Web3 Tutorial: The fundamentals of Web3

As the Internet has expanded rapidly, it has become intricately intertwined with daily human life. To harness the vast amounts of data and information available online, the Web architecture has continuously been reinvented and upgraded. From the static informational nature of Web 1.0 to the dynamic interactive capabilities of Web 2.0, scholars and engineers have strived to create a more open, inclusive, and equitable online world. Undoubtedly, the next phase of web evolution, known as Web 3.0, is already underway and influencing our daily lives.

Web3 Tutorial: Quick Take

• Web3 promotes decentralisation and individual empowerment, reducing reliance on major tech companies like YouTube and Amazon.
• It offers users more control over their data and content, breaking away from the closed ecosystems of large corporations.
• Cryptocurrencies serve as the native payment system, facilitating decentralised transactions, while NFTs enable ownership and trading of digital assets.
• Criticisms of Web3 may include concerns about unequal ownership or the concept of "decentralisation theatre."

Install Update: The Evolution of Web

1. Web 1.0: Read-Only (1990 – 2004)

In 1989, at CERN, Geneva, Tim Berners-Lee pioneered the development of the protocols that would become the World Wide Web (www). His vision was to establish open and decentralised protocols facilitating global information exchange.

The first inception of Berners-Lee's creation occurred roughly between 1990 to 2004. Web 1.0 was mainly static websites predominantly owned by corporations, with minimal user interaction and content creation, earning it the moniker of the read-only web.

2. Web 2.0: Read-Write (2004 – now)

The era of Web 2.0 began in 2004 with the rise of social media platforms, marking a shift from a passive consumption model to an interactive one. In this new paradigm, companies not only provided content but also facilitated user-generated content sharing and interaction. As internet usage surged, a small number of dominant corporations came to wield significant control over online traffic and value. Additionally, the Web 2.0 era introduced the advertising-centric revenue model, wherein users could create content without ownership or financial benefit from its monetization.

Later, the emergence of social media platforms including Facebook, Twitter and Instagram took content sharing to new heights. YouTube, Wikipedia, and Google, along with the ability to comment on content, expanded our ability to watch, learn, search, and communicate.

3. Web 3.0: Read – Write – Own

The concept of 'Web 3.0' was introduced by Gavin Wood, one of the co-founders of Ethereum, shortly after the platform's launch in 2014. Wood articulated a solution to a concern shared by many early cryptocurrency adopters: the excessive reliance on trust within the existing web infrastructure. He highlighted that much of the current web ecosystem depends heavily on placing trust in a select few private companies to prioritise the public's interests.

What is Web3?

Web3 is an extension of cryptocurrency, deploying blockchain to give power back to the users in the form of ownership. Web3 will be read-write-own.

It’s noteworthy that Web 3.0 is still being developed, so there isn’t a generally accepted definition of this significant evolution of the World Wide Web.

However, the origins of what would become Web3 can be traced back to 1991, when scientists W. Scott Stornetta and Stuart Haber initiated the first blockchain project aimed at timestamping digital documents. However, it wasn't until 2009, following the financial crisis, that the concept gained significant traction with the launch of Bitcoin.

Bitcoin, along with its foundational blockchain technology, operates by tracking cryptocurrency ownership on a publicly shared ledger. Transactions are processed by "miners" who solve intricate mathematical problems, thereby adding new data blocks to the chain and earning bitcoin as a reward. While Bitcoin primarily serves as a digital currency, subsequent blockchains have expanded the possibilities.

Ethereum, introduced in 2015, functions not only as a cryptocurrency but also as a platform for building various cryptocurrencies and blockchain projects. Co-founder Gavin Wood likened Ethereum to "one computer for the entire planet," with computing power decentralised globally and devoid of centralised control. With over a decade of development, advocates of blockchain-based internet are heralding the arrival of a new era known as Web3.

Now, as described, a blockchain can store the number of tokens in a wallet, the terms of a self-executing contract, or the code for a decentralised app (dApp). Not all blockchains work the same way, but in general, coins are used as incentives for miners to process transactions. If you hold enough of these coins, you have a say over the network. That is what contributes to the ‘own’ quality of Web3.

Core ideas of Web3

It’s challenging to give a rigid definition of what Web3 is, though, a few core principles underpin its creation.

• Decentralised: Instead of being dominated by centralised entities, ownership in Web3 is distributed among its creators and users.
• Permissionless: Web3 ensures equal access for all to participate.
• Native payments: It uses cryptocurrencies for online transactions, replacing traditional banking and payment infrastructure.
• Trustless: It operates on incentives and economic mechanisms, minimising reliance on trusted third parties.

Web3’s killer features – opening a new era

Inherently, the features of Web3 are not isolated and do not fit into neat categories. In this article, however, we try to separate them to make the explanation plausible for all audiences.

Ownership

In Web3, you gain unprecedented ownership of your digital assets. Now imagine you are playing a Web2 game. If you purchase in-game items, they are tied to your account and can be lost if your account is deleted or if you stop playing. Conversely, Web3 enables direct ownership through non-fungible tokens (NFTs). No entity, including game creators, has the authority to take away your ownership. Additionally, if you decide to stop playing, you can sell or trade your in-game items on open markets and retain their value.

Censorship Resistance

Web2 platforms often wield disproportionate power over content creators, as seen in the case of OnlyFans. In August 2021, OnlyFans attempted to ban sexually explicit content. Though the decision got quickly reversed after the backlash, it shows that this imbalance prompts creators to risk losing their reputation and following if they leave a platform. However, in Web3, data resides on the blockchain, allowing users to retain their reputation when they move to platforms aligning more closely with their values. Unlike Web2, Web3 platforms inherently resist censorship.

decentralised Autonomous Organizations (DAOs)

Web3 introduces the concept of owning platforms collectively through tokens akin to shares in a company. A decentralised Autonomous Organization (DAO) represents a community-driven entity that collectively manages a blockchain project. Unlike traditional top-down governance models, where a select few make key decisions, DAOs enable holders of a project's governance token to propose, review, and vote on initiatives impacting the project's development and direction.

Participating in a DAO fosters a sense of ownership among community members, ensuring decisions align with the project's best interests. Here are some notable examples of DAOs in the Web3 space:

• MakerDAO: As one of the earliest DAOs in the crypto community, MakerDAO issues the DAI stablecoin, backed by various collateral types to ensure stability. Holders of the MKR governance token have the authority to adjust policies related to DAI and select new collateral types. Participation in MakerDAO's decision-making process is open to anyone holding MKR tokens.
• Uniswap: Uniswap is among the first and most successful decentralised cryptocurrency exchanges (DEXs) in the crypto space. It facilitates trading of hundreds of crypto tokens 24/7 in a permissionless manner. UNI is the governance token that allows holders to participate in the platform's governance decisions.
• Compound: Compound is a DeFi (decentralised Finance) application for permissionless lending and borrowing. Lenders earn interest by depositing funds into lending pools, while borrowers provide collateral to access funds. COMP token holders can propose initiatives for the community to vote on, influencing the platform's development and policies.

Engaging with these DAOs not only provides opportunities for community involvement but also empowers individuals to contribute to the growth and governance of decentralised projects in the Web3 ecosystem.

Identity

In traditional Web2 usage, individuals manage separate accounts across various platforms, necessitating changes to display names and profile pictures on each platform individually. Furthermore, reliance on social sign-ins poses censorship risks, as platforms can restrict access to entire online identities with a single click. Conversely, Web3 empowers users to control their digital identity through Ethereum addresses and Ethereum Name Service (ENS) profiles, offering secure, censorship-resistant, and anonymous single-login solutions across platforms.

Native Payments

Unlike Web2, which relies on conventional banking infrastructure, Web3 leverages tokens such as ETH for direct browser-based payments, eliminating the need for trusted third parties. This approach ensures inclusivity, as it enables individuals without bank accounts or residing in restrictive jurisdictions to participate in online transactions seamlessly.

What can you do on Web3?

Web3 facilitates the emergence of cooperative governance models for products previously centralised. Virtually anything can be tokenized, from memes and artworks to an individual's social media content or tickets to events like Gary Vee's conferences.

An illustrative case of this paradigm shift is observed in the gaming sector. Gamers often voice dissatisfaction over bugs or changes in their favourite games. However, with Web3, gamers gain the ability to invest in games and participate in decision-making processes. Major Web2 corporations like Meta and Ubisoft are venturing into the creation of virtual realms incorporating Web3 principles. Non-fungible tokens (NFTs) are poised to significantly alter the gaming landscape, enabling players to assert immutable ownership over in-game items they acquire.

Examples of Web3 in the real world

How is Web3 related to cryptocurrency?

Cryptocurrencies are a key component of the Web3 ecosystem.

As previously mentioned, one of the core ideas of Web3 is that it has native payments: it uses cryptocurrency for spending and sending money online instead of relying on traditional banks and payment infrastructure.

In Web3, the concept of asset ownership holds paramount importance, with cryptocurrencies serving not only as a means of transaction but also enabling a "token economy." This framework allows users to earn cryptocurrencies by contributing to a platform, potentially promoting a fairer internet ecosystem. Cryptocurrencies play a pivotal role in providing the financial infrastructure and incentive structures essential for the functioning of Web3.

Moreover, cryptocurrencies offer a direct and trustless mode of payments and exchanges, circumventing the need for third-party control, which Web3 aims to eradicate.

How is Web3 related to Non-Fungible Tokens (NFTs)?

Non-fungible tokens are unique digital assets that are stored on a blockchain. Unlike crypto, every NFT has a distinct value and contains specific information that makes it unique.

Non-Fungible Tokens (NFTs) are another key component of Web3. NFTs facilitate the ownership and exchange of digital commodities, spanning realms like digital art, music, and virtual real estate. They offer a means to establish ownership and verify the authenticity of digital content, which was not possible in the Web2 framework. Moreover, NFTs can operate on a smaller scale than coins because they create their own ecosystems and require nothing more than a community of people who find value in the project. For example, baseball cards are valuable only to certain collectors, but that group really believes in their value.

Through the tokenization of creative works, NFTs are perceived as democratising the digital economy, potentially redistributing economic influence to creators and users, in alignment with Web3 principles. Additionally, NFTs empower gamers to own in-game items such as attire, weapons, and other enhancements, enabling direct peer-to-peer trading without intermediaries.

Web3 and the Metaverse

The term "meta" signifies beginning, importance, and consummation. The Metaverse blends virtual and tangible realms, with Web 3.0 infrastructure offering foundational support for Metaverse applications. Utilising immersive interactive technologies such as VR, AR, and MR can enhance the appeal of digital environments for users. The emergence of the Metaverse is poised to revolutionise several sectors:

1) Education and training: Virtual educational platforms empower educators to effectively instruct students, while immersive learning environments facilitate deeper comprehension of subjects.

2) Entertainment: The entertainment sector, particularly gaming, movie-watching, and musical experiences within the Metaverse, is currently witnessing notable success. Digital reality transcends limitations of physical space and time, while recreational activities can aid in expanding individuals' interests.

3) Security and privacy: The role of Web 3.0 architecture in safeguarding data is undeniable, granting users control over their usage data. decentralised identity systems effectively mitigate identity theft and various cybercrimes.

In summary, the Metaverse stands to disrupt smart cities, social interactions, and economic landscapes within the realm of Web 3.0.

Real World Applications

• In November 2022, JPMorgan Chase executed its inaugural cross-border blockchain transaction involving tokenized Singaporean dollar and Japanese yen deposits, as part of Project Guardian in collaboration with DBS Bank.
• Time magazine launched an NFT project to build an online community that leverages the publication’s deep history.
• Securitize, a digital-asset securities firm, collaborated with investment giant KKR to introduce a tokenized fund issued on the Avalanche blockchain. This move aims to democratise access to private equity by digitising processes and reducing investment thresholds.
• Adidas sold $23 million worth of NFTs in less than a day and instantly created a resale market on OpenSea, just like what you might see after a limited drop of new shoes.
• Nike, following its acquisition of the Web3 studio RTFKT in 2021, launched its Web3 platform named .Swoosh in 2022. This platform offers blockchain-based NFTs to customers and serves as a central hub for product launches and customer engagement, including the sharing of virtual apparel designs.
• Bored Ape Yacht Club is the biggest success story of an NFT project going mainstream. Combining hype and exclusivity, BAYC offers access to real-life parties and to online spaces, along with usage rights to the ape’s image — further reinforcing the brand. An ape NFT puts the owner in an exclusive club, both figuratively and literally.
• Esports and lifestyle brand 100 Thieves incentivized fans with an NFT of a diamond necklace upon creating a digital wallet on the platform within a 75-hour window. The promotion attracted over 300,000 participants.

Web3 Limitations – Concerns around Web3

Web 3.0 is not a panacea for all the problems of Web 2.0. In fact, it may have some potential drawbacks that enterprise leaders need to know about. They include the following:

• Complexity. decentralised networks and smart contracts pose significant learning curves and management challenges for IT, not to mention everyday web users.
• Regulatory evolution: Authorities are refining their strategies for overseeing matters like safeguarding consumers and investors, as well as determining the legality and enforceability of contracts based on blockchain technology, alongside implementing standards for know-your-customer and anti-money-laundering protocols.
• Value proposition and user experience: In contrast to the well-established standards of Web2 products, which have undergone decades of development, Web3 currently lacks robust user experience standards. Additionally, the usefulness of Web3 products, such as NFTs, remains uncertain for many consumers and businesses.
• Consumer protection: In light of recent setbacks experienced by numerous Web3 projects, ensuring the protection of consumers and investors has become a significant focus for both regulators and the broader public.

How to get prepared for the Web3 evolution?

Preparing for Web 3.0 involves several key steps to familiarise oneself with its core technologies and associated tools. Here's a comprehensive approach:

1. Understanding Core Technologies: Begin by gaining a fundamental understanding of Web 3.0's core technologies, including blockchain, decentralised applications (dApps), smart contracts, and decentralised finance (DeFi).
2. Language Proficiency: Acquire proficiency in web development languages such as JavaScript, which is foundational, as well as Rust, a newer language gaining popularity for Web 3.0 projects due to its efficiency and safety features.
3. Blockchain Platforms: Familiarise yourself with the leading blockchain platforms such as Ethereum, Hyperledger Fabric, and IBM Blockchain, understanding their features, capabilities, and use cases.
4. Front-End Development: Develop skills in front-end development, particularly in areas such as user experience (UX) and dApps design, as user-centric design will be crucial in the Web 3.0 landscape.
5. Utilising Web 3.0 Tools: Explore and utilise tools designed for Web 3.0 development, for building blockchain dApps, cryptocurrency wallets, and non-fungible tokens (NFTs).
6. Community Engagement: Recognize that the construction of Web 3.0 is a communal effort, and consider contributing to open-source projects, participating in online communities, and collaborating with peers to advance the development of Web 3.0 technologies.

By actively engaging with these steps and embracing the collaborative nature of Web 3.0 development, individuals can position themselves to thrive in the evolving digital landscape and contribute to the realisation of a more decentralised and inclusive internet.

The Future of Web 3.0

Indeed, the vision of Web3 as a dominant force on the internet remains distant. While self-proclaimed champions of Web3 aspire to shift the internet from corporate ownership to user control through blockchain technology, the reality is much more complicated. However, it is important to acknowledge that the technology now exists to potentially restructure the internet in a manner that prioritises user benefits over corporate interests. Despite the challenges and limitations, the potential for Web3 to empower users and reshape the internet landscape is a promising prospect.

Web3 FAQs

Is Web 3.0 synonymous with the Semantic Web?

While the Semantic Web forms a crucial component of Web 3.0 by facilitating AI comprehension of web content and user instructions, the latter also relies on additional technological foundations, notably blockchain.

Are Web 3.0 and the metaverse identical concepts?

The metaverse represents an enriched user experience incorporating 3D augmented and virtual reality, transforming the internet into a unified virtual domain for activities surpassing physical world limitations. Blockchain, integral to Web 3.0, is indispensable for decentralising and securing digital assets within the metaverse. While Web 3.0 could conceivably exist prior to the metaverse, the converse is improbable, as creating a singular virtual world necessitates the restructuring or replacement of current web infrastructure by Web 3.0.

What is the relationship between Web 3.0 and blockchain?

Blockchains serve as the foundational framework for Web 3.0's decentralised data structure. Various blockchain-based technologies like cryptocurrencies, dApps, NFTs, and smart contracts are anticipated to play pivotal roles in enhancing the distributed and personalised nature of Web 3.0.

Who is credited with the development of Web 3.0?

Web 3.0's conception and technical components do not owe to any single individual or entity. If attributed to someone, Tim Berners-Lee, the creator of the World Wide Web and a vocal advocate for the Semantic Web, might be recognized. However, credit is also due to the innovators behind blockchain and its associated technologies, as well as the organisations driving their commercialization, as they collectively contribute to the realisation of Web 3.0.

Is Web 3.0 immune to hacking?

Contrary to assertions by blockchain enthusiasts, notable blockchains and cryptocurrencies have experienced intermittent security breaches. Hence, it is plausible that Web 3.0, when fully established, may face vulnerabilities, given blockchain's pivotal role in its architecture.

What are Web 3.0 cryptocurrencies?

Web 3.0 coins essentially encompass the existing cryptocurrencies that underpin Web 3.0, such as Bitcoin and Dogecoin, which are already in circulation.

How can one invest in Web 3.0?

A conventional initial approach involves investing in established cryptocurrencies. While few specialised Web 3.0 technology vendors are publicly traded, certain exchange-traded funds (ETFs) amalgamate stocks of Web 3.0 companies, providing investment avenues. Additionally, ETFs and mutual funds bundling cryptocurrencies are available. While established companies like Google and Meta currently allocate a fraction of their operations to Web 3.0 endeavours, this landscape may evolve soon, warranting consideration for direct investments.