What is Web3?

The birth of the World Wide Web dates back to 1989, when Tim Berners-Lee, a British physicist and computer scientist, was looking for a way for internationally working scientists at the nuclear research center CERN to exchange information regardless of location. Even then, his vision was to make information freely available through networking and decentralization. Finally, in 2014, the term Web3 was coined by Ethereum co-founder Gavin Wood in connection with the idea of a decentralized Internet.

What does Web3 mean?

Web3 stands for the vision of a decentralized Internet and thus simultaneously describes its next generation stage. While the Internet, as we know it today, stores data on centralized servers controlled by a few, large organizations, Web3 is based on a network of nodes that interact with each other to validate and store information. This principle of decentralized data processing is based on what is known as blockchain technology. The blockchain can be understood as a kind of global, immutable database that enables transparent transactions that cannot be manipulated.

Evolutionary stages of the World Wide Web: From Web1 to Web3

Since its invention in 1989, the Web has already gone through two evolutionary stages.

Web1 refers to the first generation stage, which consisted mainly of static web pages and allowed little or no interaction with users. The purpose of these static websites was to present information and make it available to the public.

Web2 is the second generation of the Internet, which introduced dynamic web pages and social networks, making user interaction an essential component. Web pages no longer consisted of static content alone, but were augmented with valuable contributions by their users. Web2 revolutionized the way people interacted with the Internet for the first time.

Web3 refers to the next generation of the World Wide Web, under which the Internet evolved from a centralized platform to a distributed and self-organizing network with which users no longer merely interacted, but contributed as an essential part of its functioning.

Advantages of Web3

Web3 is often referred to as the vision of a new, better Internet because it produces some notable benefits:

• Decentralization: One of the biggest advantages that Web3 produces is decentralization. Since Web3 is based on blockchain technology and thus stores information in a decentralized manner on a network of nodes, data is not subject to the control of centralized institutions and companies, but remains in the hands of its rightful owners, which means more freedom, self-determination and independence for users.
• Security: Since the blockchain and the transactions logged on it are immutable due to the way they work, the risk of fraud, hacking and data loss is minimized. NFTs, for example, are an unprecedented technology for artists and brands to verify their own products and artworks as such and protect them from unlawful copying.
• Transparency: Transparency is also a key advantage of Web3. Users can track all transactions and actions on the blockchain at any time, which counteracts fraud and corruption.
• Interoperability: Web3 protocols are designed to communicate and interact with each other. This simplifies the interaction of different applications and services that can be used within Web3.
• Innovation: Web3 offers a host of new innovations and business models. NFTs, for example, offer artists a whole new platform to exhibit and sell their art. In addition, ownership of an NFT can be linked to further actions and, like a ticket, entitle the holder to access exclusive offers or closed events.
• Privacy: Since data within the Web3 is not stored on servers of centralized institutions or companies, the user retains control over his or her personal data and can decide that only the most necessary data is released for a transaction or interaction.
• Community orientation: Web3 promotes cohesion and community building, as each individual user is part of the decentralized network and can contribute to its stability. In addition, Web3 provides a platform to collaborate and support each other in a wide variety of ways.

Disadvantages of Web3

However, Web3 does not only have advantages. Like any technology, it also brings disadvantages:

• Complexity: Web3 is based on complex technologies such as blockchain, cryptography, and smart contracts, which can be technically challenging and difficult for many users and developers to understand and use.
• Time Intensity: Since Web3 is decentralized and thrives on multiple nodes processing and validating transactions, these processes are still quite time-intensive at the current time, which can lead to longer waiting periods compared to centralized systems. However, developers are constantly striving to find solutions to this problem and improve transaction speed.
• Regulation: It can be difficult for regulators to monitor the platform and ensure that users are acting in compliance with the law due to decentralization.
• Security Risks: Although blockchain technology is known for its security, there are still security risks, such as hacks, attacks, and flaws in smart contracts that can lead to financial losses.
• Incompatibility: Web3 protocols may not be compatible with existing Web2 technologies and platforms, which can make it difficult to integrate into and interoperate with existing systems.
• Energy Intensity: The algorithms which many blockchains are still based on today are very complex and therefore require a lot of processing power, which is why a lot of energy has to be expended to solve them. Here, too, new solutions are constantly being developed to keep energy requirements as low as possible. However, there are already some blockchains that are based on newer, energy-saving algorithms, such as Ethereum. Since the introduction of Ethereum 2.0 in the fall of 2022, approx. 99.98% of the original amount of energy has been saved (Source: https://www.theverge.com/2022/9/15/23354619/ethereum-cryptocurrency-merge-energy-electricity-greenhouse-gas-emissions-reduction).

Which applications are based on Web3?

Probably the best-known applications based on Web3 technology to date are cryptocurrencies and decentralized finance (DeFi). However, NFTs, which have already been mentioned several times, have also visibly gained in popularity since 2021. Beyond that, however, other applications exist, such as decentralized autonomous organizations (DAO) or the Metaverse.

How do I get started with Web3?

If you want to dive deeper into Web3 and NFTs, the first step is to set up a so-called wallet. You'll also need it to authenticate yourself to various Web3 applications. What exactly a wallet is, the different types available, and how to set one up can be found in our blog post What is a so-called Wallet?.