What is Web3? The Sound Bite Definition
Today I want to explain why Web3 is the most exciting thing since, well…Web1 and Web2.
But I don’t want to bend your brain with technical details, so let’s start with the simplest definition possible:
Web3 is the public blockchain-powered internet.
That’s it — an easy-peasy sound bite.
What is Web3? The Aspirational Definition
Web 2: Users are the data, corporations own the platform, and the code is closed.
Web 3: Users own their data, contributors own the platform, and the code is open.
- Naval (@naval) October 13, 2021
Whatever you say Web3 is, dollars to donuts you’ll find people who will say you’re wrong. (Or lob personal epithets at you, if you’re on Twitter.)
But just like a startup company may adjust day-to-day operations, the vision and mission still steer the ship. That’s why I like Naval’s definition — it’s a guidepost for where we want to go.
What is Web3? The Contextual Definition
Web 1: Read Only (early “online brochure” web sites)
Web 2: Read/Write (user-generated content: forums, reviews, & social media)
Web 3: Read/Write/Own (add an ownership layer via blockchain verification)
What I love about this definition is that is also provides context for Web3 compared with Web1 and Web2.
And it highlights the importance of the emerging ownership layer, which is key.
As we watch this space, it’s important to keep in mind that the technology is being built, battle-tested, and refined as we live and breathe. If history is any lesson, we’ll look back in ten years’ time and find that our answer to “What is Web3?” was far too short-sighted.
But There’s Something Important Missing…
Smart techies can explain Web3 six ways to Sunday, which I love.
But if our goal is to onboard our neighbors, colleagues, and techno-phobic uncles — we need something more relatable.
Something that answers the question “Why should I care?”
Web3 Benefits, in Plain English
I humbly present a list of ten benefits that Web3 experimentation has afforded me as of today, based on real-world, hands-on experience. No fancy abstractions, no diving into how the plumbing works. Just the honest truth from a first-person point of view.
Here we go.
- Speed. I love that I can verify my blockchain asset ownership practically instantly, no humans involved.
- Efficiency. Once I onboard assets like Ether via a centralized exchange (e.g. Coinbase), I can then buy and sell with third parties without having to disclose sensitive personal or financial data with each of them.
- Security. The more blockchain-based transactions I can execute, the fewer third-party databases out there access or store my sensitive personal and financial data. This means I am reducing my risk of hacks or leaks.
- Equality. Because my personal details are hidden, I cannot be discriminated against in Web3 transactions. OK, stop for a second. This is HUGE. Nobody can see (or assume) my: Name, Gender, Ethnic or racial background, Location, or Credit Score.
- Digital Collectibles. I’ve been collecting digital art without having to give up any wall space, and it’s just…fun! Decades ago we collected baseball cards and stamps, and eons ago we probably collected oddly shaped bones to display in our caves. A nice NFT bonus is that more of the purchase price goes to the artists, since Web3 platforms don’t have as high of a take rate as Web2 platforms.
- Fundraising. If I want to donate using Web3, I just connect my wallet, specify the amount, and boom, it’s done. There are non-profits out there who are using The Giving Block where you can quickly and easily transfer crypto donations with the click of “connect wallet.” Organizations can also engage in quick fundraising through a crypto platform like Juicebox.
- Investing. I’m an adult and can invest my hard-earned money on anything I choose (at my own risk of course)! Many traditional investments are only available to “accredited investors” who must meet stringent income and net worth requirements — but what about the rest of us? Related, when public companies are listed on the stock exchange, all the private investors have already struck the best deals! In the crypto/Web3 world, I can participate in token sales before they are listed on public exchanges. Disclaimer: Always do your own research and assess risk.
- Membership Benefits. My NFTs afford me online benefits via blockchain verification. These include: access to special community perks, access to special sales with partner projects, and sometimes free airdrops. They function like an instant digital access pass or loyalty card.
- Governance. I get to vote on issues pertaining to a community I belong to. My crypto token can be verified using a platform such as Snapshot, which guarantees I am a verified token holder/eligible voter. The more important note about this is that it is done anonymously (no personal data, just wallet address), autonomously (no humans required), and at scale (the platform can handle thousands of participants/verifications). Wait…you mean efficient, anonymous voting is possible? *Ahem* Yes.
- Learning. I can’t emphasize this enough. These are new technologies that are in the early stages. The more you use Web3 platforms, the more you can start to see how they might mix-and-match to create new ways of interacting on the internet.
And that last point brings us to the next section…
Web3 Benefits, in Hopeful English
Web3 is aflutter with builders and visionaries, because they see something that most of us don’t yet. So let’s have some fun exploring optimistic possibilities for Web3.
The list below is currently limited by my imagination, so we’re just scratching the surface here. For now, here are ten ideas that may materialize in time:
- Self-sovereign identity (SSI) I own my online identity (or identities). Compare this with all of our sensitive personal data sitting in hundreds of third-party databases, being sold to who-knows-who. SSI means you own your verifiable credentials, and in the future may extend to managing multiple discrete identities for different uses.
- Data sovereignty. My data are an extension of my sovereign self. This includes identity but extends beyond into usage and behavior data. I alone can consent to third-party harvesting and usage. Onerous terms & conditions agreements will be abolished. I retain the right to own, control and sell my data as I see fit.
- Interoperability. I pay you in whatever cryptoasset I choose, and you receive payment in whatever cryptoasset you choose. The technology takes care of all the swaps and fees in the background. Keep in mind that cryptoassets can be pegged to any fiat currency, equity, or commodity asset, so I see this evolving to encompass a greater percentage of global capital over time.
- Positive Interest Rates. I can earn true, market-derived interest on my cryptoassets that yield positive real (inflation-adjusted) returns. I will be rewarded for saving, and therefore am less apt to speculate. Obviously this requires that Decentralized Finance (DeFi) regulatory oversight is clarified.
- Assets = Access. My blockchain token (whether it’s an NFT or other blockchain token) will act as the “key” to rewards, including but not limited to: a) Affiliate programs. b) Referral programs. c) Loyalty reward programs. d) Membership benefits “access pass.”
- Tokenized Culture. I enjoy culture as an asset class. NFTs started with digital art, but photography, video, and music have arrived. I think we are approaching a digital asset-facilitated cultural renaissance. Who will be this era’s daVinci?
- Investing. Because ownership is a foundational tenet of Web3, finance is a natural extension of that. Hence the popular “Be Your Own Bank” idea. Today, access to many opportunities are restricted to high net-worth requirements of “Accredited Investors.” Decentralized finance (DeFi) opens up many more possibilities that don’t have these exclusionary rules and point to a more equitable future. New investing models will arise, including decentralized investment clubs like SyndicateDAO.
- Collateral. I can post cryptoassets (including tokens and NFTs) as collateral for loans. I can avoid any financial discrimination via the blockchain, and help bring an end to what I call The Tyranny of Credit Scores. I’m confident someone will design reasonable rules around volatility and value to make this possible.
- Governance. Voting and governance can be done equitably and verified at scale. Web3 technologies are fundamentally changing how humans organize themselves. You can read more about ConstitutionDAO for a sample extraordinary feat. I think the question of the 2020s will be: “Representative democracy was established when you had to ride horses to your nation’s capital and send mail via the Pony Express. We have the tools for a direct democracy, so what gives?”
- Gamification. Of everything. If most assets are tokenized and fractionalized, then we can turn practically any interaction into a game that incentivizes behavior. Token rewards for referrals, loyalty, purchases, actual gaming, learning, etc. Imagine if part of your earnings were based on quest-based tasks.
Obviously not a comprehensive list, but as these technologies converge the possibilities are infinite! Are you curious enough to get started? You may want to read “Getting Started in Web3: DAOs, NFTs, and IDOs.”
A Couple of Spiky Topics
When it comes to Web3, decentralization is a hot topic. Some people feel it either isn’t, or can’t be, sufficiently decentralized. You can find dozens of examples on either side of this discussion. If you’d like a peek into the issues, I think Packy McCormick’s “The Web3 Debate” covers the highlights.
While it’s an important discussion, it’s beyond the scope of the points I want to make here.
And a related point of clarification. Today Ether is the most common economic unit of value for Web 3 activities, but please consider me “Layer 1 agnostic.” That is, I’m impartial as to whether future Web3 rails are Ether, Solana, Bitcoin, a combination therein, or something else entirely. The space is very much “under construction,” so I keep an open mind about the blockchains that’ll ultimately become the backbone of Web3.
What’d I Miss?
Don’t worry, I’ve got a “Web3 criticisms” list that will one day make its way here, too. Gas fees, poor UX, etc. Believe me, I know.
In the meantime, are there real-world Web3 benefits that I missed? Feel free to share those with me on Twitter. If I get enough goodies I’d like to append a special section here to showcase them.
Did this explanation help make Web3 more relatable? Find me on Twitter and let me know. 🙂
If you are technically minded, I recommend Edge and Node’s “Defining the Web3 Stack” for an overview of the tech infrastructure.