The current iteration of the Internet, known as Web2, emphasizes the creation and distribution of user-generated content. Sites like YouTube, social media apps like Instagram and Twitter, news sites, personal blogs, and more make up a large part of the internet.
Web2 is an upgrade from Web1, which was primarily a read-only web version containing a simple static website. Web3 aims to bring a decentralized and token-based economy to the Internet.
Web2 and Web3
In the early 2000s, the development of several different network protocols made it possible for programs and content to be linked interactively by reading and writing. Web2 in its current form enables users to use material created by other users and create their own content. Readers are probably most familiar with Web2. Thanks to Web2’s autonomy in content production, the era of social networking ushered in, and with it came the proliferation of blogs, online forums, and online marketplaces.
However, despite the undeniable fact that Web2 offers users significant advantages, rent-seeking centralized companies have exploited this free flow of information to monetize user data and habits. The demand for developer- and user-controlled networks has increased, mainly due to the breakdown of trust, user exploitation, and data control.
The goal of Web3 is to encourage open services powered by decentralized applications (DApps) rather than centralized applications controlled by tech giants. Users of Web3 can connect directly to applications and protocols without third-party intermediaries in the process. Web3 is described as the “read/write/own” version of the Internet. Open services built on Web3 encourage permissionless entry, maximize value and ensure verifiability. These services are more reliable, fair and ethical.
Users are not required to pay recurring fees or provide personal information to use the technology platform; instead, they are invited to participate in the governance and operation of the protocol. Participants are stakeholders in the network, not just consumers or commodities abused for economic needs.
Tokens or coins are used in this setting to symbolize the accessibility, governance, and ownership of a decentralized network. In Web2, users play the role of products; in Web3, they play the role of owners.
Úrsula O’Kuinghttons, director of communications and partnerships at the Web3 Foundation, an organization that supports blockchain and Web3, told Cointelegraph:
“When we think about ownership in Web3, there are two main considerations. The first is how to manage the organization. The existing, flawed status quo places ownership in the hands of organizations, institutions and corporate entities of all kinds of power in the hands of individuals.”
O’Kuinghtons continued, “A properly decentralized network ensures that ownership of these single structures is stripped of this hierarchy. This means that the network and community have more power in governance and decision-making. It also means more Share rewards fairly. Engineers build Web3 to harness the power of peer-to-peer networks to create durable and effective solutions using blockchain.”
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“Another key issue is the sovereign ownership of data. Web3 seeks to protect individuals’ legitimate claims to have complete control over their data and to put privacy at the forefront of their online lives. This goal can be achieved through zero-knowledge proof protocols, encryption and private key.”
How Web3 will bring ownership to users
Web3 will bring ownership to users in several ways, one of which is the ability to host websites that cannot be censored or removed. Current web hosting systems mostly rely on servers controlled by a centralized organization. If these organizations feel they have good reason to do so, they can shut down the site.
The decentralized file storage network allows people to build censorship-free websites using the Interplanetary File System (IPFS) protocol. Instead of using a central server, using IPFS, everyone acts as a server by caching data from sites. Once another user visits the site, data is loaded from one of the cached users. So, for example, if a million users visit a site to view a photo, the next person visits the site, the photo file can be loaded from any of those million hosts.
This process eliminates the need for a centralized entity, as the burden of serving a website is spread among the users who visit it. This is possible because data files have unique cryptographic hashes as addresses, not user-generated names like red-car.png. Once the file is requested, the unique hash value is sought and recovered from the cache.
Organizations like the Web3 Foundation are supporting the development of technologies and applications in the field of decentralized web software protocols. They provide grants to teams around the world that are helping to build the Web3 ecosystem. The foundation currently supports 415 projects in the Polkadot ecosystem through its grants program. In addition, more than 1,000 grant applications were submitted.
Decentralized Autonomous Organizations (DAOs) also play an important role in the Web3 infrastructure. The next wave of user adoption of Web3 ownership and accessibility will be driven by community-owned and managed DAOs, with non-fungible tokens (NFTs) helping to drive this adoption.
DAOs are autonomous groups whose decisions are made using smart contracts on the blockchain. DAOs eliminate the need for a governing body or a single point of authority by bringing together individuals with common interests and talents. Furthermore, due to the distributed structure of the blockchain, everyone can view and confirm all decisions and transactions.
In the context of NFTs, DAOs can be used to facilitate collective ownership. Members make decisions through regular voting, and access to the built-in treasury requires member approval. The rising cost of NFTs has inadvertently made many collectibles unavailable to individual customers. DAOs allow users to share the cost and ownership of a single NFT to level the playing field and foster a decentralized spirit of accessibility and inclusion.
DAOs provide Web3 with a governance structure that enhances participation while reducing opportunities for corruption or censorship. They can appear in a variety of situations, from social media to money-making games. As DAOs gain traction, the popularity of DAOs will spread to decentralized finance (DeFi), NFT collection, and charitable organizations. Also, unlike hierarchical organizations, DAOs allow decisions to be made as soon as all members agree.
Non-profit organizations can greatly benefit from the DAO concept. Administrative expenses and resource allocation hesitancy are unlikely to offset the benefits of philanthropy’s outstanding work. Additionally, using DAOs allows for efficient and timely distribution of funds to their intended beneficiaries. Therefore, NGOs may have a greater influence on their ultimate purpose.
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DAOs can also be used as a direct route to investment and rapid adoption of DeFi. Peer-to-peer crypto transactions conducted by DAOs are inexpensive, almost instant, and not regulated by banking laws. As a result, members who take out loans or engage in other activities may receive better returns than they would in traditional banks. There seems to be no end to the huge growth in this industry.
Purchasing and storing these digital assets using NFTs and DAOs can expand the creator economy, which is especially important given the contemporary obsession with social media and content creation. Because the value of a creator’s work is inextricably linked to its reputation, followers, and founders, creators benefit. Like many large organizations and businesses, the DAO will certainly support users accessing Web3 in the future.