Some call it the next phase of the internet. Some say it’s a quick money scam that will fall apart. But what exactly is Web3?
The term “Web3” is widely used to refer to a new age internet that will run on the record keeping technology blockchain, a decentralized public accounting system. The current iteration of the internet, Web2, by comparison, runs on centralized, company-owned servers.
WHAT IS IT?
Web3 “offers a read/write/own version of the Web, where users have an economic stake in and more control over the online communities they belong to” by enabling users to own their data, according to the Harvard Business Review.
Investors hope this version of the internet will lead to a democratization of online data, where transactions and contracts can be double-checked by all users. However, consumers should be skeptical, according to venture capitalist Joe Lonsdale, as mainstream products have yet to materialize despite large cash investments.
WATCH PALANTIR CO-FOUNDER JOE LONSDALE EXPLAIN WHY HE FEELS WEB3 IS A ̵[ads1]6;PONZI SCHEME’:
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“A lot of what people are calling Web3 was a Ponzi scheme and it made no sense at all,” the Palantir co-founder previously told Fox News. “That said, the protocols for having decentralized ownership are very interesting.”
Decentralization, a key feature of blockchain, distributes responsibility for important Internet functions such as server control, transaction verification, and timestamping to a network of users rather than traditional methods where all operations will be handled by one company or organisation. Where something like Amazon Web Services’ servers hosted nearly 30% of the internet in 2020, Web3 promises to distribute this responsibility among users, fundamentally changing interactions on the web.
Decentralized digital infrastructure – such as cryptocurrency such as Bitcoin and non-fungible tokens (NFT) – is designed to be key components of Web3 and will be necessary for its functioning.
WHY DOES IT MATTER?
“In the longer term, it makes sense to have more decentralized power and for something like Bitcoin to exist,” Lonsdale said in an earlier interview. Bitcoin “allows more sort of freedom for the financial system from really bad acting governments.”
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Elon Musk, meanwhile, has expressed skepticism about Web3.
“I’m not implying that web3 is real – seems more marketing buzzword than reality right now,” the Tesla CEO tweeted last year.
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Twitter founder Jack Dorsey has also questioned the new age internet.
Users “don’t own ‘web3,'” he said tweeted last Decemberthrows cold water on the idea that users will be able to monetize their data online.
Dorsey has been working on one competitor to Web3which on its website claims to be “an additional decentralized online platform.”
To watch the full interview with Lonsdale on Web3, click here.
Bradford Betz contributed to this report.