An understandable explanation of Web 3.0

Web 3.0 (also known as Web3 for short) represents a new trend in the commercial Internet based on blockchain technology and incorporating specific methods such as decentralization and the token-based economy. In this context, the structures and applications from Web1 and Web2 form the foundations for Web3. In the early 1990s, the Internet as the Web1 consisted of a web of static web pages from which users could merely extract information. With the innovative advancement of platforms, such as HTML5, JavaScript, and CSS3 in the 2000s, dynamic websites emerged that focus on user interactions. Web1 thus gradually became Web2. Insofar as users now provide their own information, they make the functionality of the Web applications based on it possible in the first place. As a result, Web2 users are no longer just consumers, but also the product of Internet service providers. For example, by allowing users to now communicate via WhatsApp, shop on Amazon, and pay for goods via PayPal or online banking, Web2 has significantly increased user convenience. However, it has also created new challenges. Because the Web2 is based on a server-client structure, centralized private companies have full control over user data. Such corporations thus also gain access to the banking and financial system. To break this enormous monopoly power, the Web3 has taken up this challenge. The main goal is to replace the centralized server-client infrastructure with distributed ledgers. The most common manifestation of these is blockchain technology. With it, all data is scattered across a decentralized computer network. The intermediary central control instances thus lose their influence. The Web3 is thus entirely geared to returning data sovereignty and ownership rights to the users.

Challenges and outlook for Web 3.0

Web3 is still in its “infancy” and has to overcome significant challenges. For one thing, the speed of data transfer is still much too slow. For example, a wire transfer over the Web2 based Visa network is much faster than a Web3 based Bitcoin transaction. Furthermore, decentralization must still be viewed critically. This is because Web3 is still heavily dependent on the intrastructure of Web2. Crucial innovative structures and processes still need to be created to implement the vision of a practical decentralized Web3. In the medium term, it is quite likely that decentralized protocols will coexist with centralized platforms, but that these will gain more and more market share. Just as the transition from Web1 to Web2 was a creeping innovation process, so too will the emergence of Web3. Here, too, only those technologies and business models will prevail which prove superior to the others.

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