By IT Brew Staff
3 min read
Definition:
Not to be confused with the third Spider-Man sequel, “Web3,” or Web 3.0, describes a version of the internet with no centralized authorities—such as banks or tech companies—handling interactions and transactions between users. Instead, everything from gaming to payments happens on a decentralized, peer-to-peer basis, often supported by the blockchain.
Key takeaways
If Web1 refers to a read-only internet (the World Wide Web of the 1990s) and Web2 describes an interactive, more social space (an internet dominated by the likes of Google and Facebook), the third iteration decentralizes information into public ledgers, or blockchains, where records are stored across a network of computers, with no server or vendor holding all the data.
Gavin Wood, co-founder of decentralized platform Ethereum, coined the concept of Web3 in a 2014 blog post, concluding that “entrusting our information to organisations in general is a fundamentally broken model.”
By design, Web3 communication takes place over encrypted channels and between pseudonymous identities—with no traceability-enabling components like IP addresses, Wood wrote.
Some Web3 components
A digital agreement stored in the blockchain is often referred to as a smart contract. Those smart contracts support borrowing and lending in decentralized finance (DeFi) applications.
Today Ethereum, a blockchain-based network, allows developers to build and deploy a decentralized app, or dApp, via smart contracts and without third-party interference.
Broadly speaking, unique digital objects known as tokens also represent access and ownership in Web3 ecosystems. Online wallets decentralize identity and carry out transactions. In theory, that allows for a broad range of applications; for example, users can use their tokens and wallets to purchase and sell virtual “land” and digital collectables.
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In 2022, Gartner saw tokens and cryptocurrencies facilitating new Web3 economies, like metaverse applications. In a Web3 setup, users “own their data, identity, content, and algorithms and participate as ‘shareholders’ by owning the protocol’s tokens or cryptocurrencies. That ownership shifts power and money away from centralized Web 2.0 ‘gatekeepers,’ such as big tech companies and governments,” Gartner wrote then.
Where is Web 3.0 today?
While metaverse applications have not gained mainstream adoption and interest in non-fungible tokens (which link assets like images and music to a digital token) remains uncertain since a period of hype in 2021, Web3 has shown signs of continued life, including interest in decentralized finance and stablecoins—a digital currency tied to a fixed asset like the US dollar. (The US Treasury predicts a market cap of around $2 trillion for stablecoins by 2028.)
The lack of centralized oversight—seen as a strength by its supporters—leaves the technology open to cyberattack. Web3 security service provider Certik found that attack vectors like wallet compromise and phishing led to a total of $2.4 billion across 344 incidents in H12025. Web3 offers some tantalizing possibilities for the future, but also carries some risks.
