Web 3.0

Ali Zahi / January 17, 2021

9 min read

The completely decentralized and secure version of our internet where people can exchange money and information on the internet without the need for unnecessary third-party solutions like a banks or tech corporations with no government regulations and no censorship, it's basically a vision for the internet where everything is regulated with smart contracts and cryptocurrencies instead of Facebook, Google and Amazon.

Most of the Web 3.0 technologies are based on the Ethereum protocol, read more about Ethereum here...

There's obviously a lot of hype around Web 3.0 but not everybody is buying it, personally I like the vision but the reality is that Web 3.0 doesn't have the computing power or the storage capacitiy to scale and replace Web 2.0. you will encounter some people that will tell you that crypto is growing faster than the internet was in the 90s, but that's a dumb argument because crypto is built on top of the internet itself, the same logic applies for Tiktok and Facebook, all of them will never be as revolutionary as the internet was but that doesn't mean that it's not a big deal.

Another problem is that many of the "decentralized companies" and their cryptocurrencies are controlled by vulture capitalists and silicon valley insiders, that's not usually the case but there's a lot of scams you need to watch out for.

Web 1.0

Refers to the internet from 1994 to 2004, was just static files or documents hosted on the network with some hyperlinks to other webpages, nothing much was going on there really.

Web 2.0 is the internet we "mostly" use today. Facebook, Youtube, Snapchat, Instagram, Twitter and many others are Web 2.0 applications.

Web 2.0

Then there's Web 2.0, AKA the participative web or the read and write web, with the introduction of web servers and databases things got more dynamic and apps started to be more complex.

Web 2.0 was the starting point of many things like personalized content, likes, comments, posts, stories and many other things that revolutionized the way we use the internet today, it also lead to massive centralized tech corporations that dominate the flow of information on the whole network like Facebock, Amazon and Google.

Everything is regulated by those tech companies and the governments, they censor whatever they don't like and show you whatever they like and they will continue untill you become a brainwashed sub-human species that's not capable of criticaly thinking about anything, you will do, believe and be whatever they want, and freedom of speech doesn't really exist except for the ones who they choose.

Also privacy is a big con of Web 2.0, it's not big concern for most of the huge tech companies since their business model relies on personalized advertising, I personally don't think that it's not ethical but I believe people should be allowed to opt-out if they want.

In the 2010s, personal data belonging to millions of Facebook users was collected without their consent by British consulting firm Cambridge Analytica, predominantly to be used for political advertising, they built an app consisted of a series of questions to build psychological profiles on users, and collected the personal data of the users’ Facebook friends via Facebook's Open Graph platform, the app harvested the data of up to 87 million Facebook profiles, Cambridge Analytica used the data to provide analytical assistance to the 2016 presidential campaigns of Ted Cruz and Donald Trump.

Web 3.0

When the dot com bubble burst happened between 2001 and 2002 Amazon lost 90% of it's value and the stock fell from 90$ to 16$ but amazon was one of the lucky companies that survived this collapse.

Web3, in the context of Ethereum, refers to decentralized apps that run on the blockchain. These are apps that allow anyone to participate without monetising their personal data.

Cryptocurrencies

Cryptocurrencies (like Filecoin or Ethereum) are one the main building block for Web 3.0, they provide the perfect form of payment since banks are not acceptable solutions on Web 3.0 but also provide the incentive for people to provide their computing infastructure that makes the whole network exist.

Tokens

Tokens are a digital asset that you can trade with other people that's created by other people in the form of smart contracts.

Fungible tokens are tokens that have the same value of another tokens of the same kind, the US dollar value for example is equal to any other US dollar.

Most Fungible tokens are ERC 20 standardized.

NFTs

A unique and non-interchangeable unit of data stored on a blockchain.

Most NFts are ERC 721 standardized.

Non-fungible tokens or NFTs are cryptographic assets on a blockchain with unique identification codes and metadata that distinguish them from each other, powered by smart contracts which handle the transferability and verify the ownership.

This comes up handy in situations like real estate or collectibles, where some items are valued more than others, due to their usefulness, rarity, etc.

The value of each NFT is not the same, like artwork each one is unique.

Dapps

I'm covering this in the conext of Ethereum and of course there's other alternatives.

No owners, once deployed to Ethereum, dapp code can’t be taken down. And anyone can use the dapp’s features. Even if the team behind the dapp disbanded you could still use it. Once on Ethereum, it stays there.

Free from censorship, you can't be blocked from using a dapp or submitting transactions, for example, if Twitter was on Ethereum, no one could block your account or stop you from tweeting.

One anonymous login, with most dapps, you don't need to share your real-world identity. Your Ethereum account is your login and you just need a wallet.

Decentralized apps or Dapps has been around even before crypto with peer-to-peer file sharing apps like BitTorrent or Napster.

So how does a Dapp work?

On the Ethereum blockchain with the current status (Ethereum 1.0), it's like a massive network of computers where miners validate the state of the data on the network and get rewarded with gas fees which is some Ether (the cryptocurrency on the Ethereum network) that's paid when the users make transactions on the network, simply it's like when you pay a hosting provider for cloud computing resources.

Dapps on the blockchain are open source no matter what, because their back-end code is contained in a smart contract written in Solidity which is just an app that's on the blockchain that can govern the operations between multiple accounts, for the front-end, it can be built just like any other normal website but for user authentication, in Web 3.0 the user owns all of their data, the user has a public wallet address that can recieve payments and a private key that can sign transactions to send payments, the user will connect their wallet through a plugin like MetaMask and then the app will be able to interact with the user's wallet to do operations like purchasing.

Defi

Decentralized Finiance or Defi for short, is a global open alternative to the current financial system, it gives you control and visibility over your money and exposure to global markets and alternatives to your local currency or banking options. Defi products open up financial services to anyone with an internet connection and they're largely owned and maintained by their users.

So far tens of billions of dollars worth of crypto has flowed through Defi applications and it's growing every day.

for centries people used centralized authorities to deal with their financial needs like banks for example, you

Stream money around the globe...

You can also stream money over Ethereum. This lets you pay someone their salary by the second, giving them access to their money whenever they need it. Or rent something by the second like a storage locker or electric scooter.

And if you don't want to send or stream ETH because of how much its value can change, there are alternative currencies on Ethereum stablecoins.

Access stable currencies

Cryptocurrency volatility is a problem for lots of financial products and general spending, the deFi community has solved this with stablecoins, their value stays pegged to an another asset, usually a popular currency like dollars.

Coins like Dai or USDC have a value that stays within a few cents of a dollar, this makes them perfect for earning or retail.

Many people in Latin America have used stablecoins as a way of protecting their savings in a time of great uncertainty with their government-issued currencies.

Borrowing

Borrowing money from decentralized providers comes in two main varieties.

Peer-to-peer, meaning a borrower will borrow directly from a specific lender, or pool-based where lenders provide funds (liquidity) to a pool that borrowers can borrow from.

There are many advantages to using a decentralized lender like:

Borrowing with privacy

Today, lending and borrowing money all revolves around the individuals involved. Banks need to know whether you're likely to repay a loan before lending.

Decentralized lending works without either party having to identify themselves. Instead the borrower must put up collateral that the lender will automatically receive if their loan is not repaid. Some lenders even accept NFTs as collateral. NFTs are a deed to a unique asset, like a painting. More on NFTs

This allows you to borrow money without credit checks or handing over private information.

Access to global funds

When you use a decentralized lender you have access to funds deposited from all over the globe, not just the funds in the custody of your chosen bank or institution. This make loans more accessible and improves the interest rates.

Tax-efficiencies

Borrowing can give you access to the funds you need without needing to sell your ETH (a taxable event), instead you can use ETH as collateral for a stablecoin loan, this gives you the cash-flow you need and lets you keep your ETH.

Stablecoins are tokens that are much better for when you need cash as they don't fluctuate in value like ETH.

and much much more like Flash loans, Lending, Token-exchange and Advanced trading.

So that's Web 3.0 for now, hope you liked the article and I'll be updating this if needed, you can also read about Ethereum 2.0 here.