Web3 is the next version of the internet, built on blockchain technology and controlled by its users. The internet is constantly evolving, and tech futurists point to Web3 — a term from computer scientist Gavin Wood — as the next step. It envisions a decentralized internet built on blockchains, where community networks control access rather than the corporations that dominate the current Web2 model.
As blockchain ecosystems continue to expand, technologies such as TRON Energy have also become part of the broader infrastructure supporting efficient on-chain interactions.
Momentum for Web3 has grown since 2018, with increases in investment, online searches, and job vacancies. The financial services industry has led in adopting Web3 technologies, with daily transaction volumes on decentralized finance exchanges sometimes exceeding $10 billion. However, progress has been inconsistent.
What are Web1 and Web2?
To understand Web3, it helps to know what came before. Web1 (1990s-early 2000s) was built on “open protocols,” allowing anyone to exchange information. People used it to read web pages, chat, and for e-commerce.
Web2 emerged in the mid-2000s with platforms like Facebook and Twitter that empowered users to create content. These platforms were free, but companies monetized user data by selling it to advertisers while retaining control.
What technologies support Web3?
Web3 is built on three main technologies:
- Blockchain: A decentralized digital ledger distributed across a computer network. New data is added in unchangeable blocks, preventing a single point of control.
- Smart contracts: Programs stored on a blockchain that automatically execute when pre-agreed conditions are met.
- Digital assets and tokens: Digital items of value, such as cryptocurrencies and NFTs, or tokenized versions of real-world assets.
How is Web3 different from Web2?
In Web2, large tech corporations centralize control over transactions and data. Web3 aims to change that, allowing users to control their own information without intermediaries. This could alter how data is managed and how web-based companies operate.
The two also differ in their approach to trust. Web2 relies on parties trusting each other, often with a central facilitator. Web3 is “trustless,” meaning technology ensures a transaction only proceeds if criteria are met and verified by the network. For example, a Web3 system could authenticate a concert ticket on a blockchain, preventing the sale of fakes.
What does trouble in the crypto market mean for Web3?
While the crypto market faced uncertainty in 2022, other areas of Web3 continued to advance. For instance, NFT sales counts grew, downloads of key developer tools increased, and the number of active Web3 gaming users rose by 60%.
What are some real-world examples of Web3?
- JPMorgan Chase conducted its first cross-border blockchain transaction with tokenized currencies.
- The firm Securitize launched a tokenized fund on the Avalanche blockchain, making private equity more accessible.
- Nike launched. Swoosh, a Web3 platform for virtual apparel and product launches.
Is Web3 the same as the metaverse?
No. Web3 refers to decentralized systems architecture, while the metaverse is a new paradigm for computing and networking. Both could be part of the internet’s future.
What are some concerns around Web3?
Early adopters face several challenges:
- Evolving regulation: Authorities are still developing rules for consumer protection and anti-money-laundering.
- User experience: Many Web3 applications are not as polished as their Web2 counterparts, and the utility of products like NFTs remains unclear to many.
- Consumer protection: Recent failures of Web3 projects have made consumer and investor protection a major focus.
Web3 is not a simple solution to Web2’s problems and will require new approaches to address challenges in the internet’s next generation.