What is Web3?
I used to be a Web3 doubter. Hell, one might even have fairly called me a hater. Now, I'm a skeptic.
Web3 as a term first came across my radar a couple years ago, well after it had already existed in the niche research spaces for quite some time. As I saw it, it was immediately associated with the speculative assets collectively called cryptocurrencies, which I knew as being non-existent currency that is created by burning obscene amounts of energy and frying a couple of graphics cards. I immediately wrote it off as a shitty bubble with no actual use case, even if the idea of pseudo-anonymously buying drugs using a cryptocurrency wallet was a tempting idea as a libertarian-minded young college student.
Now, though, Web3 has been in the collective discussion for quite some time, and some seemingly legitimate use cases have surfaced that I'd like to dive into. It has also somewhat legitimized itself as something separate from the speculative cryptocurrency space, while the cryptocurrency space has matured somewhat, though I still worry that proof-of-stake has not reached the wide adoption necessary to assuage ecological concerns.
Thus, the real reason I'm wanting to study Web3 is rooted in my belief that you shouldn't hate on something you don't understand. I hated on Web3 in the beginning without giving it as an idea and as a functional ecosystem a fair try, and this is the first of many blogs that will be devoted to studying Web3. If you're interested in reading more, you can subscribe to my weekly research newsletter here.
What is Web3?
Defining Web3 itself seems to be a fairly difficult enterprise, though I'm going to do my best. Web3 seems to be a general description of mechanisms to combat perceived problems with what Web3 proponents call "Web2." I'm going to use Web2 as a catch-all term to describe non-Web3 internet assets, but it must be noted that many people that use the term Web2 do so in a derogatory manner.
Web3 proponents typically describe issues with the current web as stemming largely from over-centralization. To their point, the internet has become increasingly centralized, from internet access in the US being controlled primarily by a handful of mega-company ISP's to domain names being primarily controlled by a couple of main registrars. According to a survey done by internet marketing firm WebFX last year, the majority of the country's market share in the ISP market is owned by about 7 companies. Governance of the web is also fairly centralized through ICANN and other similar organizations, which has lead to many concerns that web governance is not as necessarily democratic as it could be.
Web3 proposes a new state of the web by decentralizing the web, primarily using blockchain technology to provide inherent trust, security and decentralization. Since the blockchain is theoretically immutable, it is fairly immune to censorship (theoretically) and because it is decentralized, it is very difficult to outright take down. One issue I do see with this argument is that, while it theoretically fixes things at the web application layer, it still doesn't necessarily fix the fact that much of the actual physical infrastructure of the web is owned and governed by a handful of private companies and NGO's, so censorship can still potentially take place by hamfistedly cutting internet connections, using DPI or blocking connections by metadata.
The best way I can describe Web3, then, is that it is a collection of technologies and approaches to governance, finance, communication and other ecosystems that is focused on decentralization, privacy and security. This... isn't a great definition. It leaves me wondering if technologies like the Fediverse, a collection of decentralized social media platforms like Mastodon and Peertube that can be self-hosted by anyone with an internet connection, is part of Web3 or Web2. Web2.5 maybe? I don't know.
I think a better description of Web3 approaching an actual definition is in describing some of its technologies as examples of what Web3 is.
What technologies make up Web3?
If you're not a fan of complex terminology and acronyms, I'd stay away from Web3. There is no shortage of jargon here. I'm going to describe a couple of the general sub-sectors of Web3 in very general terms to try to break out of that jargon, but understand that I'm just now entering this space so I may get a bit of it wrong or over-generalize some incredibly complex topics. In fact, I'm almost definitely going to over-generalize some incredibly complex topics.
Smart contracts seem like one of those things that are simple on the surface and mind-numbingly complex underneath, but they form the basis of pretty much everything on Web3. Smart contracts are blockchain-based (read: distributed and immutable) coded digital contracts that handle transactions between users, serving as a digital and supposedly unbiased middleperson in an exchange. They are primarily written in a programming language named Solidity for the Ethereum blockchain.
Essentially, you code up the rules of the smart contract and it distributes tokens or funding according to the rules of that code. Every party is naturally able to view the code within the smart contract, so it is incredibly transparent, and the language that the contract is written in is code, which, while often convoluted, is endlessly more clear and less ambiguous than the legalese that makes up many traditional contracts.
This is about as far as I really understand smart contracts... so I think what I'll need to do honestly is start here and start getting my hands dirty with writing and researching them.
DeFi, or Decentralized Finance, is a catch-all term for a subset of Web3 projects focused on doing finance using Web3. This can be anything from companies and smart contracts seeking to make commerce using cryptocurrency easier to companies and contracts that enable peer-to-peer loans using cryptocurrency and blockchain.
DeFi seems to be one of the more disruptive, and thus interesting and legally dubious, parts of Web3, and is definitely an area I want to look into a lot.
ReFi is seemingly a term that connotates Decentralized Finance (DeFi, explained above) for regenerative efforts. It would seem that here regenerative refers to the ecosystem, social justice causes and other similar issues.
This seems... interesting. Ecological issues were one of the things that kept me away from crypto/Web3 for a while, so I'm very interested to see if ReFi is actually regenerative or if this is an over-technical approach to the problems facing our environment.
DAOs, or Decentralized Autonomous Organizations, are a technological governance schema that is honestly one of the primary reasons I'm looking into Web3. Essentially, the idea is to structure governance around a decentralized voting schema using tokenomics and smart contracts. Honestly I don't feel like my current understanding of DAO's is deep enough to do the subject justice, so just know that this is going to be a pretty heavy area of focus for me going forward.
What am I going to do with Web3?
What am I planning with Web3?
Well, honestly, I have no idea. I definitely plan on learning how to develop smart contracts and interact with Web3 assets, but I don't know enough about the ecosystem to really say what I'm going to do with it. It would be really cool to get hooked into the community and learn about places where I can get involved with pre-existing projects, but I'm so early on in the infancy of learning this space that I can't honestly say what that would look like.
For now, it's going to be all about getting my feet wet in the research... so if you're interested in following that journey, my weekly newsletter is the best place to do that!