Web3 Revolution: Are you ready for the decentralized future of the internet?

April 4, 2023

Let’s dive into the web3 space - the internet’s evolution-and see how the rise of decentralized applications can be a game changer for so many industries! Ready, set, go! 

What is Web3, and how does it differ from Web1 and Web2?

They say web3 is a shift in the internet culture. And we couldn’t agree more! After web 1.0 and web 2.0, web3 is the third generation of the World Wide Web. And this one is built on the blockchain! 

It's all about using blockchain technology in new and exciting ways. This includes cryptocurrencies, NFTs, and even new ways of handling financial transactions through DeFi and decentralized autonomous organizations, or DAOs. So, if you're working with any of these on blockchain technology, you're already a part of the Web3 movement.

You have probably seen this scheme before 

Web 1.0 = Read

Web 2.0 = Write

Web3 = Own

It’s a really useful one cause it provides a clear and easy-to-understand framework when looking to understand what web3 is all about. It breaks down the evolution of the internet into three stages with their own prominent features. So, to acknowledge the future, let’s understand the past. 

Web 1.0 started around the ‘90 and was a “static web” because there was no (or too little) bidirectional communication. It was the first generation of the internet, so we shouldn’t expect something else from it. Simply put, there were read-only websites where users didn’t interact with each other or the platforms. Centralized media only furnished information for users to read. 

It’s like you enter a library, and you have access to a vast collection of books and information resources, but your interactions are limited to reading and borrowing materials. There is no real-time communication or collaboration between library users, and the library staff is the only centralized source of information. Similarly, during the Web 1.0 era, websites were like digital libraries, providing users with access to information but limiting their ability to interact with each other or the platform. The content on these websites was mainly static and read-only, with little to no user-generated content or bidirectional communication. 

Later on, somewhere around the early ‘00s, web 2.0 arose. And it’s the internet we all know today. The “social web”, as it’s called, introduced the opportunity for users to interact, publish and share content themselves. This one is bidirectional. You read and, most importantly, you also write. The paradigm shift that came with it it’s what we are so familiar with today: social media (Facebook, Instagram, Tik Tok, Youtube, Twitter, etc.), all kinds of services websites (Wikipedia, Drive, Dropbox, etc.), and mobile phone apps that we daily use. 

“Interactive” and “Dynamic” are the defining words for the web 2.0 era. People created social media accounts, posted things about themselves, photos, check-ins, and shared some of the most important aspects of their lives. Communication with dear ones or new people was the epicenter of this era. 

Web 2.0 opened up a new world of possibilities for companies, as well. They started to interact and engage with customers in new and innovative ways. New tools became available to build awareness, generate leads and sell their products or services. 

It all sounds good, but there’s a pitfall for web 2.0. It’s centralized, so only a small group of corporations - also known as Big Tech giants - controls most of the online space (and our lives if we think about it at a large scale). This centralization leads to various problems, such as censorship, data breaches, and lack of privacy. And even if we are familiarized with social media and web2, we are becoming increasingly aware of the power these big tech giants hold and what that means for our privacy and lives.

Web3 aims to address these issues by creating a decentralized network where users have more control over their data and online activity. This decentralization means that no single entity has control over the network. It’s a network that uses blockchain technology to distribute data across a network of users to create a more secure and transparent online environment. Or, as we like to say, it’s the internet owned by the people, for the people.

The role of blockchain technology in Web3

At its core, Web3 is powered by blockchain technology, which makes it decentralized. But what exactly is blockchain technology, and how does it support the vision of Web3? 

Blockchain is a distributed ledger that’s open to everyone and can record transactions between two parties efficiently, securely, transparently, and permanently without a third-party intermediary. Think of blockchain as a spreadsheet available to everyone, but you can edit only your entries.

The decentralized nature of blockchain allows for a new level of trust and transparency in online interactions. Read about blockchain technology in this article from our blog: What is blockchain?

Blockchain plays a big role in the Web3 space by enabling decentralized applications, or dApps, as they are simply called, and platforms that allow users to interact and transact directly, bypassing intermediaries. This has the potential to disrupt many industries, from finance and banking to e-commerce and social media.

Ownership landscape of Web3

There are various blockchains, like Bitcoin, Ethereum, Solana, MultiversX, etc. Each of these blockchains is a ledger of verifiable transactions and ownership. So it’s like keeping track of who owns what. When a new block is created, and everyone agrees, the ownership records are checked and verified. If you buy or claim a digital asset, you own it, and it stays with you until you sell it or send it to someone else.

On web3, you own your assets because there's a way to verify and prove ownership. This is a new and important concept in the world of web3. So now, you don't have to rely on others to keep your records. You can verify and prove ownership on your own.

This is the central idea behind Web 3.0 - to transfer power from intermediaries, such as big companies and social media platforms, to the individual. With this system, you have control over your own data. The financial sector is just as well. You can make transactions without relying on an intermediary, like a bank or a payment portal.

The emergence of decentralized finance (DeFi) in Web3

Nowadays, the line between offline and online keeps getting thinner, leading to a fusion of the two. Therefore, the line between real and virtual keeps getting finer, as well. That’s why it’s easy to imagine that the financial environment, too, will progressively grow, aiming to adapt to this new ecosystem. So, today we are looking at one of the financial elements of web3, Decentralised Finance (DeFi). 

First thing first. What is DeFi? Simply put, it’s a financial system built on top of blockchain technology. As the name says, it’s decentralized finance built on trust. It doesn’t rely on centralized institutions but on Smart Contracts. So it cuts out the middleman (the bank) and processes transactions through a marketplace instead. This process is faster, more secure, and potentially cheaper than traditional banking methods.

DeFi operates open, permissionless, and transparently and is considered a sector in the larger Web3 space. Also, its purpose it’s revolutionizing the traditional finance system.

Let’s take a concrete example to make this more understandable. The traditional financial system has banks, bank accounts, and transactions between people with the bank in the middle. If I want to send $5 to my friend, I need to transfer the money from my bank account to his. Therefore, I’m creating a transaction stamped in the bank transaction records. The bank already has my data, the money in my account, to whom I send money, where I get money from, well, basically everything. 

Back to the scenario where I have a friend in need. I trust the bank to make the transaction. But what if the bank messes it up? Why must I trust the bank, the government, and the law? This is where DeFi enters the scene. DeFi represents a trustless system, a new paradigm for a more transparent financial system where you don’t need to trust any central authority. All the transactions are made through a Smart Contract that replaces the third-party actor.

Smart Contracts and their Use Cases

Ok, we reached this point: Smart Contracts! Well, you should know that the Ethereum network launched the concept in 2015. If we were to define Smart Contracts in a few words, we would say that they're a game-changer in the world of agreements and transactions! They are actually lines of codes on the blockchain and automatically execute the terms of an agreement when specific conditions are met. 

When you have a business collaboration, the terms of the deal are automatically carried out without a middleman. So you don't have to rely on a lawyer or a bank to ensure the deal is honored. Instead, the smart contract takes care of it all! And the best part is that a Smart Contract is set on the blockchain. This means the terms of the agreement can't be changed, and all parties can view and verify it. It's like a bulletproof agreement, making transactions more efficient and secure.

By combining Smart Contracts, developers could create decentralized apps (DApps) on the blockchain instead of a company server. That makes them less vulnerable to downtime, data breaches, and other problems with relying on a central authority.

Some common use cases for smart contracts and DApps include supply chain management, digital identity verification, voting systems, and fundraising through initial coin offerings (ICOs). These applications allow for more secure and transparent processes, as all parties can see and trust the code that runs the agreements and transactions. 

In addition, they can save time and reduce costs, as intermediaries are often not needed. It's exciting to see what new and innovative use cases will emerge as the technology develops.

NFTs

It’s inevitable! When we talk about web3 space, we must also talk about NFTs! As you probably know, NFTs are an acronym for non-fungible tokens, and they're all the rage these days in digital art and collectibles. Basically, an NFT is a unique digital item that's verified on the blockchain and can't be replaced or exchanged for something else (while NFTs themselves cannot be directly exchanged for something else, they can still be used as a means of exchange within the digital art and collectibles market on trading platforms, etc.). This makes them a one-of-a-kind piece of digital property you can own and trade.

NFTs are a big part of the web3 space, as people and creators take control of their identity, work, and assets. 

Just think about it - with NFTs, creators can sell their digital masterpieces directly to collectors without middlemen getting in the way. And for collectors, it means they can trust they're getting the real deal - a verified, unique item. It's a whole new way of thinking about ownership and value in the digital world, and it's just one of the many cool things that the blockchain is making possible.

Current use of Web3 and future potential

To sum up, there are already applications of Web3 today. From enabling peer-to-peer transactions without intermediaries (DeFi) to creating new gaming and social experiences (Blockchain Gaming & Metaverse), the potential applications of this technology are vast and varied and are already happening. 

We see web3 in the world of finances, art, and entertainment. But it doesn't stop here. 

The Medical field could also benefit from web3 capabilities by enabling the creation of decentralized platforms for the secure and private exchange of medical data. The technology can effectively improve the condition of patients at a much lower cost. In a secure and pseudo-anonymous way, it eliminates all hurdles and barriers to multi-level authentication, such as incomplete point-of-care records and difficult access to patient health information. Take, for example, the Itheum project - you’ve probably already heard about it. As they also say, they are the world's 1st decentralized, cross-chain data brokerage platform. Read more about the project on itheum.io because it’s going to be a revolutionary one. 

Supply Chain Management is another field that can use web3 technology to increase transparency, efficiency, and accountability in moving goods and services.

Applicability is the star word, which we also discussed in this article. Legal Systems, Economic segments, Research Industry, Energy, Property Rights, Elections, Data Management, and E-commerce… all these fields have the potential to be changed by the web3 revolution. 

The question is… are we ready for it? 🙂

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