There is a lot of misleading information about Web 3.0 out there. For example, one author compares Web 2.0 to Web 3.0 by comparing various apps in this graph:
However, there is a signiﬁcant problem with this approach.
Let’s start with the Brave browser.
While it is a great browser, it is not a Web 3.0 app. It is built using the conventional internet infrastructure, and the only Web 3.0 part of it is that they threw a cryptocurrency on top of it. The developers don’t actually remove anything from the bottom (like swapping the database for blockchain).
So Brave is a conventional browser from the bottom up. It shows Google Ads, they can’t remove Facebook Ads, and you are still using the Google search engine. Brave is not a Web 3.0 browser.
Other Web 3.0 Apps
Another example is the comparison between Skype and Experty. The problem with this comparison is that Skype initially started as a decentralized protocol. Earlier versions of Skype used a hybrid peer-to-peer and client-server system. Things changed slightly when Microsoft bought it.
However, the Experty app isn’t fundamentally different. Skype could have been a complete peer-to-peer protocol and would have stayed this way if Microsoft didn’t buy it or if it would run on Web 3.0 architecture.
When it comes to EOS, it is an excellent DApp (decentralized app) development platform. But does it replace operating systems like Android and iOS? Not at all. So this comparison is totally wrong.
Other decentralized apps mentioned on that graph are great. However, it’s just the tip of the Web 3.0 iceberg, a tiny piece of the pie that doesn’t change the underlying infrastructure. Web 3.0 is all about transforming the Internet, not hiring blockchain developers to change some elements on the top, and creating more and more DApps.
In this article, we would like to take a more profound look at Web 3.0 and why now is the time to prepare your business for it. If you would like to dig deeper, you should look at the academic research on this topic.
Why Do We Need Web 3.0?
The problem with Web 2.0 is that if you look at the majority of companies in Web 2.0 space, there is no room for competition. These major companies have:
- The most money
- The best talent
- The most compute power
- All the data and resources
These companies created a shrinking economy with the winner-takes-all mentality. As a result, they have given birth to the unsustainable digital distribution model we see today. Another big problem with Web 2.0 is that customers have lost control over how these large companies collect and use their data.
Centralized actors are now the Internet’s bedrock because they provide the Internet’s trust.
As we now know, IBM was not the company to monopolize the Internet because they failed to realize that mainframes wouldn’t build it. It was primarily Google, Microsoft, and Amazon that came to dominate the Internet.
They created “the Cloud,” which is another way to call Big Tech’s servers.
To understand the critical differences between the two, here is a quick comparison of Web 2.0 and Web 3.0:
Key Characteristics of Web 2.0
- Few players dominate the market.
It is centralized and controlled. Anyone can be removed/ banned without any explanations. Imagine Google removing your website from search results! How hard will it be to get in touch with support and ﬁx it?
- Tech giants censor it.
Web 2.0 developer tools are company-made. As a result, the data structure of these tools is composed of Big Tech’s databases. It is the only standard for data structures.
- Network platforms are private by default.
The same people own the servers (Amazon, Microsoft & Google make up ~70% of this market).
The only decentralized part of Web 2.0 is TCP/IP structure and Clients (hardware) that actual people own. Anyone can download and run TCP/IP. You actually use it every time you use your computer.
So how can a new company enter this space that does not allow for almost any competition?
The answer is Web 3.0 – a decentralized network.
Key Characteristics of Web 3.0
- It is impossible to censor
- There is no ownership or centralized power.
- New entrants are unlimited and do not have to ﬁght with giants for their space.
- More competition, lower barriers, and easier entry for everyone.
- Web 3.0 developer tools are community-made.
- Network platforms are public by default.
To put it short, Web 3.0 accomplishes what the Internet was initially built for: anyone can participate and generate sustainable income without being censored or overpowered by more prominent players.
ANYONE can start a company with Web 3.0, sustain it, build blockchain apps, and make money to live on. With Web 3.0, you don’t have to be a major company in Silicon Valley.
Centralized vs. Distributed vs. Decentralized Systems
The Centralized System of Web 1.0
We would like to think of a centralized Internet as Web 1.0. You would put a server on the Internet, that server would host a website, then you would have all the users connecting to it. The issue with this structure is that if your server went ofﬂine, that would cause your entire website to go ofﬂine. It was a massive issue at the time.
In summary, a centralized system is based on a single server, which makes it easy to publish something, but difﬁcult to scale and interact. It also has a single point of failure.
The Distributed System of Web 2.0
Distributed system Web 2.0 took us from centralized to distributed systems. For example, Facebook has data centers around the globe. Each of these centers maintains a copy of Facebook data. Therefore, if one of these data centers goes ofﬂine, Facebook will still be completely functional, and the users won’t notice any disruptions. In short, distributed systems spread computation across multiple nodes, making it possible for the system to be both centralized and distributed simultaneously.
The Decentralized System of Web 3.0
Decentralization is what we are building with Web 3.0. There is no centralization because every node can maintain a copy of the data. Every node has the power to validate all of the data. As a result, each node can validate everything that any person has previously put on the network. There is no single node dictating to others what to do; the system is based on millions of individual servers spread all over the world.
A decentralized system can handle demand and failures better. Why? Because all of the data that goes into decentralized applications is time-stamped. That way, if there is anything put into the applications, it’s validated by every participant in the network.
Web 2.0 vs. Web 3.0 for Application Development
Application Development in Web 2.0
However, to create an app, you will need all the other developer tools: microservice maps stack and the TCP/IP layer stacks of all the higher-level protocols. Those are the developer tools that developers have to learn even though they do not specialize in them. Private companies almost always own those.
We can conclude that in Web 2.0, the developer tools are almost always centralized, and the most popular ones are the APIs offered by Big Tech. As a result, you have network platforms that are private by default.
What does it mean for you?
It means that if you want access to any of these developer tools, you will need a complex set of permissions to access them. Private companies issue these permissions and usually charge you for them.
Web 3.0 Application Development
In a few words, when we move over from Web 2.0 to Web 3.0, there is one tiny but crucial tweak that makes all the difference. The tweak is swapping the database with a blockchain as the underlying data structure. Everything changes from there.
How is blockchain different from any other database?
If you are new to blockchain, we will explain it in a few simple words. Blockchain is different from every other database because:
- Every data input is taken in as “true.”
- Everyone agrees on it.
- There are never any discrepancies.
- You cannot reverse it.
The result? You never have to worry about all the cybersecurity measures that come with the underlying data structure of centralized companies. You don’t need to implement ﬁrewalls. Load balancers become irrelevant. Usernames and passwords are not as important anymore because the data structure is fundamentally different. For blockchain and Web 3.0, it doesn’t really matter who you are (unlike Web 2.0 with usernames and passwords).
What happens at the server level in Web 3.0?
In Web 3.0 and blockchain, instead of having server farms run by Big Tech with all this complex cybersecurity infrastructure, you can have regular users in their homes with single servers that run a database. That’s what you can build your apps on.
This server structure would never work in the past. Because if you were using a traditional database, my power could go down, for example, and bring your app down. You also had to trust me that I won’t tamper with your app data and if I have one server in my home and your app users grow to the point that you need more servers, your app shuts down. That’s why the big cloud players always win this race.
Once you swap the database for blockchain, you no longer need the Big Tech Cloud. With blockchain, we have clients (hardware) talking to servers and can even have a client-to-client model. As computers get more efﬁcient and can store more and more data, blockchain and Web 3.0 allow you to experiment with various models. All these models are decentralized from the bottom up.
Challenges with Decentralization and Web 3.0
Let’s imagine that you are building a DApp (decentralized application) on Web 3.0. You no longer have any developer tools that offer peer-to-peer value for the Web 2.0 user base. Why? Because, as we explained above, all of them belong to big tech. So when you swap out the data structure with the blockchain and the servers begin to be decentralized, you no longer have a compatible place with all of Big Tech’s developer tools.
As a result, you can’t connect your decentralized app with Facebook APIs, and you can’t use Microsoft Ofﬁce on it… The problem with this is that nobody will ﬁnd your app because not everyone has a Web 3.0 accessible computer (e.g., a blockchain wallet). It is a central problem with Web 3.0. You can build all these apps, but they will be disparate and separate from the rest of the Internet.
If you were to look at Web 3.0’s developer tools, you would realize that anyone can make the same apps available on Web 2.0: ERPs, Ofﬁce suites, decentralized search engines, and App Stores (DApp Stores). You can host them on a decentralized cloud – client to client or independent data centers running the servers.
The story of Blockstack
For example, Blockstack had an app as good as Microsoft Ofﬁce or Google Docs. However, everyone still uses Microsoft Ofﬁce.
One of the reasons why Blockstack’s app failed is that every network in the traditional internet infrastructure is private by default. So it needs peer-to-peer value to be offered in the developer tools you are using. In other words, the copycats of existing Web 2.0 apps will have a hard time catching up. They would need to capture the user base of the incumbent developer tool for the copycat to gain mass adoption. It is the principal disadvantage of DApps. However, if they get over this hurdle, we will start realizing the beneﬁts of the decentralized Internet.
Once we have enough developer tools to attract more users than Web 2.0, it will revolutionize app development. Every single developer tool in Web 3.0 is public by default. So everyone can use them unconditionally without permission from companies and without paying Big Tech. What’s more, Web 3.0 will eliminate these ever-changing algorithms that control what people see (think Google updates and their impact on SEO). As a result, you will be able to access all the Internet resources at once without any weird algorithms, usernames, or passwords.
Web 3.0 and decentralized finance
Let’s take decentralized ﬁnance as an example. In Web 3.0, your bank, your investment platform, and your cryptocurrency exchanges are compatible. They can interact with each other thanks to the trust levels (the underlying data structure is blockchain). Therefore, you will have a truly all-in-one platform with transparent rules without nefarious companies writing algorithms to affect users. The economic model of this decentralized Web 3.0 returns all the proﬁts to the users and developers. There are no actual companies to take a piece of the pie.
It’s a genuinely free Internet. It’s freedom for all without destroying the economic model of the people who build on it. Quite the opposite to destroying, it helps people grow by giving away things for free.
At this point, we are still quite far from Web 3.0 because not many people understand it. All these centralized companies have everything to lose from people moving to Web 3.0 solutions. The battle between centralized and decentralized Internet is just starting. You can be at the front of it.
Web 3.0 and Opportunities for Businesses
The blockchain is a decentralized ledger. It allows users and other computers to verify the records via cryptographic veriﬁcation of information and its reliability, immutability, and security. So, whether this is hype or not, blockchain is an excellent tool for producing a transparent record that can not be edited and, at the same time, reach a consensus in a group of anonymous entities.
Transparency and immutability make the blockchain attractive for every digital transaction that requires veriﬁcation of data integrity and business logic. Anyone anywhere in the world can ‘audit’ a public blockchain by entering any transaction hash into a blockchain explorer.
But what does it mean for business?
Some Use Cases for Web 3.0 and Blockchain
Triple Entry Accounting
Forget smart contracts. We will not talk about them in this article because blockchain offers a much more critical invention that everyone missed. Triple-entry accounting is the most disruptive discovery in the past ﬁve centuries. Yuji Ijiri created it back in 1989. Don’t worry if you have never heard of him. His book, Momentum Accounting & Triple-Entry Bookkeeping, has a total of 12 (!!!) reviews on Good Reads. So you’re not alone if it’s your ﬁrst time learning about it.
Everyone missed this invention because it straddles two equally poorly understood ﬁelds: accounting and cryptography.
What can you do with triple-entry accounting?
E2E voting systems
E2E (end-to-end veriﬁable voting) means that everyone in the entire population, down to the individual voter, can verify and trust that the results are accurate. There are multiple E2E systems in use today. For example, Helios, was developed by Ben Adida of Harvard’s Center for Research on Computation and Society. They already use it on a small scale for campus-wide votes. You can call these alpha tests.
What about voting on the Internet?
That’s where blockchain and Web 3.0 come in. Suppose you combine an E2E voting system with the efforts behind decentralized identity and reputation systems. In this case, you will get an E2E distributed voting, too, aka “Internet voting.” Some projects, for example, the Cicada or decentralized Digital Identity consortium, aim at scaling E2E distributed voting and promoting mass adoption.
Let’s imagine you have a small company that we’ll call XYZ. The business is booming, and you’ve got 10% of the total shares, say a million shares of XYZ stock. You think you do. You’ve got an ofﬁcial-looking document that states you own a million shares. It has a stamp and looks quite legit.
Let us tell you that you don’t really own a million shares of your stock. They were issuing double shares or cooking the books. How is this possible? Today’s double-entry system has a security problem to give you access to their books that hide behind the corporate ﬁrewall.
Triple-entry changes all that.
We can issue stock, and you can verify your stock against the blockchain. You don’t need to see their books to conﬁrm that you have 10% of the total shares. You can check the chain, and notice that there were 10 million shares issued, and you own a million. Hence, you have 10% for real.
Triple-entry accounting might not prevent them from completely cooking the books. But it takes us closer to stopping lots of ﬁnancial fraud that’s happening today. With triple-entry, you’ll be conﬁdent that you didn’t get double-issued stock.
Track and trace in manufacturing supply chains
Blockchain and Web 3.0 for traceability
In this exclusive interview, IBM’s Bridget van Kralingen talks about a famous test, where doing a traceback with a conventional technology took more than six days. IBM blockchain technology reduced this time to a couple of seconds. Since then, IBM has initiated the IBM Food Trust using blockchain technologies. While some argue that it isn’t really a blockchain, we can safely say that whether or not it meets a speciﬁc criterion, blockchain-based technologies can help with food traceability in these critical areas:
- Food safety and recalls
- Regulatory compliance
- Food fraud
- Social issues
- Consumer information
With blockchain and Web 3.0, product manufacturers and raw material producers can easily prove the origin of their products. In the meantime, all supply chain logistics retailers and vendors are conﬁdent in the quality of products they deliver to consumers. Blockchain offers time-stamped, traceable records of goods movement. As a result, it can drastically improve food recall processes.
Safety recalls are a significant issue not only in the food and beverage industry. It is a common problem in the automotive industry and is very costly to manufacturers. Blockchain solves this problem. It helps companies identify vehicles with defective parts and issue a recall with an accurate scope. You can then track the production phase that caused the defect with the network ledger.
We can use blockchain to track materials in the mining value chain, literally, from the blocks to the concentrate to metal (e.g., gold bars). The ﬁnal customer can see the stepwise values to verify the origins of the material.
Most mining companies’ value chains are fragmented, with transactions spreading across many parties. So the transparency that blockchain can provide to JV partners is invaluable.
Intellectual Property Protection
Music ﬁles and other copyright-protected content
We won’t talk about NFTs in this article as many authors out there already cover this topic. However, there is a less general application of blockchain technology when it comes to intellectual property. And it’s in the music industry.
The traditional copyright protection platform lacks security and makes it costly to register your work. We knew about the shortcomings of this system for many years. The 2018 Music Modernization Act (MMA) addressed some of them, but these amendments are insufﬁcient.
Blockchain offers decentralized storage of information to safeguard against tampering. It stores the data chronologically, and everyone on the blockchain can verify it. As a result, it creates a high level of transparency. Moreover, with digital signatures and private-public key cryptography, users don’t have to reveal their identities. Pseudonymity is another essential feature of blockchain.
Features of a Blockchain-Based Copyright Register
- Provides users and right holders with reliable and detailed ownership information.
- Allows right holders to tokenize rights and works.
- Allows right holders to control the usage of their works.
These are just a few examples of real-life use cases of Web 3.0 and blockchain. The opportunities are endless. It is not surprising that many businesses are adopting this technology in one way or the other to cut costs, automate, protect their data, reduce failures and eliminate errors, and much more.
Web 3.0 has both a technical side and a conceptual side. When we refer to the concept of Web 3.0, it is a vision for what the future looks like in terms of applications that are scalable, secure, and interoperable that leverage the blockchain and p2p technology to co-create value in decentralized networks.
Imagine a place where people can connect, communicate, transact, and collaborate without interference or unnecessary interruption from Big Tech. A place where everything is open source, where developers and businesses can build applications directly on top of the protocol.
This is Web 3.0.
Web 3.0 is not just a bunch of technical improvements. It’s an entirely new way of interacting with one another through technology. Consequently, it revolutionizes the way we do business and use the Internet.
The ﬁrst two versions (1.0 and 2.0) have been about replicating old media in digital form online; Web 3.0 aims to facilitate brand-new interactions that were never possible before.