“web3” — all over the place. What is it?

Web3 is the idea of a new kind of internet service that is built using decentralized blockchains — the shared ledger systems used by cryptocurrencies like Bitcoin and Ether.

Web3 is used for  including decentralized social networks, “play-to-earn” video games that reward players with crypto tokens, and NFT platforms that allow people to buy and sell fragments of digital culture. The more idealistic ones say that web3 will transform the internet as we know it, upending traditional gatekeepers and ushering in a new, middleman-free digital economy.

But some of them believe that web3 is little more than a rebranding effort for crypto, with the aim of shedding some of the industry’s cultural and political baggage and convincing people that blockchains are the natural next phase of computing. Others believe it’s a dystopian vision of a pay-to-play internet, in which every activity and social interaction becomes a financial instrument to be bought and sold..

But the web3 boom also reflects the amount of capital, talent and energy pouring into crypto start-ups on the heels of a yearslong crypto bull market. Venture capital firms have put more than $27 billion into crypto-related projects in 2021 alone — more than the 10 previous years combined — and much of that capital has gone to web3 projects. Many  big technology companies like Twitter and Reddit have also started experimenting with their own web3 projects.

And the industry has become a magnet for tech talent, with many employees of big tech firms quitting cushy, stable jobs to go seek their fortunes in web3.

 

Web1 & Web2

In the 1990s and early 2000s web1 was used. It was the internet of blogs, message boards, and early portals like AOL and CompuServe. Most of what people did on web1 was passively read static web pages, and much of it was built using “open protocols” like HTTP, SMTP and FTP.

The next phase of the internet was the Web2 , it was starting around 2005 ,the one characterized by social media  like Facebook, Twitter and YouTube.In web2 people began to create and post their own contents, actively participating in the internet rather than passively reading it. But most of that activity ended up being distributed and monetized by big companies, which kept most, if not all, of the money and control for themselves.

Web3, the story goes, will replace these centralized, corporate platforms with open protocols and decentralized, community-run networks, combining the open infrastructure of web1 with the public participation of web2.

How do web3 proponents actually envision that happening?

Web3 proponents argue that a blockchain-based internet would improve on the current internet in several ways.web3 platforms could give creators and users a way to monetize their activity and contributions in a way that today’s mega-platforms really don’t.

Today  Facebook makes money by aggregating user data and selling targeted ads. A web3 version of Facebook could allow users to monetize their own data, or even earn crypto “tips” from other users for posting interesting content. A web3 Spotify could allow fans to buy “stakes” in up-and-coming artists, effectively becoming their patrons in exchange for a percentage of their streaming royalties. A web3 Uber could be owned by the drivers on the network.

 web3 platforms could be democratically governed in a way that web2 platforms aren’t.web3 would be less reliant on advertising-based business models than web2, and people would have more privacy as a result, with fewer trackers and targeted ads following them around and fewer giant companies vacuuming up their personal data.

What’s an example of a web3 app that exists today?

Axie Infinity, a video game developed by the Vietnamese game studio Sky Mavis, which uses NFTs and Ethereum-based cryptocurrencies to reward players with real money for achieving in-game objectives.

In the game, players can “breed” characters called Axies, and it can be used in battles against other players. They can also collect virtual land, in the form of NFTs, and earn digital money, which can be traded on a cryptocurrency exchange.

Axie Infinity has attracted millions of players, including a number of people in the Philippines who make a full-time living from playing the game. But the game’s reliance on crypto tokens makes it volatile, and players can lose money if the value of the token drops, it happened last year.

This game sounds like gambling , right ?. But gambling is an incredibly successful industry. You should at least have the opportunity to get paid for it because you spend hours and hours of your day playing a video game.

Another example for Web3 is Helium. It is basically a crypto-powered, crowdsourced wireless network. There is a Helium Network, users can sign up to share bandwidth from their home or office Wi-Fi networks in it by using a device. Those devices need to plug into their computer or router to join in  the helium network. When nearby devices use their bandwidth,they’re rewarded with Helium tokens in exchange. The more often their hot spots are used, the more tokens they get. The Helium network has more than 500,000 active hot spots today, many of them powering connected devices like parking meters and electric scooters.

You could build a similar network without crypto by going door-to-door, trying to convince people to share slivers of their internet bandwidth with nearby devices.Or, you could spend billions of dollars to build such a network yourself. But Helium was able to build a network without huge upfront costs by allowing people to earn crypto tokens for adding new coverage to the network.

 

Some other objections to web3

Some simply believe that web3 doesn’t make sense from a technical perspective. They point out that blockchains are significantly slower and less capable than standard databases, and that today’s most popular blockchains couldn’t even begin to handle the amount of data that Uber, Facebook or YouTube use on a daily basis. To make web3 services perform as well as consumers demand, they argue, you have to build centralized services on top of them — which would defeat the whole purpose.

There are also people who believe that web3 is an attempt by wealthy investors to pay lip service to decentralization while building new, centralized services that they control ; making themselves the new middlemen, in effect.

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Conclusion

web3 is a word you’ll be hearing a lot in the next few years as people try to get their heads around the world of new experiences, platforms and money making opportunities crypto enthusiasts are trying to create.

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