Web 3.0 Simplified Part 1

Sepehr Vafaei

Before jumping into web 3.0, first, let’s have a quick review of web 1.0 & 2.0 for those not familiar with those concepts.

As you read more, pieces of the puzzle come together and the big picture will reveal itself. It’s ok to be confused at first.

Web 1.0 refers to the internet between 19991 and 2004. That was the era of static pages when with no interaction. Web 1.0 was a bunch of hyperlinks and documents like one big Wikipedia. Users were just consumers.

Web 2.0 is the internet between 2004 and now when pages can get data from users both directly and indirectly serve better content and use it for targeted advertising. It lacks privacy and is centralized.

Web 3.0 is decentralized and achieves this by blockchain technology. Blockchain uses cryptography in a new innovative way to provide privacy. Both storage and processing are decentralized. Data structures are distributed and decentralized in web 3.0. 

Blockchain introduces a completely novel way of saving and processing data, building on the idea of peer-to-peer technologies which are not a new thing but the blockchain is taking it to a new level. 

In a blockchain, network security is achieved by incentivizing Network actors with a network token. Cryptocurrency is essential because the creator economy needs some sort of payment and banks are not an acceptable solution. It also provides the incentive for people to provide the computing infrastructure that makes the whole thing possible. A cryptocurrency is native to a blockchain but a token uses another blockchain as infrastructure.

So far there is a top-down approach like a pyramid for handling agreements where the sides go to a legal entity in case of problems. Blockchain provides a new way of managing society. DAO is arguably the most important result of blockchain technology. DAO stands for Decentralized Autonomous Organization. For example, Bitcoin is run by a DAO where a network of actors and users have control instead of just one legal entity. Those providing service to keep the network going will be rewarded by Bitcoin cryptocurrency.

A critical idea in DAO is smart contracts that are not actually smart. A smart contract is a piece of code that defines who is allowed to do when and what and this piece of code runs on the distributed and peer-to-peer network and is automatically enforced when the majority of network actors agree that the predefined conditions have been met. This means that we are radically cutting the transaction costs of monitoring auditing and enforcing agreements.

Right now if the entity or person with more tokens has more control compared to persons or entities with a lower quantity of tokens when it comes to voting for changes to a blockchain but this doesn’t mean that one entity or person can control the blockchain.

Decentralized apps on a blockchain are called DApp. There are different blockchains like Bitcoin, Ethereum, Cardano, and so on. Let’s for example consider Ethereum blockchain. Gas fees are paid to use a blockchain and reward service providers. A web application needs some back-end code that is deployed to a centralized server like AWS. But for a decentralized app on the blockchain, your backend code is contained in a smart contract usually written in the solidity language which is just an application that lives on the blockchain that can govern the behavior between multiple accounts.

Unlike web 2.0 the end-user owns all of their data and a username and password are not needed. The end-user has a public wallet address that can receive payments and a private key that can sign transactions to send payments to someone else.

To interact with decentralized applications, you need a wallet like Metamask. It lets you interact with the Ethereum blockchain. It allows users to access their Ethereum wallets through a browser extension or mobile app. Metamask was just an example. It is one of the most used wallets.

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Resources (attributions):

https://en.wikipedia.org/wiki/Web3

https://ethereum.org/en/developers/docs/web2-vs-web3/

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