Web3

The term ‘Web3’ was coined in 2014 by Gavin Wood, co-founder of Ethereum and developer of Polkadot. Web3 is used to refer to next-generation digital innovations and their applications on the internet. Web3 is often referred to as a phase of the internet. Its evolution has in fact been marked by a succession of eras. The first era, Web1, lasted from 1990 to around 2005, and the following, Web2, from 2005 to the present. Web3 therefore represents the phase of the internet we are about to enter. The transition to the new era is not yet complete – at the moment Web3 exists only as a set of shared ideas about the future of the internet and the first experiments with it. Just like the actual Web3, the meaning of the term itself is still under construction. The definition of Web3 has wide boundaries and is used to refer to many different aspects, all united by the specific technology of this internet phase – the blockchain. Web3 aims to put blockchain at the heart of all existing technologies, from the internet to artificial intelligence and the Internet of Things.

The internet phases differ not only on a temporary basis. Each phase is also characterised by different users’ interaction opportunities and distribution of power. In Web1, internet users could only gather information from the web, where each site was created and maintained by independent developers, or companies and academic institutions. Web2 enabled users to publish their own content, giving way to user generated content, mainly via social networks. In this phase, Internet rules are dictated by large centralised companies such as Amazon, Google and Facebook. Web3 represents a synthesis of the two – it combines the absence of mediators of Web1 and the advanced technologies of Web2. 

The key themes of Web3 are therefore decentralisation and content ownership. Web3 represents the golden age of content creators and artists – everything you produce on the Internet is yours and you can decide how and whether to monetise it. The big limitation of Web2 is precisely the impossibility for creators to make money and receive proper recognition, as this goes against the interest of centralised platforms. Changing the Web2 economic system is possible thanks to the blockchain and its products, specifically:

  1. NFTs a) They make content on the internet scarce and thus give it a value b) They can help track content ownership on the blockchain and establish royalty payments
  2. Social or fan tokens They help support creators and potentially make money
  3. DAOs They allow creators to have equal authority on the platforms where they create and distribute their work

In the Web3 phase, the internet will be owned directly by the people who create its value and will be managed using blockchain tools. This is precisely why we talk about an ownership economy. Cryptocurrencies are the pioneers of this kind of economy – their value doesn’t depend on a central authority, but on the people who own them.

The development of the Web3 coincides with a particular historical moment. Like all revolutions, it arises from a need and a desire to solve a fundamental social problem – the inequalities caused by the current economic system. The pandemic has seen the widening of the gap between people who had always earned a lot of money and continued to do so, and, on the other hand, people who lost their savings due to ever increasing living costs. Since these economic models cannot be sustained any longer, people are looking for an alternative in cryptocurrencies and the opportunities opened up by the blockchain, towards the Web3. The change in the economic model also affects the business model. Web3 tools help people to work on a cooperative and collaborative basis.  

Web3 has also received some criticism, in particular with regards to its decentralisation aspect, which is seen as a weakness. Some observers believe that in this kind of Internet it would be very difficult to counteract illegal actions. According to others, the decentralisation of Web3 risks becoming merely ‘cosmetic’, and instead the internet could end up being controlled by venture capital companies that are investing heavily in this kind of projects. 

To complete the transition to the next version of the Internet, Web3 must respond to these criticisms by demonstrating that decentralisation is both feasible and beneficial. The Internet as we know it today, with its strong imprint of centralisation and monopoly of the tech giants, has a very strong impact on our culture and everyday life. Just think of the importance of social networks, which over the years have built up a solid infrastructure, an ability to evolve and a powerful narrative. Web2 and Web3 are likely to coexist in the immediate future; whether the tools and principles of Web3 will prevail in the long term will depend on how much the blockchain technology will be able to overcome the limits of Web2. In any case, Web3 has a good chance of success – many young talents and enthusiasts are training and working for its development, and getting funding from companies and individuals, as well as from public bodies such as universities. Finally, as we have already mentioned, the historical moment requires and pushes us to shift paradigms.

Correlated words

Cashback

Cashback involves a partial reimbursement of funds spent in a transaction.

Bitcoin

The longest-lived cryptocurrency on the market and the first application of blockchain.

Wallet address

The string of characters that identifies a cryptocurrency wallet.

Stablecoin

Cryptocurrencies pegged to the price of a stable asset such as a fiat currency or precious metal.

Custody

Managing one's wallet by knowing its private key

White Paper

Technical and informative document used by cryptocurrency projects to present their technological proposal.

Wallet

Software that allows you to send, receive and store your cryptocurrencies.

Virtual Currency

Term used in legislation to define cryptocurrencies.

Fiat Currency

Legal tender, i.e. the official currency adopted by a government.

Token

Digital unit of value based on a third-party protocol.

Satoshi Nakamoto

The pseudonym used by the creator or group of developers of Bitcoin.

Open-source

Open-source software is public and available for anyone to reuse.

KYC

Identity verification procedure required by European regulations for exchanges.

Hard Fork

A division of the blockchain due to the incompatibility of the new version of the protocol with the previous one.

Hot Wallet

A cryptocurrency wallet connected to the internet.

Halving

The halving of the reward given to miners for each validation, every 4 years.

FinTech

A sector that combines finance and technology, where companies develop technologically innovative financial services.

Cryptography

The branch of computer science that studies secure communication methods.

Cryptocurrency

Virtual currency based on cryptography and blockchain.

Coin

A cryptocurrency that is natively based on its blockchain

Public Key

Cryptographic code that identifies a wallet on the blockchain.

Private Key

Cryptographic code that gives access to a wallet.

API

Tools that simplify the development of apps and web services.

Altcoin

Cryptocurrencies that followed Bitcoin as alternative solutions.

AML

Anti-money laundering regulations prevent illegal activities on centralised exchanges.

Algorithm

The procedure applied to solve a problem.

Exchange

Services facilitating the purchase and sale of digital assets based on daily market prices.

Financial Market

The financial market is a regulated space where financial securities can be bought and sold.

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