A nerds intro to web 3.0
A complete reference to web 3 and its underlying technologies
If you are bored of hearing about web 3 and wondering what it is, then you have come to the right place. Today we are going to discuss what web 3.0 is and why should we care. Let’s start without wasting too much time.
History and evolution of the WEB
The web as we know it didn’t exist until the late 80s, the internet was premature at that time. It was the ambition of a man named Tim Berners-Lee that led to the development of the early World Wide Web. He made the prototype of the web back in 1989 while working at CERN.
The web he created can be defined as the first version of the web (web 1.0), where people can consume content but can not interact with it. The web consisted of interlinked web pages that were static which means that users could read them but could not create any form of content without the knowledge of programming. It was merely just an alternative to the traditional media.
Fast-forward to the early 2000s, the web started to take off. This is the form of the internet we use today. Now people not only consume content but can create them as well. This is the form of the web that can be considered the next version of the original web — web 2.0 coined by Tim O’Reilly. Here consumers are the creators but the beneficiaries are the companies that own their user data. Its biggest downsides are “data”, “privacy” and “censorship”.
Here comes WEB 3.0
“Web 3 is an internet owned by users and builders orchestrated with tokens.” ~Chris Dixon
It is the future of the web, where the creators have full ownership of their work. Contrast that to today where companies like Facebook can sell their user’s data or censor their data as they have the ownership of all the user’s data on their platform.
WEB 3.0 seeks to solve all these problems related to web 2.0 by creating a decentralized form of the web. It runs on certain principles like openness, decentralized, censorship-resistant, immutable, trustless, and permissionless.
- Openness — all users can view all the data stored in the network.
- Decentralized — peer-to-peer connected network that doesn’t rely on a centralized server.
- Censorship-resistant — it is pretty self-explanatory, the web that has no censorship.
- Immutable — once data is being committed, it can’t be altered again.
- Trustless — users don’t have to trust any platform to create content.
- Permissionless — users don’t need permission for their work.
Why WEB 3.0
The main benefit of web 3.0 is trust and ownership. Since there are no middlemen involved in the network and every individual user has a copy of the data, ensures that there is no censorship, less risk of data loss, and high security.
- Trust — Removing the middlemen from the equation establish trust in the network. Since we no longer have to trust these middlemen like banks, central organizations, and other third parties to get the work done.
- Ownership — Every piece of data committed on the network is digitally signed (with their private key) by the user and validated by other parties, so the user that created the data on the block is the rightful owner of it.
WEB 3.0 Technologies
The technologies that together make web 3 a reality are as follows:
Blockchain
One of the main technology that governs web 3 is blockchain. Blockchain is like a large storage container that stores all the data exchanged in the network but in an open and decentralized way. Every data is stored on a block that refers to the previous block and so on thus creating a chain of blocks (hence, blockchain). These blocks contain unique IDs (called a “hash”) that are generated from their contents using cryptographic techniques and each time someone tampers with a block its ID gets changed. Learn more about blockchain technology.
To create a transaction between two parties, a block needs to be created that contains the details of the transaction. And a block is generated by a consensus mechanism. This consensus is nothing but an algorithm that facilitates the creation of a block without the involvement of a central authority.
As of now, there exist many types of consensus mechanisms. But the major consensus mechanisms are:
- Proof of Work: This is the widely popular algorithm that is responsible for the mining of cryptocurrencies! Bitcoin uses this mechanism. Here, all the nodes or parties in the blockchain network compete with each other to solve a cryptographic puzzle (known as mining) to validate the transaction. And the first node that can solve the puzzle gets rewarded with a certain percentage of the transaction, known as an incentive.
- Proof of Stake: This is more of a new algorithm! Ethereum is trying to transition to this mechanism. In this mechanism, some nodes called validators stakes some cryptocurrency to validate the transaction. If the transaction is verified all participating validators get some fees with cryptocurrency.
Cryptocurrency
You might have noticed that I referred to cryptocurrency while explaining blockchain. As the name suggests, it is digital money that is secured by means of cryptography. It is also known as a digital asset by some. It lives on blockchain and powers all the transactions on it.
This currency is not issued by any central authority or government but is being minted while mining (refer to blockchain consensus mechanism above). So generally it is immune to any governmental interference and highly secure.
Two of the most famous cryptocurrencies among others, are Bitcoin and Ethereum.
NFT
NFT or Non Fungible Tokens are non-fungible digital assets. Let me explain in detail about tokens. Tokens are generated using cryptography or more precisely hashing algorithms like SHA-256. These algorithms require keys to generate these tokens. So unless you have the right keys it can not be claimed or verified.
Everything that exists in the web3 world is generally a form of Token!
Now, what is a non-fungible and fungible token?
- Fungible Token: the tokens that are interchangeable i.e. the owner changes on each transaction. Example — Bitcoin and USD can also be considered the physical equivalent of these tokens.
- Non-Fungible Token: The tokens that are unique i.e. only one owner exists at a given time. Example — artworks, real estate, music, or any unique asset.
The real reason why NFT exists is related to the history of digital artworks or music or any digital piece in general. It is really hard to keep track of copyright contents on the internet since anybody can copy or download the piece and use it anyway. NFTs provide a way to own these digital assets permanently and transparently.
Dapp
Dapp is simply termed as “Decentralised application”. These are similar to the normal apps we use every day except for the fact that it runs on the blockchain via smart contracts.
Jargon time! Smart Contracts are digital programs on the blockchain that runs under certain conditions. These are similar to server programming except that they run in a decentralized way instead of on a server.
There is a website that curates various Dapps that exists today.
DAO
A DAO stands for Decentralized Autonomous Organizations. These are community-driven organizations that do not have a central authority to govern them. Think of a modern approach to a business model where there is no BOSS!
The decisions are made by the members through the submission of proposals and group voting systems again using TOKENS!
Defi
Defi is called Decentralized Finance. It is also built on top of the blockchain network. Its ambition is to create a financial system that does not rely on banks. This is very similar to DAOs and relies on programmed rules, therefore, establishing trust and transparency. These platforms are highly efficient by their very nature.
Some example use-cases of these applications are exchange tokens, crowdfunding, and your imagination;)
Some Drawbacks of WEB 3.0
The very nature of Blockchain requires all the data to be visible to everyone in the network, this might led to accessing one’s personal and political data easier.
Another drawback could be large-scale cybercrime and online abuse among many things. Since the way blockchain works is based on anonymity, it would be very difficult for governments and official to oversee and prevent such things from happening.
Closing thoughts
WEB 3.0 as we call it, doesn’t properly exist today (our current technology is not completely ready yet) but some products and services can be considered a part of it. We are also seeing certain web 2.0 platforms thinking about starting their products under web 3.0, such as Twitter’s Bluesky Project which is set to make a decentralized standard for social media.
Eagerly waiting for the future to unfold itself!
Until then, Happy Hacking!
