On Rebuilding the Internet with Web3 and Cryptonetworks

The World Wide Web has been a centralized entity that has helped onboard billions of people to it with a stable, robust infrastructure. At the same time, a handful of centralized entities have a stronghold on large swathes of the World Wide Web, unilaterally deciding what should and should not be allowed. The answer to this dilemma is Web3.0 (or Web3 for short). Instead of a Web monopolized by large technology companies, Web3 embraces decentralization and is being built, operated, and owned by its users. Web3 puts power in the hands of individuals rather than corporations.

History of the Web

Most people think of the Web as a continuous pillar of modern life—it was invented and has just existed since 1989. However, the Web most of us know today is quite different from originally imagined. To understand this better, it's helpful to break the Web's short history into loose periods—Web 1.0 and Web 2.0.

Web 1.0: Read-Only (1990-2004) In 1989, at CERN, Geneva, Tim Berners-Lee was busy developing the protocols that would become the World Wide Web. His idea? To create open, decentralized protocols that allowed information-sharing from anywhere on Earth. The first inception of Berners-Lee's creation, now known as 'Web 1.0', occurred roughly between 1990 to 2004. Web 1.0 was mainly static websites owned by companies, and there was close to zero interaction between users - individuals seldom produced content - leading to it being known as the read-only web.

Web 2.0: Read-Write (2004-now) The Web 2.0 period began in 2004 with the emergence of social media platforms. Instead of a read-only, the web evolved to be read-write. Instead of companies providing content to users, they also began to provide platforms to share user-generated content and engage in user-to-user interactions. As more people came online, a handful of top companies began to control a disproportionate amount of the traffic and value generated on the web. Web 2.0 also birthed the advertising-driven revenue model. While users could create content, they didn't own it or benefit from its monetization.

Web 3.0: Read-Write-Own The premise of 'Web 3' was coined by Ethereum co-founder Gavin Wood shortly after Ethereum launched in 2014. Gavin put into words a solution for a problem that many early crypto adopters felt: the Web required too much trust. That is, most of the Web that people know and use today relies on trusting a handful of private companies to act in the public's best interests.

Why is Web3 Important? During the first era of the internet, internet services were built on open protocols that were controlled by the internet community. This meant that people or organizations could grow their internet presence knowing the rules of the game wouldn’t change later on. Huge web properties were started during this era including Yahoo, Google, Amazon, Facebook, LinkedIn, and YouTube. In the process, the importance of centralized platforms like AOL greatly diminished. During the second era of the internet, for-profit tech companies — most notably Google, Apple, Facebook, and Amazon— built software and services that rapidly outpaced the capabilities of open protocols. The explosive growth of smartphones accelerated this trend as mobile apps became the majority of internet use. Eventually users migrated from open services to these more sophisticated, centralized services. Even when users still accessed open protocols like the web, they would typically do so mediated by the software and services offered by these software giants.The good news is that billions of people got access to amazing technologies, many of which were free to use. The bad news is that it became much harder for startups, creators, and other groups to grow their internet presence without worrying about centralized platforms changing the rules on them, taking away their audiences and profits. This in turn stifled innovation, making the internet less interesting and dynamic. Centralization has also created broader societal tensions, which we see in the debates over subjects like fake news, state sponsored bots, “no platforming” of users, EU privacy laws, and algorithmic biases. These debates will only intensify in the coming years. One response to this centralization is to impose government regulation on large internet companies. This response assumes that the internet is similar to past communication networks like the phone, radio, and TV networks. But the hardware-based networks of the past are fundamentally different than the internet, a software-based network. Once hardware-based networks are built, they are nearly impossible to rearchitect. Software-based networks, on the other hand, can be rearchitected through entrepreneurial innovation and market forces.

Introducing Cryptonetworks

A software-based network for the internet already exists in the form of cryptonetworks, a generalization of the ideas first introduced in Bitcoin and further developed in Ethereum.

Cryptonetworks are networks built on top of the internet that

1) use consensus mechanisms such as blockchains to maintain and update state,

2) use cryptocurrencies (coins/tokens) to incentivize consensus participants (miners/validators) and other network participants.

Some cryptonetworks, such as Ethereum, are general programming platforms that can be used for almost any purpose. Other cryptonetworks are special purpose, for example Bitcoin is intended primarily for storing value, Golem for performing computations, and Filecoin for decentralized file storage.

Cryptonetworks align network participants to work together toward a common goal — the growth of the network and the appreciation of the token they hold for enabling it. This alignment is one of the main reasons Bitcoin continues to defy skeptics and flourish, even while new cryptonetworks like Ethereum have grown alongside it.

However, today’s cryptonetworks suffer from limitations that keep them from seriously challenging centralized incumbents. The most severe limitations are around performance and scalability. The next few years will be about fixing these limitations and building networks that form the infrastructure layer of the crypto stack. After that, most of the energy will turn to building applications on top of that infrastructure.

The Future of Cryptonetworks Centralized platforms often come bundled at launch with compelling apps: Facebook had its core socializing features and the iPhone had a number of key apps. Decentralized platforms, by contrast, often launch half-baked and without clear use cases. The question of who will win the next era of the internet reduces to who will build the most compelling products, which in turn reduces to who will get more high quality developers and entrepreneurs on their side. Cryptonetworks have a significantly more attractive value proposition to developers and entrepreneurs. If it can win their hearts and minds, it can mobilize far more resources than centralized entities can, and rapidly outpace internal product development at today’s technology giants. In turn, this can lead to a migration of people, products, jobs and services from the internet as we know it today (Web 2.0) to a World Web 3.0 built on cryptonetworks.

What is Web3?

Web3 has become a catch-all term for the vision of a new, better internet. At its core, Web3 uses blockchains, cryptocurrencies, and NFTs to give power back to the users in the form of ownership. A 2020 post on Twitter said it best: Web1 was read-only, Web2 is read-write, Web3 will be read-write-own.

Core ideas of Web3 Although it's challenging to provide a rigid definition of what Web3 is, a few core principles guide its creation.

• Web3 is decentralized: Instead of ownership by a few centralized entities, ownership gets distributed amongst its builders and users. Unlike in Web 2.0, where computers search for data that is kept at a fixed location, in Web3 information might be stored simultaneously in numerous computers and be found based on its content rather than at a single location. This would give individuals more power by dismantling the enormous databases that internet goliaths like Facebook and Google presently maintain.

• Web3 is permissionless and trustless: Everyone has equal access to participate in Web3 (without a governing body’s permission), and no one gets excluded. It will also be trustless (i.e., participants will be able to interact directly without going via a trusted intermediary) It operates using incentives and economic mechanisms instead of relying on trusted third-parties.

• Web3 has native payments: it uses cryptocurrency for spending and sending money online instead of relying on the outdated infrastructure of banks and payment processors.

• Web3 provides content ownership: With Web 3.0, users will be able to sell their own data through decentralized data networks, ensuring that they maintain ownership control.

Web3 Features

Web3's killer features aren't isolated and don't fit into neat categories, The following are some of them.

Ownership Web3 gives you ownership of your digital assets in an unprecedented way. For example, say you're playing a Web 2.0 game. If you purchase an in-game item, it is tied directly to your account. If the game creators delete your account, you will lose these items. Or, if you stop playing the game, you lose the value you invested into your in-game items. Web3 allows for direct ownership through non-fungible tokens (NFTs). No one, not even the game's creators, has the power to take away your ownership. And, if you stop playing, you can sell or trade your in-game items on open markets and recoup their value.

Censorship resistance The power dynamic between platforms and content creators is massively imbalanced. For example, OnlyFans is a user-generated adult content site with over 1-million content creators, many of whom use the platform as their primary source of income. In August 2021, OnlyFans announced plans to ban sexually explicit content. The announcement sparked outrage amongst creators on the platform, who felt they were getting robbed of an income on a platform they helped create. After the backlash, the decision got quickly reversed. Despite the creators winning this battle, it highlights a problem for Web 2.0 creators: you lose the reputation and following you accrued if you leave a platform. On Web3, your data lives on the blockchain. When you decide to leave a platform, you can take your reputation with you, plugging it into another interface that more clearly aligns with your values. Web 2.0 requires content creators to trust platforms not to change the rules, but censorship resistance is a native feature of a Web3 platform.

Decentralized autonomous organizations (DAOs) As well as owning your data in Web3, you can own the platform as a collective, using tokens that act like shares in a company. Decentralized Autonomous Organizations (DAOs) let you coordinate decentralized ownership of a platform and make decisions about its future. DAOs are defined technically as agreed-upon smart contracts that automate decentralized decision-making over a pool of resources (tokens). Users with tokens vote on how resources get spent, and the code automatically performs the voting outcome. However, people define many Web3 communities as DAOs. These communities all have different levels of decentralization and automation by code.

Identity Traditionally, you would create an account for every platform you use. For example, you might have a Twitter account, a YouTube account, and a Reddit account. Want to change your display name or profile picture? You have to do it across every account. You can use social sign-ins in some cases, but this presents a familiar problem—censorship. In a single click, these platforms can lock you out of your entire online life. Even worse, many platforms require you to trust them with personally identifiable information to create an account. Web3 solves these problems by allowing you to control your digital identity with an Ethereum address and ENS profile (Sign-in with Ethereum). Using an Ethereum address provides a single login across platforms that is secure, censorship-resistant, and anonymous.

Native payments

The payment infrastructure of Web 2.0 relies on banks and payment processors, excluding people without bank accounts or those who happen to live within the borders of the wrong country. Web3 uses tokens like ETH to send money directly in the browser and requires no trusted third party.

Web3 limitations

Despite the numerous benefits of Web3 in its current form, there are still many limitations that the ecosystem must address for it to flourish.

Accessibility Important Web3 features, like Sign-in with Ethereum, are already available for anyone to use at zero cost. But, the relative cost of transactions is still prohibitive to many. Web3 is less likely to be utilized in less-wealthy, developing nations due to high transaction fees. On Ethereum, these challenges are being solved through network upgrades and layer 2 scaling solutions. The technology is ready, but we need higher levels of adoption on layer 2 to make Web3 accessible to everyone.

User experience The technical barrier to entry to using Web3 is currently too high. Users must comprehend security concerns, understand complex technical documentation, and navigate unintuitive user interfaces. Wallet providers, in particular, are working to solve this, but more progress is needed before Web3 gets adopted en masse.

Education Web3 introduces new paradigms that require learning different mental models than the ones used in Web2.0. A similar education drive happened as Web1.0 was gaining popularity in the late 1990s; proponents of the world wide web used a slew of educational techniques to educate the public from simple metaphors (the information highway, browsers, surfing the web) to television broadcasts. Web3 isn't difficult, but it is different. Educational initiatives informing Web 2.0 users of these Web3 paradigms are vital for its success. Ethereum.org contributes to Web3 education through Translation Program, aiming to translate important Ethereum content to as many languages as possible.

Centralized infrastructure

The Web3 ecosystem is young and quickly evolving. As a result, it currently depends mainly on centralized infrastructure (GitHub, Twitter, Discord, etc.). Many Web3 companies are rushing to fill these gaps, but building high-quality, reliable infrastructure takes time.

Conclusion

Web3 is not inevitable. The descriptions above of a potential future face many barriers, some of which may never be overcome. Some of the “open problems” in Web3 include:

· Are entrepreneurs actually incentivized to build decentralized applications? Who will fund them? Today, the route to profitability and venture-scale returns for these applications is unclear, whereas the traditional “centralized” business model is more reliable.

· Will decentralized applications be worse than centralized ones? A product controlled by a single company might have a more coherent product vision, and is able to rapidly iterate on new features. Centralized products may always have better UX and ease of setup.

· Will the cryptographic components of decentralized applications be too challenging for most users? How can users manage private keys in a way that can be safely recoverable? Is that even possible without returning to some form of centralized service?

· Will decentralized applications be more expensive to use? Low level decentrallized systems- (e.g. file storage, computation, oracles) have many redundancies built in to make them function. Will these layers make decentralized applications too costly?

· Will decentralized applications built with “smart contracts” ever make sense? Is it possible to write “immutable” code that fulfills an application’s requirements forever? If we need to upgrade smart contracts, then who gets to decide those upgrades, and is it any different from a centralized application?

· How will decentralized systems be “governed”? Decision making by centralized companies with total control is easier than building consensus among a group of actors with different interests and priorities. How will governance of the base layers work across different political ideologies and cultures?

· Do enough users actually care about privacy, controlling their own identity, or access to open financial services? Or will the goals of web 3 always be a niche concern?

· How will governments and regulators respond to Web3? There is inevitable tension created by technologies that give people new capabilities. Web3 includes technologies that avoid censorship and surveillance, and could be used to sidestep financial regulation and law enforcement.

· Can the base-layer blockchains used by Web3 apps ever scale to serve millions or billions of users?

Even with this uncertainty, Web3 is a worthwhile vision for the future. Cryptocurrency and blockchain enthusiasts are rightly criticized for focusing myopically on technology, rather than the problems that technology is supposed to solve. Cryptocurrencies and blockchains aren’t ends in themselves: they are only valuable in so far as they solve a problem. The Web3 vision is helpful because it reorients us towards that problem: the internet has grown too centralized, and it needs to be opened up. Ethereum or Bitcoin could fail, but if they did the Web3 vision would not die. We would just build new, better versions of those systems using the same applied body of knowledge that we’ve developed over the last 8 years — cryptoeconomics — and keep on building.

Reference

• Web3.0 on Ethereum

• What is Web3.0? A Blockchain Tutorial

• Why Decentralization Matters - Chris Dixon

More Reading

• Get a wallet

• Find a community

• Explore Web3 applications

• Join a DAO

• Build on Web3

Further reading Web3 isn’t rigidly defined. Various community participants have different perspectives on it. Here are a few of them:

• What is Web3? The Decentralized Internet of the Future Explained – Nader Dabit

• Making Sense of Web 3 – Josh Stark

• Why Web3 Matters — Chris Dixon

• The Web3 Landscape – a16z

• The Web3 Debate – Packy McCormick