21 - I’m looking for “Web3”
“I need a Web3 developer” has become a frequent statement made by startup founders. It’s an interesting statement because when you ask them the follow up question, “What do you mean?,” they often don’t know. The focus on “Web3” has been caused by the current hype around the blockchain and digital asset ecosystem. Immense amounts of capital have poured into anything “blockchain”, “crypto”, or “Web3” branded. All of these terms have technical meanings, but they are often used interchangeably. We learned that blockchains are a type of distributed ledger, and crypto is a general term for assets tracked on a blockchain; but Web3 still lacks a clear definition. In order to define it we must look at the terms that preceded it. If today we are talking about Web3, then there must have been a Web1 and 2, which there were.
Web 1 and 2
The internet was created in the 1960’s by the US government to share information across agencies. Over time more of these interagency networks were created but could not communicate with each other. On January 1, 1983, two computer languages called “transmission control protocol” and the” internet protocol” (TCP and IP) were introduced. Used together, these protocols give the separated networks a way to communicate in one massive interconnected web, thereby creating the internet as we know it today.
At macro level, Web1, 2, & 3 are all describing different phases of the internet from a particular perspective. Web1 was the first phase, and it was known for allowing internet users to click and read. Anyone accessing the internet could search the web for digital “pages” (web pages) that were designed to replicate physical pages. Anyone could create a web page. Web pages were especially attractive to shops and stores because they gave their customers a place to find out when the stores opened, where they were located, and what they sold. You can think of Web1 as being like a massive encyclopedia where you could find facts. Web pages were basic, and the interaction between the user and the webpage was one way: from the internet to the user.
Over time technology advanced and internet users began to do more with their web pages. Not only could you read the pages, but you actually converse with other people online–a two way interaction. Web2 is the phase when users can engage with each other, not just find information. Users can chat, leave comments, and post pictures of their lives. It was the first time that people began to express themselves in a digital sense. Web2 was also the phase at which companies like Amazon began to gain popularity by allowing more complex forms of communication like the purchasing of a product.. Web1 was static–you can think of Wikipedia where people could create factual pages about people, places, and events, Web2 was interactive, think Facebook chats, comments, likes, and other features that allowed for interactions with others.
The internet has always been free to use but that freedom has come at a hidden cost: the availability of user data. In order for Facebook to allow you to share and comment on photos for free they lay claim to your personal information. Where you were logged on , who you talked to, and what topics you were most interested in were all the property of the company that owns the platform you were using. They could and would sell that data to advertisers to cover the cost of maintaining their service. The model has two main problems: First, companies like Facebook have deep insights into who you are–more so than they need to and most users want. Additionally, storing that personal data in one location makes it an appealing target for hackers. Enter Web3.
The beginning of Web3 is marked by the creation of blockchain technology; but only in 2021 was it recognized widely for being the third phase of the internet. Users could not only read and write, but they could actually fully control the data they are creating. Using cryptography, blockchains allow users to only reveal the activity they want the world to know they are engaging in online. Visiting a blockchain based application and interacting with it will not tell the company running the application anything about you personally. Chris Dixon, a partner at the world famous venture capital firm a16z, said it best in this tweet. Web1 was about reading, Web2 was about reading and writing, and Web 3 is about reading, writing, and owning.
j1mmy.eth @j1mmyeth@cdixon i’ve started to describe web3 as the ownership layer - could have been inspired by one of yours or another recent thought leaders tweets. 1. read 2. read / write 3. read / write / own
Why is this happening?
The main difference between each of these phases is how an individual uses the internet. Users engage with the internet through portals known as “applications”. We discussed applications in Attacks throughout history and described them as the “facade” of a technology. The transitions between Web1, 2, & 3 were enabled by new application functionalities, but that functionality was enabled by some fundamental technological change. Specifically, that change was in the location where data resided which is encompassed in the “own” part of Chris’s delineation.
When you load a web page or use an internet application, your computer is communicating with a storage device known as a “server.” Servers are the physical devices (special computers) where internet data is stored. In the Web1 phase, many people had personal, at home servers where they stored data. Any time you access a website, your computer is contacting the server where that website is located. In order to create a website, you had to do so on a personal server. Maintaining a server can be expensive and time consuming, so people began to outsource server management to companies like Amazon, IBM, and Microsoft.
What has made companies in the Web2 era such as Facebook so profitable and successful is that they standardize the place where people congregate; and they control where the data generated from their product being used is stored. Instead of creating a web page and storing on a personal server, you create a Facebook page, and Facebook stores that data for you. Controlling data is valuable because of the information you can glean from it. We can define “information” as data given meaning. When a company can collect data and then control where it is stored, they have incredible power. A great example of this when Target figured out if someone was pregnant based on the types of items they were shopping for. Oftentimes they were able to do this before the person's close family members knew.
Centralizing data storage under the management of a single company and other advances in hardware increased internet speed and reduced storage costs. The combination of more storage and increased speed allowed Facebook to create massive applications that connect billions of people. The problem was that these applications required individuals to “create” accounts which was essentially letting Facebook store personal data on their servers.
Moving from Web1 to Web2, information went from being stored at home to being stored in other companies' hardware. Web3 brings the pendulum back the other way. Web3 takes data and spreads it out over many different storage devices known as “nodes.” The difference between Wed2 storage and Web3 storage is that personal information is encrypted (hidden from the public) and stored on multiple servers controlled by multiple people instead of unencrypted on a single group of servers controlled by one person. Even though other people running servers have your information, there is a layer of protection that Web1 and Web2 did not have.
Taking a page out of Chris Dixon’s book you could describe each phase of the internet from the technical perspective as follows. Web1 = you hold your data; Web2 = someone else holds your data; & Web3 = everyone holds everyone’s encrypted data. Many people working in Web3 believe that the design of Web3 helps to rectify the wrongs committed by allowing Web2 companies to control your data.
Each phase of the internet is defined by both how internet users engage with applications and the underlying technical changes that have allowed for that new engagement. Web3 is the internet phase where users have more control over what information they provide the companies they interact with, and that information is stored in encrypted form across multiple storage providers called “nodes.” Web3 is term that needs to be more defined then it currently is and establish its own identity outside of “blockchain” and “crypto.”