What Is Web3 and Why Are All the Crypto People Suddenly Talking About It?

What Is Web3 and Why Are All the Crypto People Suddenly Talking About It?

If you’re wondering what this immersive art installation in Hong Kong that will converted into an NFT has to do with Web3, read on. If you’ve been perusing cryptocurrency forums or video-game news recently—or spying everything from New York Times job listings to zany Twitter threads claiming that the traditional job interview is about to be replaced by blockchain-based “ quests, adventures and courses to prove your worth ”—you might have run into the term “Web3.” The term, obviously, refers to a third generation of the internet. But is it just jargon, the latest shibboleth among people who trade NFTs of cartoon apes for hundreds of thousands of dollars and are already designing their virtual homes in the metaverse? Or is Web3—and the less concentrated version of the internet it represents—something that those of us who thought we were still living on Web2 ought to know about? The answer to both is probably yes. The answers to your follow-up questions are below.

What, exactly, is Web3?

Web3 refers to a potential new iteration of the internet that runs on public blockchains , the record-keeping technology best known for facilitating cryptocurrency transactions. The appeal of Web3 is that it is decentralized, so that instead of users accessing the internet through services mediated by the likes of Google, Apple, or Facebook, it’s the individuals themselves who own and control pieces of the internet . Web3 does not require “permission,” meaning that central authorities don’t dictate who uses what services, nor is there a need for “trust,” referring to the idea that an intermediary does not need to facilitate virtual transactions between two or more parties. Web3 theoretically protects user privacy better as well, because it’s these authorities and intermediaries that are doing most of the data collection.

Of course, this is all an idealized vision of Web3 sketched out by blockchain developers and boosters for the future, so it might not be so egalitarian in practice. One element of Web3 that’s gaining a lot of traction is decentralized finance, also known as DeFi , which involves conducting IRL financial transactions on the blockchain without assistance from banks or the government.

Meanwhile, a number of large companies and venture capital firms are already investing huge sums to build Web3, and it’s hard to imagine that their involvement wouldn’t amount to some kind of centralized power.

What came before Web3?

Web1 and Web2 (more commonly known as Web 2.0) refer to older internet eras. Web1 covers the 1990s and early 2000s, which was more decentralized and had an emphasis on open-source protocols. It was more common during this time to see static pages, essentially sites that you can’t really interact with and aren’t regularly updated. Web2 covers the period from the early 2000s to today, in which Big Tech companies run the most popular hubs of internet activity. Another marker of this era is the rise of user-generated content on galaxy-sized platforms, like YouTube videos or Facebook posts, the stuff that fuels social media. The internet became a place of active participation rather than passive consumption.

OK, but Web3 is a crypto thing, right?

NFTs, digital currencies, and other blockchain entities are going to be crucial to Web3. For instance, Reddit is currently making Web3 inroads by trying to devise a way to use cryptocurrency tokens to allow users to essentially own portions of the communities they participate in on the site. The idea would be that users would use tokens known as “community points,” which they earn by posting on a certain subreddit. The user then accrues points based on how many upvotes or downvotes that post gets from other users. (It’s basically Reddit Karma on the blockchain.) Those points can essentially function as voting shares, allowing users who have made valued contributions to have more of a say when it comes to making decisions that will affect the community. Because those points exist on the blockchain, their owners have more control over them; they can’t easily be taken away and they follow you around. To be sure, this is only one use case, a kind of corporate version of a Web3 concept known as Decentralized Autonomous Organizations, or DAOs, which use tokens to make ownership and decision-making powers more equitable. One example of a DAO is Augur, a decentralized betting platform.

NFTs are also another cornerstone of Web3. They’re essentially one-of-a-kind cryptocurrency tokens; because each of them is unique, they’re typically used as certificates of ownership for virtual objects like artwork or basketball clips […]

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