Why Web3 Matters?
Web1, which roughly dates between 1990 -2005, was about open protocols that were decentralized and community governed. Most of the value were accrued to edges of the network, who are mostly users and builders. The following 15 years would see the rise of Web2 (2005-2020), which was siloed, and made up of centralized services run by corporations. In this version of the web, most of the value were accrued to a handful of companies like Google, Apple, Amazon, and Facebook. If you have been paying attention to our timeline, we are now commencing on the era of Web3. This web combines the decentralization and community-governed ethos of Web1 with the advanced, modern functionality of Web2. This new web is owned by the builders and users, and orchestrated with tokens.
Why Web3 Matters?
To understand why this new web matters, you need to understand the problems with centralized platforms, for which there are many. For starters, centralized platforms follow a predictable life cycle. At first, they will do everything they can to recruit users and third-party complements like creators, developers, and businesses. The goal is to strengthen their network effect. As these platforms move up the adoption S-curve, their power over users and third parties steadily grows.
When they hit the top of the S-curve, their relationship with network participants changes from positive-sum to zero-sum. The only way they can continue to grow is by extracting data from users and competing with (former) partners. There are many examples here, such as Epic vs. Apple, Facebook vs. Zynga, Microsoft vs. Netscape, Google vs. Yelp, and Twitter vs. its third-party clients.
You can imagine how it feels for third parties where their relationship with these corporations goes from cooperation to competition. Due to this devious strategy, over time, the best entrepreneurs, developers, and investors have learned not to build on top of centralized platforms, which generally attempts to stifle innovation.
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Enter Web3
In Web3, ownership and control are decentralized. This allows users and builders to own pieces of internet services by holding tokens that can be both fungible and non-fungible (NFTs). It is shaping to be a token-based internet, where token holders get property rights such as the ability to own a piece of the internet.
For example, NFTs allow users to own objects, such as art, music, code, photos, text, game objects, governance rights, credentials, access passes, and whatever else people can think of. NFTs live on blockchains such as Ethereum, a decentralized network owned and operated by its users. Most blockchains are public, allowing anyone with a computer to participate in a network. They are also decentralized, meaning no one owns them.
Ethereum, for its part, is powered by a fungible token, Ether (ETH), that is used to incentivize the physical computers that underlie the system. ETH is also used for transactions on its network, such as to make NFT purchases.
Why Is There So Much Hype Around Web3?
Most of the excitement surrounding Web3 comes from the crypto community that benefits from an internet that is more decentralized. Also, companies such as Reddit have created some buzz around the term, as they plan to start developing Web3 services and platforms.
Many experts speculate that Web3 could augment video games, for example, by allowing players to more easily buy and sell in-game items, or give them more power to determine how the game is run. However, the biggest buzz has stemmed from the Metaverse narrative.
Metaverse essentially refers to a future internet consisting of three-dimensional spaces in a virtual reality where users can interact. It will be fully immersive, something along the lines of the movie Ready Player One. A few companies have been quick to lay claim to the metaverse, such as Facebook, who recently changed its name to Meta. However, some technologists hope that Web3 will incubate a metaverse built using blockchain systems and open standards, and run by a network of computers worldwide, rather than a few big companies.
Meta, on its part, believes the metaverse will not be created by one company, and it will establish a "massively larger creative economy than the one constrained by today's platforms and their policies."
Whether this statement is to be trusted is another thing, given that Facebook has fought hard over the years to maintain its dominance within the social media space. It is clear they are striving to be a powerful institution, even in the coming Web3 era.
However, proponents of decentralization should take heart as NFTs will facilitate commerce within Web3. This means that traditional gatekeepers will not be able to dictate what can and cannot go into the metaverse.
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