Web3 was born with a mission: to build a more resilient Internet, where users break free from censorship and gain control over their data and digital footprints. What has led to such a paradigm shift?
The way the Internet has evolved over time and the role tech companies have played over the past decade help explain the pivotal role Web3 is having in today’s world.
Web1 was unidirectional, the content was static and readable only. Internet penetration was still low and limited to those who could afford a computer and a good connection. Web1 was based on a web server-client architecture; data rights and ownership were controlled by server administrators or providers.
A greater mobile penetration blasted Internet access globally, which at this point was mostly dominated by social networking sites, applications, and content platforms like blogs, video and image sharing websites. This new era, deemed as Web2, is predominantly centralized within tech conglomerates such as Alphabet (Google), Amazon, Apple, and Meta (Facebook). Web2 still relies on web server-client architecture and is largely based on user-generated content. Data belongs to these platforms, not the users.
When Tim Berners-Lee, the inventor of the World Wide Web, designed the HTTP communication protocol, he envisioned an utterly different Internet. In the late 90s, he proposed an improved version, more autonomous, intelligent, and open; he named it the Semantic Web. “The Web,” he said, “was designed as an information space, with the goal that it should be useful not only for human-human communication but also that machines would be able to participate and help.” Berners-Lee’s vision never truly came to fruition, but it can still be considered a key contribution to the Web3 rise.
Web3 is about disrupting centralization and putting users back in control of their privacy, data, finances, and more. Data is encrypted and distributed across networks, rather than being stored and controlled by single entities. This decentralized infrastructure, known as the blockchain, is by far the greatest Internet revolution since 1989’s HTML code. Blockchain technology ultimately removes intermediaries and replaces them with cryptography, DLT, and P2P transactions. To use Chris Dixon’s words “Web 3 is the Internet owned by the builders and the users, orchestrated with tokens.”
The dawn of Web3
In both Web2 and Web3, users are required to have their own digital identity. In Web2 digital identities are linked to an account, typically associated with an email address, whereas Web3 makes use of self-sovereign identities (SSI), managed through wallets and encrypted private keys. NFTs also play a crucial role in proving ownership over tradeable assets and digital identities.
Users’ identities comprise big data set defining individual taste, consumption habits, and behavioral patterns. Essentially, we are the data we “own”. However, the Internet as we know it today is mostly dominated by a few tech giants leveraging users’ data for their own profit leapfrogging regulations.
Back in 2017, The Economist published an article claiming that data is the new oil, prompting new approaches to antitrust rules. A year after Facebook’s reputation was crashed by the Cambridge Analytica scandal. Over the years, recurring data breaches to institutions and corporations prove how today’s Internet is failing to protect people’s data and privacy. Such a spiral of events has understandably raised concerns over users’ digital identities and the way these are being managed by third parties.
The need for a decentralized control that reinforces data ownership is just a common-sense response to such looming mistrust. The third generation of the Internet relies on P2P connectivity, where data are distributed across a network rather than being centralized into single servers. Such a mechanism allows sharing information and assets without relying on intermediaries, bringing data back into control of individuals.
Sovereignty Over Data and Privacy
The Web3 leverages some of the most powerful features of blockchain and DLT to safeguard people’s legitimacy over their data and privacy. These are:
- Zero-knowledge proof (ZKP): a method used in cryptography to prove possession of knowledge without disclosing it. Put it simply, it’s an authentication system between two parties where there’s no exchange of sensitive information like a password, for instance. This way ZKP can be deployed to provide an additional level of security and data protection.
- Encryption: Each asset, message, contract, or financial transaction in Web3 is encrypted. Encrypted data can be made readable and accessible by decrypting it and using unique private keys.
- Private Keys: Private keys make use of encryption to prevent third-party access. A private key proves ownership of a blockchain address, digital identity, or cryptocurrency asset. It’s therefore the getaway to a user’s personal data and investment.
- Authenticity: every data or asset, associated with a digital identity gives users not only full control but also, and most importantly, the right of transacting it. The rightfulness over data enables users to choose the type of information they want to share. It also grants the user total benefits over the profits an asset or data could generate.
Ultimately, the ownership of tokens grants rights over protocol governance and can be therefore considered a form of co-shared ownership of the network itself.
Figment supports 50+ protocols enabling a variety of use cases that unfold Web3 potential. Here are some examples of the most prominent ones that will drastically transform the way ownership will be perceived and managed in the years to come.
Decentralized Marketplaces: most NFTs are currently traded on OpenSea adding more centralization to the space. NFTs, however, should empower creative communties around the globe, acting as proof of ownership over tradeable assets and digital identities. NFTs platforms should therefore safeguard this aspect, facilitating open trading of digital collectibles and rewarding NFTs’ creators for their creativity.
- Stargaze is a fully decentralized and interoperable Layer1 NFT marketplace built on Cosmos. Stargaze gives content creators the opportunity to mint NFTs through their native platform, or permissionlessly using the Stargaze protocol. The native Stargaze NFT marketplace beta recently went live, allowing users to buy and sell NFT collections directly on the Stargaze platform.
Developers Communities: to grow and thrive the Web 3 space needs developers building decentralized applications (dApps) efficiently. This implies solutions that allow scaling quickly without relying on centralized infrastructure support, like existing Amazon’s and Google’s cloud services. Web3 decentralized cloud solutions allow to seamlessly scale the network’s capacity as the number of nodes increases while safeguarding permissionless and self-sovereign environments.
- Near is a community-run cloud platform built to support an open-web ecosystem. The platform uses a sharding technique that allows scaling quickly projects without limiting interoperability and network capacity. Near is built by developers for developers looking to easily build and scale dApps at low costs.
Data Privacy: Web3 is about protecting users’ personal data. Encryption acts as information shielding for digital identities. In Web3 users can finally choose the information they want to share and with whom. This means individuals, not intermediaries, can ultimately own and manage their own data free from centralized control.
- Secret Network is the ultimate Web3 data privacy platform enabling developers to build in a permissionless yet secure way. It does so by using a special smart contract function that performs computation on encrypted data without disclosing it throughout the process, bringing therefore maximum security across public blockchains.
Exchanges: finally, decentralized exchanges, or DEXs, are probably the most critical part in decentralizing the next generation of the Internet. Centralized exchanges, like Binance for instance, hold tokens’ control using a centralized exchange wallet. Since users have no access to such a wallet, tokens’ ownership stays in the hand of the exchange. DEXs instead, let users maintain ownership of their assets by deploying smart contracts and digital wallets.
- Osmosis is an automated market maker (AMM) using the Cosmo-SDK, which gives more freedom to developers and brings more flexibility and innovation within AMMs’ liquidity pool. Being cross-chain and compatible with other Ethereum Virtual Machine (EVM) networks, allowed Osmosis to grow dramatically becoming one of the leading DEX in the Cosmo ecosystem.
- Injective is a decentralized exchange protocol fully governed by its token holders, using the Tendermint consensus. It allows to create and trade on any derivatives market in a fully decentralized way. Similar to Osmosis, Injective DEX is built on a sidechain using the Cosmo-SDK, which allows great scalability and access to lower operational fees than centralized counterparts.