Is web3 the future of the Internet?
Or is it merely a buzzword used to lure unsuspecting investors to Ponzi schemes?
We know that it’s worth at least hundreds of billions of dollars today and over a trillion during the crypto market’s peak. It is a budding but vibrant industry, involving millions of people across the globe, from normal everyday users to multi-billion dollar companies, and everything in between.
We also know that the space is fraught with scams, money laundering, Ponzi mechanics, and all manners of financial perils that could compel anyone to run for the hills. The fact that many newbies have lost their life savings shows that this industry isn’t the get-rich-quick scheme people presumed it was.
Taking that into account, do we still think that web3 is the future of the Internet?
Yes, web3 might still be the future of the Internet, despite all its shortcomings. However, it is currently in a tricky spot right now, with tough challenges ahead that could potentially change its trajectory from being the future of the web to being a failed experiment.
For one, it has too many single points of failure due to centralization, the very problem it promised to fix! Moreover, it is facing congestion issues that make it either too expensive to use or fail due to network overload.
Some would say we’re in a clusterf#ck right now. I’d say we’re still early. Rome wasn’t built in a day and neither is web3.
If you think the opportunities that came before were life-changing, wait until you see what happens in the next five years. The vast majority of the protocols we see today are quite lacking. They are nowhere near what they could become, and could be vastly improved.
But whether or not web3 becomes the future we want it to be heavily depends on what we do today as users, investors, and developers.
Read on if you want to get a good grasp on web3 and how it could shape the Internet.
What Does Web3 Stand For?
Web 3 is the purported third generation of the Internet that succeeds Web 2.0 (Interactive Web), ushering a new era of the World Wide Web powered by decentralized protocols. It was coined by Polkadot and Ethereum co-founder Gavin Wood in 2014, and later gained massive interest since 2021.
Essentially, it is an advocacy to create a future where the common individual is empowered to participate in the global economy free from arbitrary censorship. It typically rejects the notion of large entities extracting value from the little guy, and abhors any organizational setting where an individual or select few decides the fate of the majority without strict limitation.
This doesn’t mean that web3 is anti-leadership. Quite the opposite. Great leaders are essential to revolutionize this industry. Leadership is held in such a high degree that it is vital to hold them accountable for their actions and keep their powers contained to ensure that they don’t fail to do their job or act against the best interest of the company or community they serve.
Think of web3 as decentralized monarchy. The leader/s should have as much flexibility to do their jobs effectively, but everything should be transparent to all parties. Furthermore, the community should be able to vote on major decisions, such as treasury allocation, massive protocol changes, etc.
Most importantly, leaders should be easily replaceable if the community deems them unworthy.
That’s the future web3 people want.
But how would that benefit the common individual? The next section should answer that.
How Will Web3 Change the Internet?
Web3 will change our relationship with the Internet by enabling us to truly own the the information we share to the world, express ourselves as freely as we can, collaborate with less friction, and preserve our privacy as we see fit.
Let’s discuss them in more detail.
Ownership of the Internet
Decentralized ledgers like blockchain will propagate the democratization of user data and content creation, eliminating middlemen like social platforms. This allows the average internet joe to monetize their data as they please without platforms taking a massive cut and controlling what ads they can see.
We choose the data we want to share, not platforms.
All the content you create, including memes, videos, articles, podcasts, will be fully owned by you, for you to do as you please. You get to own a piece of the Internet instead of being under a lease to giant platforms.
Elimination of Censorship
Owning your data is only half the battle. Users will also need various decentralized channels in order to post content or any information they wish to spread, preferably one that doesn’t restrict access or have a single entity to police content.
Today, Facebook can deplatform you for violating their terms and services. Google can deindex your website if you they deem your content ‘bad’ or ‘dangerous’. This limits our creative freedom, forcing us to bend to the standards put up by these platforms.
Web3 could provide a better alternative through applications powered by a decentralized protocol, controlled by a DAO (decentralized organization), where anyone has more freedom governed by a community, not a single entity.
Decentralizing Organizational Setups
Speaking of DAOs, let’s highlight them since they play a pivotal role in ushering the era of collaboration. You see, a DAO is just like any organization or company in the sense that it is a group of individuals that have common goals and values. The difference is that it has no ruling entity.
The members make the decisions collectively by either submitting proposals for changes/upgrades or by staking their DAO tokens to vote on proposals made by others. If a proposal is passed, then the DAO’s developers can start building the proposal or implement it.
This empowers every member to be able to contribute independently in their own way by submitting proposals, voting on proposals, or take things further by doing tasks that help the DAO. For instance, a gaming guild DAO employs multiple roles, such as managers, scholars, trainers for individual games, as well council members for partnerships, development, marketing, treasury management, and a whole lot more.
Any member can join in any of the roles they can fit in and be rewarded accordingly.
Furthermore, this can extend to DAOs collaborating with other DAOs since almost everything is open source anyway. This presents tremendous opportunities for collaboration like never before.
Decentralizing Identities
A decentralized identity system will enable users to control their online credentials, allowing them to access applications without needing to create an account. Your web3 account could merely be your crypto wallet or decentralized domain, which you can use to log into applications seamlessly.
Crypto users today already enjoy an early version of this concept. For instance, you can log in to any Ethereum dApp such as OpenSea, Uniswap, Compound, etc. through a web3 wallet that supports the Ethereum blockchain, such as MetaMask. The only challenge is that the infrastructure today isn’t quite decentralized yet; the companies that power MetaMask can still censor some users in some ways. This needs to change.
Perhaps the most significant aspect of decentralized identity is that it affords all users with the basic human right of privacy. We only need to reveal as much information as we want. Some public figures already exercise this right by creating online personas using non-fungible token (NFT) collectibles as their digital selves.
Problems with Web3 Today
The web 3 space is facing a great challenge today, considering its issues on centralization, complexity, and scalability. While the underlying blockchains that power applications remain sound, the rest of the infrastructure is overly reliant on a few companies, which is antithetical to original vision of a decentralized Internet.
If things remain this way, then what we’ve built will be nothing more than a house of cards.
Too Much Centralization
In the blockchain world, people talk passionately about the idealistic vision of decentralizing decision-making and applying it to nearly every facet of society. However, the applications being built on top are centralizing over the client/server side.
What does that mean?
A blockchain like Ethereum is decentralized. No question. But accessing that blockchain requires a proper node—a server. The dilemma here is that we are building these systems that require servers when common people don’t really like to run their own servers. So what do we do?
We access someone else’s node/server. Today, the vast majority of Ethereum dAps connect to two large server providers: Infura (acquired by Consensys) and Alchemy, in order to access the blockchain.
That’s only two companies running nearly all the world’s dApps! And we’re supposed to trust the outputs they provide?
This is by far the trickiest problem we’ve ever encountered. I don’t know what it will take, but we need to make decentralization, even at this level, a priority. Otherwise, all our NFTs and web3 infrastructure will be for naught.
Fortunately, there are many other blockchain ecosystems that are dying to replace Ethereum as the top dApp blockchain if it doesn’t fix its problems. Cardano, Polkadot, and Cosmo are some of the alternative networks that aim to be as decentralized as possible.
Terrible User Experience
Veteran crypto users probably won’t mind, but for the rest, it’s extremely difficult to ‘get started’ in web3. You have to create an account on an exchange to buy your first crypto, most of which require KYC, so you have to wait for approval before you can withdraw. Then you have to learn how to use various wallets, which only work on certain blockchains while incompatible with the rest.
And that’s only the beginning. The next steps are even more difficult, which is to learn how to use various blockchain applications like decentralized finance (DeFi) platforms and NFT marketplaces.
We will never reach critical adoption levels unless using web3 apps becomes as easy as signing up to create a Facebook account.
Scalability
Scalability is a problem that is currently facing all blockchains that have significant userbase, particularly Ethereum, but also less decentralized chains like Solana and BNB Chain, to some degree. The more decentralized a blockchain, the more difficult it is to scale.
Of course, we need both decentralization and scalability for blockchain to be ready for mass adoption.
Ethereum has a multi-year plan for scalability that began a few years ago, but it’s taking longer than we want.
Solana was a very promising alternative in 2021, with many thinking that it could unseat big bro ETH. That didn’t turn out so well as Solana never really deliver its promised 50,000 tps. Even today, it averages around 1K-2K tps.
Even BNB Chain, which is supposed to be even more centralized, can sometimes have slow transaction settlements.
There are many other chains with their own scaling solutions, but most aren’t battle-tested yet. The only way to truly tell whether a blockchain scale is when a significant amount of users transact on it daily.
Luckily, scaling is one of the most worked upon solution among various dApp blockchains, which is why I’m less worried about it. There are also layer-2 networks that are alleviating the congestion problems today. I think we just need to be patient in this area. Devs will figure it out eventually.
The Rise of Web5: The Web3 Killer?
Twitter Founder and Bitcoin enthusiast Jack Dorsey announced in Consensus 2022 that his company (Block) is developing a new vision of the Internet called web5.
Web5 is touted to be a successor of web3 that aims to build a decentralized infrastructure for the Internet using different tool. It won’t be powered by smart contracts or blockchains like web3. Instead, it utilizes decentralized identifiers, verifiable credentials, and decentralized web servers (nodes).
Bitcoin might actually be the only currency that will be used in this new internet.
Web5 is built on the premise that web3 has the right intentions (giving back control to the average user), but the wrong execution. Considering the present issues of web3 pointed out in this article, Dorsey isn’t really in the wrong here. And he isn’t alone. Other major tech experts like Moxie Marlinspike, Elon Musk, etc. are also quite skeptical of the technology.
Will this make web5 the web3 killer? That highly depends on what we do today. If we collectively work towards improving web3 to have the desired characteristics we want, then chances are, it will have a place in the future. But we need to be more vocal of our intentions.
Ordinary users can pressure developers of various applications and platforms not to cut corners or make compromises on decentralization by not using their products. Developers can choose to work on projects that are working on making the ecosystem more decentralized, not less.
Let this be your wake up call to be more careful of the things you do in the web3 space. What we do today could change the future. Don’t take that for granted.
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