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Multiple industry players are currently conceptualizing and developing Web3, with Ethereum standing out in terms of early user adoption and breadth of scope.
While the underlying architecture of Web3 has yet to be finalized, its decentralized nature is a core part of its proposed architecture. In this article, we'll explore what a decentralized web means, how it's being used and what it could look like in the future.
What Is Decentralization?
Web3 will provide access to connected data in a decentralized way, different from Web 2.0, which primarily stores data in centralized locations.
Web3 will enable people to interact with data in conjunction with AI and machine learning technology, combining the concept of the Semantic Web, which was originally described by Tim Berners-Lee, with AI. Essentially, Web3 will enable decentralized apps to take the place of centralized social networks, all while allowing individuals to maintain ownership over their data.
Matt Biilmann, CEO of Netlify, a cloud-based web development platform provider, spoke with CMSWire about the decentralized web. Biilmann said the core idea behind Web3 mirrors the original vision of the web — open and decentralized.
“The web started out as a decentralized system based on DNS and the ability for anyone to buy, own and manage their own domain name and move it from one host to another as they see fit with full control and ownership over all the underlying data,” Biilmann explained. “However, as the web grew up, our online presence has become more and more centralized on corporate platforms. For instance, when someone registers an Instagram handle, they can’t just move that handle with all of their content and followers somewhere else because they’re tied to that network.”
Related Article: Understanding Web3's Supporting Blockchain Technology
The Benefits of Decentralization
Web3 is conceptualized as giving ownership of data back to end-users through decentralization. “The promise of Web3 is building new web protocols and infrastructure that should allow developers to build apps where users bring their own data and where identity is no longer tied to any specific platform,” said Biilmann.
A decentralized web relies on a peer-to-peer network built upon a community of users. This group's own internet-connected devices would host websites or applications, rather than a group of high-powered servers. Every website or application gets distributed across hundreds of nodes located on different devices.
This process reduces the chance of a server crash, hackers taking down a website or an authoritarian government taking control of and/or censoring opinions. The decentralized web is similar to the dark web, which was created by the US government to allow freedom of thought and expression for citizens and journalists under oppressive regimes, protect whistleblowers and keep users out of danger by protecting their anonymity. The anonymous and decentralized nature of the dark web also enables criminals to operate freely, a potentiality for Web3, too.
As one of the world’s largest nonprofit repositories of knowledge and culture, including free books, music, movies, software and websites, the Internet Archive has been pivotal in ensuring that the web remains free and open. As such, it has been one of the lead organizers of DWeb events since 2014 and has organized groups of people who are creating the building blocks of a decentralized web.
How the Decentralized Web Is Being Used Today
The concept of the decentralized web has been discussed for many years, but in practice, most of the web is still centralized. Currently, the Ethereum network is the largest community-run decentralized network, and it powers the cryptocurrency known as ether (ETH) and provides access to thousands of decentralized applications.
Decentralized apps — or dapps, as they're called — are available for finance, arts and collectibles (including infamous NFTs), gaming and technology.
Financial dapps are applications that focus on building out cryptocurrency services, and include the following subject areas:
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- Lending and borrowing
- Token swaps
- Trading and prediction markets
- Investments
- Payments
- Crowdfunding
- Insurance
- Portfolios
Arts and collectibles dapps focus on digital ownership, increasing the earning potential for content creators and inventing new ways to invest. These dapps cover art and fashion, digital collectibles and music.
Gaming dapps look at the creation of virtual worlds for gaming and interacting with other players. The big difference here is that these dapps — there are two types, virtual worlds and competition — use collectibles that hold real value.
Technology dapps concentrate on decentralizing developer tools, incorporating crypto-economic systems into existing technology and creating marketplaces for open-source development work. Types of technology dapps include:
- Utilities
- Marketplaces
- Developer tools
- Browsers
Harish Daiya, CEO of Lumenci, a full-service technology consulting firm, said that Web3 in 2022 is what Web 2.0 was in 2001 — and many tech leaders are already ahead of the game.
“So far, we have seen massive adoption in the L1 ledgers or public blockchain protocols (Bitcoin, Ethereum, Solana, Chia, etc.), which accounted for maximum revenue generation. The adoption of L1 protocols is going hand in hand with the explosive growth of the Crypto exchanges, like Coinbase, Binance, Blockfi, etc., making it easy for consumers to participate in this new asset class,” said Daiya.
Cryptocurrencies also rely upon blockchain technology and play a large role in Web3 payment processes and identity methodology. “NFTs saw a major boost in 2021, opening up further use cases in Web 3.0,” said Daiya. “Crypto wallets have become the gateway to Web 3.0, just like FB., Google, Twitter, etc. are in Web 2.0. Also, Web 3.0-based Decentralized Finance (DeFi) is disrupting the Web 2.0 fintech companies, which is forcing Web 2.0 fintech companies to redefine themselves as blockchain-first companies — most evident from Square’s name change to Block.”
“We are still at the beginning of the beginning of Web 3.0 evolution, as there are big technical problems still open to be solved,” said Daiya. “As L1 scales, we will see massive innovation and adoption in both consumer applications, e.g., gaming, social networks, etc., and enterprise applications, e.g., decentralized digital identity, decentralized autonomous organizations (DAOs), decentralized digital signatures, etc.”
Related Article: How Blockchain Is Enabling Digital Transformation
Final Thoughts
Web3 is more than this year’s biggest buzzword. Decentralized apps are already available — via the Ethereum network — for finance, arts and collectibles, gaming and technology.
The decentralized nature of Web3 will give control of data back to end-users, rather than the corporations that currently control it.
