Web3 has grown to encompass a whole ecosystem of public blockchains, applications, and even architectural philosophies since its inception in 2014 as a name to characterize new sorts of protocols that enable decentralized consensus. The query “What is Web3?” produces a slew of responses as diverse as the persons articulating them, as it does with other great obscure ideas. The new language might be intimidating for investors in Blockchain, so in this blog article, we’ll go over nine concepts that define Web3, along with lots of examples to help you comprehend them.

The decentralized Web is now referred to as Web3.

Beyond decentralized money and identification, we meant the rest of the stack when we talked about the decentralized Web. Other aspects of the decentralized Web, such as decentralized storage (IPFS and Arweave), decentralized storage (Golem, W3BCloud, and others), and decentralized data, are just becoming crucial parts of the stack (Graph Protocol).

Web3 has now become a catch-all term for a whole investment category at a16z and other major venture capital companies, resulting in extended Twitter threads, sarcasm, contempt, and misunderstanding. Soon the jesters came for the protocol priests once Web3 became a major enough component of the public internet discourse.

Web1 is a read-only website, Web2 is a read-write website, and Web3 is a read-write-own website.

The evolution of #web3 pic.twitter.com/CWNzVetB41

— Alvin Foo (@alvinfoo) June 8, 2022

When I asked my Web3 developer brother how he describes Web3, he said that Web1 was read-only, Web2 was read-write, and Web3 was read-write-own. Open-source protocols such as TCP, IP, SMTP, and HTTP were used to create the first version of the Web. A protocol is there that says numerous computers agree to follow when communicating with one another. These core protocols govern the flow of information and messages on the internet; you don’t have to pay to use their rules in your application or service.

Web2 refers to the internet’s next generation based on free and open-source protocols. Individuals could add material to the Web, which was a significant change from the static, read-only versions of Web1 websites. What began as upvotes on Digg message boards evolved into microblogging, and now there are over 2 billion Facebook profiles. Another slight alteration occurred as well. Web2 firms paid the fees instead of maintaining their own server to display their websites. However, in exchange, they established a silo of user data, behaviour, and actions that advertising may use to build a social graph. The individual user is the product in Web2.

For Web3, ownership means that the platform’s creators, operators, and users own a piece of what they use. Bitcoin and Ethereum are the first examples: in exchange for safeguarding the network, they receive payment in BTC or ETH in exchange for updating the ledger and keeping other players honest. Token-based networks based on Ethereum and other smart contract blockchains have even generated new ownership forms that aren’t always the same as cooperative or shareholder equity models. For instance, ownership may be transferred in the form of a token used to offer a service, such as providing liquidity for a trade, and the same token could also be used to manage future network modifications. Participants in any network will be able to own a piece of the products and services they use on a daily basis, according to the grand vision.

Also, read – Web3 is a new approach to engaging your audience

Web3 is an internet-based money layer.

One of the internet’s most significant advances was the ability to make knowledge internationally accessible, inexpensive, replicable, and abundant. These characteristics are diametrically opposed to objects of value, such as money or property, which are rare and difficult to obtain by definition. Bitcoin was the first system to bring scarcity to the internet, in part by resolving the “double-spend” issue that plagued early attempts at digital money for investors in Blockchain. The double-spend dilemma refers to the possibility of using duplicate digital money and spending it in two or more places at the same time. Banks, credit card issuers, and payment processors authenticate transactions to reduce the possibility of double-spending in the mainstream financial world. Decentralized cryptocurrencies rely on a network of miners or validators to ensure that an account does not double spend. Because verification is no longer reliant on a trusted centralized party, this has far-reaching ramifications. Anyone with an internet connection can join the peer-to-peer network and view the ledger. A cabal attempting to undo or censor transactions can be protected by social consensus.

Loved this conversation. The world needs a fair, secure, optimized internet layer. #Web3 won’t reach full potential without it. We must fortify the web’s foundation to support our bright future (5G, IoT, decentralized everything, etc) https://t.co/JxmpTlguQ1

— Jonas Simanavicius (@JSimanavicius) March 18, 2021

The fungibility of individual units is another characteristic of scarcity. Fungibility refers to the ability to exchange one unit with another while maintaining the same value. 1 ETH, for example, is worth 1 ETH. Non-fungible refers to something that is one-of-a-kind. Users can own assets such as art, images, music, writing, gaming objects, credentials, governance rights, and access passes using NFTs. How can an NFT be scarce when I can save it to my desktop with a right-click? Something that matters most is that the blockchain keeps track of who owns what from one account to the next. It enables an artist or a business to establish the “original” and, like the basic problem blockchains answer, prohibit someone else from claiming ownership or “double-spending.” Because NFTs are Ethereum tokens (and are now available on other smart contract blockchains), they are compatible with the rest of the Web3 ecosystem, which is one of the reasons why so many people are excited about them as a mechanism to show digital provenance. They can be divided into smaller pieces so that different people can possess them; they can be used as collateral for other decentralized financial services; they can include perpetual royalties, and they can even be used as the basis of online identity.