Compiled in this article: 0x13, Kxp, Andrth BlockBeats
The new term Web3 was born in 2014, and at first it was used to describe a new type of protocol that implements decentralized consensus, but today it has become a general term for public chain ecology, applications, and even design concepts. It's like, "Who am I?" Like this philosophical question, many people have given their own answers to the question of "What is Web3?", and it seems that everyone has a different answer. However, for some people, this new term can feel very unfamiliar, so we wrote this article to explain the nine major knowledge points that people need to know about Web3, hoping to help people understand what Web3 is.
TL;DR
1. Web3 is a trendy nickname for decentralized networking.
2. Web1 read-only information, Web2 read + write information, Web3 read, write, own information.
3. Web3 is the monetary layer of the Internet.
4. Web3 is the identity layer of the Internet.
5. Web3 is a counter-attack on social networks that do not protect our data and profit from selling user data.
6. Web3 is a way for artists and creators to own not only what they create on the platform, but also the platform itself.
7. Web3 is the new incentive model for the Internet.
8. Web3 makes it easy to establish cooperative ownership and governance structures.
9. Web3 is still not completely decentralized.
Web3 is a trendy nickname for decentralized networking
Since 2015, Joseph Lubin, founder and CEO of ConsenSys, has been giving lectures, writing articles, and supporting team building for Web3 and decentralized networking. The Web3 philosophy has been the "touchstone" that guides all of ConsenSys' early-stage investments and projects.
MetaMask is now the primary way for people to join the Ethereum blockchain and is also compatible with more networks. It's a way to securely generate public keys on your phone or computer, but it embodies a new principle of how users interact with the web — only you can access your accounts and data, and choose what to share and what to hide. Others refer to MetaMask as the Crypto version of consent manager.
When we talk about decentralized networks, we also mention stacks other than decentralized currencies and identities. Other aspects of decentralized networking, such as decentralized storage, have just become the infrastructure of the stack to achieve persistent storage (such as IPFS and Arweave), decentralized storage (Golem, W3BCloud, and others), and decentralized data indexing (Graph Protocol).
Now, Web3 is the most frequently followed track for a16z and other big venture capital firms, and Twitter is full of lengthy discussions, and many people who don't understand Web3 are still ridiculing and mocking it. It is foreseeable that in the future, when Web3 dominates the public Internet discussion, those who ridicule Web3 will go back and learn what Web3 is.
Web1 reads only information, Web2 reads + writes information, and Web3 reads, writes, and owns information
When I asked a Web3 developer friend how he would interpret Web3, he said, "Web1 is read-only, Web2 is read-write, and Web3 is read-write-own." The original Web was built on open source protocols such as TCP, IP, SMTP, and of course HTTP. A protocol is a standard way for multiple computers to agree to communicate with each other. These underlying protocols manage the flow of information and information on the Internet, and if you want to use their rules to build an application or service, you don't have to pay for access.
Web2 is an iterative product built using the Internet's free and open source protocols. The major shift brought about by Web2 compared to the static, read-only Web1 is that individual users are beginning to be able to distribute content to the Internet. It started out on Digg's message board, then Weibo, and now has more than 2 billion individual users on Facebook. At the same time, another subtle shift is quietly taking place. People are starting to feel that instead of maintaining their own servers to keep their websites up and running, they should leave this hassle to Web2. At the other end of the deal, Web2 has also created an island of user data and behavior that is valuable to advertisers. In the age of Web2, the individual user was the product.
Web3 ownership means that platform builders, operators, and users do own a portion of what they use. Bitcoin and Ethereum are the earliest examples: ETH and BTC are actually rewarded for honestly keeping the ledger up to date and other contributors who are doing what keeps the network secure. Token-based networks built on Ethereum and blockchain have even introduced new ownership models that are not necessarily the same as cooperative or shareholder equity models. For example, ownership can take the form of tokens, which you get when you provide a service, such as providing liquidity for transactions or voting on governance for the future development of the network. The grander vision is that participants in any network will be able to "own" a portion of the products and services they use every day.
Web3 is the monetary layer of the Internet
One of the greatest innovations of the Internet has been the ability to distribute information globally and at a low price, replicable, and diverse. But these labels are the opposite of "value," and by definition, anything of value, money or assets, should be scarce and hard to come by. Bitcoin was the first protocol to introduce scarcity into the internet, somehow solving the "double-spend" problem that plagued early digital currency attempts. Double spending refers to the fact that you can use duplicate digital currencies and spend them in two or more places at the same time. In traditional finance, banks, credit card companies, and payment processors verify transactions themselves to minimize double spending. For decentralized Crypto, the job of a miner or verification node is to ensure that the account is not double-spent. This has far-reaching implications because validation no longer relies on a trusted central party. As long as there is an internet connection, anyone can participate in the peer-to-peer network and check the ledger. Social consensus can protect people from evildoers who try to roll back or censor transactions.
Another manifestation of scarcity is whether it is homogeneous, that is, whether a single unit can be arbitrarily interchanged, and arbitrary interchange means that you can replace this unit with another unit because they have the same value. For example, the value of 1 ETH is 1 ETH, while non-homogenization means uniqueness. The advent of NFTs has made it possible to own things that would otherwise be unobtainable, such as digital art, photos, music, text, game assets, certificates, governance rights, passes, and so on. And many people question, "If I can directly right-click to save on the computer, how can it be scarce?" The reason for this is actually because the blockchain records the process of transferring ownership from one account to another. This also gives digital artists or virtual products the concept of "originality", just like the underlying problem solved by blockchain, preventing another person from claiming to be its owner or "double flower". One of the reasons many people are excited about NFTs as a way of proving the source of digital assets is that since they are tokens on Ethereum (and now there are many NFTs on other blockchains), they are interoperable with the rest of the Web3 ecosystem. They can be split into smaller parts so many people can own them; they can serve as collateral for other decentralized financial services; they have perpetual royalties; and they can even serve as the basis for internet identity.
Web3 is the identity layer of the Internet
One of the biggest omissions in early Internet protocols was the absence of a public and open source identity layer. With the development of Web2, platforms such as Facebook and Twitter monopolized this layer as closed-source applications. Web3's stance is that you should have your identity online and only make some of it public if you want to. In practice, Ethereum's identity system is very basic. You can think of it as a container that allows other projects to associate with it. For example, when an authority wants to know your date of birth or location, it doesn't need to know anything else you don't want to provide. Your identity will also include your transaction history, which financial institutions can know without requiring you to provide your birthday and place of birth. In addition, the digital identities you develop on one social network can be ported to other networks.
In today's practical scenario, the closest thing in the Web3 world to the universal identity layer is Ethereum Domain Name Service (ENS). With ENS, you can purchase a unique domain name that uses the ERC-721 Token standard NFT, and then you can link it to your Ethereum address. ENS makes ethereum addresses readable, and then it's used as a more convenient way to airdrop NFTs, show off token positions, or NFT collections, and show what you chose when voting on governance. It's actually tempting to show others that you "know" web3, which is perhaps why Paris Hilton, Shaqui O'Neill, and others have changed their Twitter usernames to ENS domains. However, like the earlier Internet protocols, ENS had no early investors, and the protocol itself was decentralized and given open standards.
Other 3Box Labs services, such as IDX and Self.ID allow you to link your wallet and manage your digital identity. You can connect your Ethereum address, existing social media profiles, and other information you want to make public. Just like ENS, but more significantly, people can automatically choose what information and data to share from their personal identities when they sign up for a new service or platform. Currently, the reasons that drive people to use blockchain digital identities still come from the Web3 world, such as linking your Ethereum address to your social profile, but in the long run, the long-term goal of the Web3 world is to have real-world identities such as authoritative identities also proven on-chain.
Web3 is a response to social networks that do not protect our data, but instead profit from it
Facebook owns most of the data on your social graph, so even if you close a page, it still resides on Meta's servers. Gavin Wood, the inventor of the term Web3, said in 2014: "Web 3.0, or what might be called the 'post-Snowden' network, is a rethinking of current network activity and introduces a disruptive model for network participants." If we decide that some information needs to be made public, we publish it, and if we feel that some information needs to be agreed upon in order to reach consensus, we put it on the list of matters to be agreed upon." The 2018 Cambridge Analytica scandal revealed that one company collected the personal information of 87 million people and used it to create voter psychological profiles that influenced the outcome of the election. Although the incident made headlines at the time, such data breaches have been commonplace, affecting millions of Internet users. The reason for all this is simply because we entrust the company to store our data, and when we later switch to other platform services, these permissions can no longer be revoked.
Remember when we described MetaMask as a Crypto version of consent manager? Web3 apps are designed on the principle that information is "pushed" by individuals to trusted sources, rather than by apps obtaining them from sources that hold your data. For example, in the Web2 world, when you "log in with Google," the app may obtain your personally identifiable data without your consent. The transparency of the data you provide to different applications on the web is one of the reasons why social media networks gain dominance – your personal information tends to be of high value, and in most cases we give it up the moment we agree to the platform's terms of service.
Web3 can be said to be a response to today's Internet platforms to continuously obtain user information, with Web3, users can choose what information to share or hide.
Web3 allows artists and creators to own not only their work on the platform, but also their platform itself
In 2021, it seems like everyone is rolling out NFTs. DappRadar's data shows that NFTs will reach more than $23 billion in total transaction volume in 2021. For many digital artists, the advent of NFTs allowed them to devote themselves to art full-time for the first time in a real sense. Since NFT is a generic token format, you can mint NFTs by deploying your own code or by using the NFT Marketplace. Unlike Web2 social networks, your Token can be purchased on the services platform and sold on the secondary market, or used in other games and apps. In other words, NFTs continue the character of Ethereum as a class of portable, interoperable value.
Some early NFT markets quickly realized that they were positioned not just as a market, but as more bridges between creators, users, and platforms. In 2021, SuperRare released the RARE Governance Token and created the SuperRare DAO to reward artists and collectors who joined early and to encourage community participation in its art curation. SuperRare explains, "We want Spaces to be the future of community art curation, a vibrant ecosystem where curators, artist groups, galleries and community members can hire artists and conduct collaborative auctions, with the help of SuperRare's shared brand and technology."
Other applications on Ethereum are now using Tokens to reward people for their contributions to network building and decision management. Even Web2 social networks like Reddit are exploring the use of tokens called "community credits" to allow active contributors on subreddits to "own" a portion of the social network, while DeFi protocols like Uniswap build a consolidation mechanism that incentivizes liquidity providers to capitalize transactions on virtually all assets on Ethereum.
The benefits of individuals staking collective pledges across multiple service platforms across the network are perhaps the biggest threat to the effects of Web2 social networking. Scott Belsky once asked, "If every stakeholder in these businesses is incentivized to help build, improve, promote and sponsor these brands, will that be an advantage for them to compete with larger companies?"
Web3 is the new sponsorship model for the Internet
The term "creator economy" is a term used to describe the Internet space and is designed to help creators monetize in new ways. OnlyFans, Twitch, and other platforms promise platform users unlimited money directly from their fans, rather than relying on a money-making model with ads and traffic at its core. However, unlike Web3 networks, some creators are randomly removed from the network and cannot own the content they share.
Thanks to the emergence of platforms such as Substack, Ghost, and Lede over the past year, the motivation for writers and journalists to earn directly from their readers has been further strengthened. However, none of these platforms allow writers to use ownership to build a direct relationship with their fans. Mirror is a Web3 blogging network that allows users to sell their work in NFT format and redefine the creative and sponsorship model through "crowdfunding." Crowdfunding allows patrons to fund an idea by depositing ETH in exchange for a token that proves your sponsorship, which in turn can be used to join the DAO or receive future returns for publications. Tokens are not only practical, they can also prove that you have supported an idea or author, and as more and more people support crowdfunding, tokens will become more and more valuable. As Kyle Chayka, a contributing writer for New Yorker who funded Dirt.xyz with Mirror, puts it: "For many forms of media, subscription is certainly a sustainable business model, but it may not be suitable for all forms of content or work, but collectors and patrons are a good fit for this model." NFTs can support collector and patron relationships, as can mirror-backed tokens such as ESSAY or Emily Segal's NOVEL. I hope that future creators can make money from Token and NFT, not just on readers or regular payments, and that the revenue from their articles should be shared between creators and sponsors."
Now that tokens that can be homogenized or non-homogeneous can play a role in the relationship between patrons and artists, artists should also be able to connect directly with their early supporters — with Ethereum addresses or ENS name collections that can be used for mailing lists, admission tickets, and payment systems, artists on either platform can interact with their fans.
Web3 makes it easier to build collaborative governance and ownership structures
If you join any DAO in 2021, you've probably already joined Telegram or Discord with other strangers: participating in voting on DeFi governance proposals, making decisions about project funding, and getting tickets to Erykah Badu concerts; joining the Artist and Developer Residency Program, collectively purchasing the only backup of Wu-Tang Clan's 2015 album Once Upon a Time in Shaolin. There was even a joint venture to buy a printed copy of the U.S. Constitution.
The DAO, or "decentralized autonomous organization," is a community-led entity that uses Ethereum smart contracts to establish foundational rules and execute agreed decisions. Some of the largest and earliest DAOs in Ethereum manage the growing coffers of decentralized financial protocols. At present, the top 20 DAOs have nearly $10.5 billion worth of digital assets.
DAO serves not only DeFi, but also many other areas. Media outlets like Bankless, as well as public funds like Gitcoin, use the DAO to coordinate, govern, and manage their financial activities. Currently, there are more than 1.3 million DAO Token holders in Web3. A New York Times reporter once quipped that the DAO is a "chat room with a bank account." What's fascinating about Web3, though, is that it can quickly bring together leaderless online groups of like-minded people to pool capital and make decisions.
Not every layer of Web3 is decentralized
As any veteran of the Web3 ecosystem knows, engineers are constantly trying to build maximum decentralization, easy-to-use applications, and scalable infrastructure, with design trade-offs in between. Moxie Marlinspike, founder of Signal, recently wrote in his blog about web3 explorations: "Web1 is built on the premise that everyone on the Internet becomes a publisher and consumer of content, as well as a publisher and consumer of infrastructure. We all have our own web server, our own website, our own mail server and our own email address. However, this is not really what people really want – people don't want to run their own servers (I don't think that's an overstatement)."
It shouldn't be too surprising, then, to learn that the vast majority of Ethereum's applications call data from trusted API sources, and that the U.S. runs 40% of Ethereum's 5433 full nodes. MetaMask made similar design decisions in its early years — instead of requiring each user to run a self-hosted Ethereum node, they chose to use Infura to feed Ethereum data. This allows developers to focus more on building applications than on the infrastructure on which the network runs. Dan Finlay, founder of MetaMask, writes, "This approach makes it easier for users to use our platform without consuming too much power to host nodes. At the same time, it also changed the rules in terms of the use and promotion of the platform, which confirmed Moxie's previous statement: "People don't want to host their own servers (because this takes up the computer capacity of the entire laptop)".
However, this does not mean that the Ethereum and Web3 communities are still considering decentralized data centers like W3BCloud, or moving lightweight clients to Eth2 through a series of operations to reduce trust at all levels. While MetaMask uses Infura as its default server, they have always allowed users to choose their own blockchain connections. In addition, with Snaps, users can choose other options other than connecting wallets with a server. Dan Finlay explains, "Snap can help users run lightweight clients, choose alternative runtime systems such as zk-STARK chains or new friendly languages, or it can also allow users to connect to their preferred centralized service platform."
While many teams in the Ethereum community are working to improve centralization, the success of some newer, more centralized Crypto networks suggests that users may not care much about these things. However, we should not conclude that Web3 infrastructure will not be further developed in the future, as more and more people are already experiencing the benefits of a fully decentralized network.
*Rhythm BlockBeats reminds investors to guard against chasing high risks, and the views expressed in this article do not constitute any investment advice.
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