager to tap into its vast potential. However, for a person with a highly “consumer-based” experience of the internet and not a “developer-based” experience, Web3 and Blockchain Technology can sound perplexing and challenging to navigate. In this article, we will demystify some of the fundamental concepts of Web3 and the infrastructure that it is built on i.e., Blockchain Technology.

First, A Brief History of the Internet

The internet, just like any living being, has gone through its fair share of evolution over the last few decades. It began as a “browse-only” space (Web 1.0), where an array of sites was available for public viewing with minimal to no interactivity. This archaic form of the internet limited the user experience to only looking at codified content without editing or interacting.

Then came Web 2.0 (estimated to have originated sometime around 2004), which terraformed the internet, making it highly interactive and enabling users to add, alter and mold information on websites. This feature drastically enhanced the user experience from that of Web 1.0.

Companies began leveraging this change and set up centrally controlled infrastructures for operating and running websites, ushering in new ways of facilitating consumerism. Vast amounts of personal data are exchanged and stored, bringing empirical decision-making and selling to the forefront.

Web 2.0 is dominated by companies that own, monetize, and harvest personal user data

As social media use gained a meteoric rise in usage, tech giants heavily monetized user activities on their websites. The present-day Web 2.0 is dominated by companies that own, monetize, and harvest personal user data in exchange for services. This raises serious concerns about personal data management and questions the veracity of data ownership.

Web 3 is a decentralized, trustless, peer to peer network

Web 3, broadly canvassing the contours of the concept, is a decentralized, trustless, peer-to-peer network that is said to be unmodifiable, devoid of intermediaries, and highly authentic. Web3 promises to be a publicly owned and operated version of the internet where user data is managed on blockchain technology.

Second, a brief introduction to blockchain technology

At Web3’s core is blockchain, a technology that enables storing data online in an encrypted and decentralized manner. Blockchain is synonymously used with everything “crypto”. One of the foundational concepts in Blockchain is cryptography (a technique wherein information is secured by the use of codes) to store and read data on a blockchain network. Blockchain networks are highly effective in enabling users to securely record transactions in a common digital ledger shared within that group.

What is a blockchain network made of?

To put it simply, blockchain technology employs a number of transaction data blocks (each block is made up of data/information on transactions) that are cryptographically connected. A blockchain network is made up of multiple nodes (users of the network) that validate and verify each of these transactions through consensus mechanisms.

Blockchain tech employs a number of data blocks, cryptographically connected.

All the transactions on a blockchain network are then chronologically ordered, secured using cryptography, and shared across all the nodes on the network.

How is cryptography employed on blockchain networks?

Cryptography and hash algorithms make the data on blockchain networks permanent, immutable and impossible to alter/modify. Data on the blockchain is encrypted using cryptography resulting in information secured by codes that can only be decrypted by individuals authorized to do so. Another tool used in blockchain networks is hashing algorithms that convert existing input data (for example- “apples are red”) into an “output” of a unique arrangement of letters and numbers that are specific to that input data. Any change in the input data would immediately result in a different output of the hashing function, concluding that the input data has been altered. Therefore, data on blockchain networks cannot be manipulated.

The input data in blockchain networks also remain secure because hashing algorithms do not permit reverse engineering, as such the input data cannot be determined from the hashing output. Every new block of information carries forward some of the hash output of the preceding block.

Information on blockchain networks is encoded into “blocks” of data that are validated by consensus.

As a chain of such blocks form, any attempt to change or alter any information in previous blocks would result in a different hash output. Any and all subsequent blocks would detect such modified hash output differently from the original hash output. This is another aspect of blockchain networks heralded for ensuring data on these networks remain secure, unadulterated and immutable.

Information on blockchain networks is encoded into “blocks” of data that are validated by consensus. All the nodes on the network are chronologically arranged, cryptographically sealed, and connected to the next (subsequent information) block using hashing processes.  This forms a link of blocks that are secure, permanent, and immutable.

Features of Blockchain networks

Block chain systems are powered by “open-source software”- a collaborative effort where many users contribute to the development and maintenance of the software. This increases the security and reliability of the software as it is created, operated and maintained by several “peers” working simultaneously on the software. It also ensures that no single institution controls, owns or operates the data making it highly decentralized.

This means that each individual user retains control over access, ownership, and use of their data. One of the biggest advantages in blockchain technology is that the data is validated by every peer on the network and not a single entity. A “trustless” software democratizes the network and ensures that exchanges/transactions between two users can be validated without the presence of a third party. For example, Annie can directly send a token of ‘x’ value to James without involving an online exchange belonging to a central server. This also empowers the individuals accessing and operating the network to remain in control of the exchange of information.

Each individual user retains control over access, ownership, and use of their data

Blockchain technology can be applied in various sectors, ranging from financial services (cryptocurrencies, defi and the like) to healthcare, voting and governance, NFTs and many more.

Web 3 : Internet decentralised and Democratized

Web3 is internet decentralized and democratized.

Distinctive features of Web3 from the earlier web space-

Data is stored in a way that it is owned and controlled only by the individual to whom the data belongs, despite the data being stored on a shared network. Contrary to the Web2 mechanics, where user data on the network is treated as a commodity that is bought and sold arbitrarily with questionable notions of “users consent”,  Web3 enables users to be in full control of their data while still retaining ownership. Web3 is made up of several peer-to-peer nodes that help in eploying decentralized applications unlike Web2 wherein applications run on a single server/database. In many ways, Web3 opens up a whole new world of opportunities and a high likelihood to re-engineer the existing societal structure.

What Web3 has in store for society?

The emergence of Web3, DApps (Decentralized Applications) and Decentralized Autonomous Organizations “DAOs” (internet organizations owned and maintained by its members) can catalyze the growth of information technology and advanced forms of the world wide web. This new phase of the web can also expedite large-scale acceptance of blockchain and cryptocurrencies. Web3, however, has received its fair share of criticism from big names in the tech industry for being “as unreal as flying cars”. However, the underlying concept of Web3 is to develop a form of internet where users own, earn money and hold assets for contributing towards the web either by creating content or by interacting with the network; a noble and idealistic notion that deserves to be brought into existence. Web3 might not be here in all its glory yet, however, it has already made its successful debut with cryptocurrencies, non-fungible tokens (NFTs) and in some virtual worlds in the metaverse.

Users own, earn money and hold assets for contributing to the network

Fuelled by blockchain technology, Web3 has the power to re-engineer the modern day social infrastructures that are presently employed to create, transfer and own things of value. Not only that, Web3 can re-write the current dynamics of how user data is being handled in the internet and promises to bring in more transparency, accountability and integrity to the framework of the internet.

Web3 has the power to re-engineer the modern day social infrastructures

It is estimated that Web3, owing to the decentralized form of managing data, can withhold and allow 160 times more data by 2025 than what the internet handled in 2010. Web3 and blockchain technology can be used to benefit various sectors such as finance, art, healthcare and pharma, etc due to its ability to manage and use data. Web3 can create and nurture a decentralized freelance economy and re-define how individuals in a society collaborate.

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