Simply Web 3: Let's Start
A explanation of Web 3. To a 5 year-old.
Welcome to a new series I am starting called Simply Web 3. I believe this space will power trillions of dollars in wealth creation over the next the 10 years, so it’s only right that everyone understands it.
For technical people and coders, it’s a little easier to understand, but for fundamental thinkers like myself, it can get confusing very quickly. So, the purpose of this series is to explain the dynamics of web 3 in the simplest manner possible.
More versions will follow soon. Let me know what you would like to see more of!
First, let’s rewind for some context…
What was web 1.0 and web 2.0?
Web 1 (1990-2005ish) had simple navigation and basic infrastructure. There were really no players who “controlled” the internet. Some say Amazon led the charge into web 2 when people discovered what you could really do with the internet.
Web 2 was driven by an exploration into the true capabilities of the internet. This movement had several large catalysts including mobile, social networks, and cloud computing. In Web 2, there are a few centralized players that hold a fair amount of control including Google, Facebook, Apple, Amazon.
The Revolution of Web 3
The main difference you will see is that while Web 2 is centralized, Web 3 is decentralized. Here is a simple graphic to help you understand, I used google as an example of a centralized player.
While Web 2 is mainly owned and run by centralized players, Web 3 is run by the community and builders.
How is Web 3 owned by the community and the builders?
This ownership of web 3 is mainly facilitated through the use of tokens, both Non-fungible tokens (NFTs), and fungible.
Chris Dixon says it best"NFTs gives users the ability to own objects, which can be art, photos, code, music, text, game objects, credentials, governance rights, access passes, and whatever else people dream up next.”
NFTs are verifiable tokens that exist on top of existing blockchains such as Ethereum and Solana and represent proof of ownership in a specific asset.
Fungible tokens include coins like $ETH and $SOL which can be traded on an exchange like Coinbase. These tokens (cryptocurrencies) can then be used to buy NFT’s. Fungible tokens can also be earned through certain platforms such as Rabbithole.
On Web 3 platforms, these tokens represent ownership in the platform, just like a stock would. The only exception is, these tokens are more meaningful. They can have multiple benefits including:
Voting rights in decisions of the platform.
Entry into a platform’s features (ex, You have to hold $WRITE to access Mirror.xyz)
Future share of the platform’s income. (ex, 20% of profits get distributed back to token holders of a website.)
Earn a % back for staking the tokens.
Stocks represent “ownership” in companies, but you don’t truly feel like an owner. Web 3 you are truly an owner.
Why is it important that users and builders own the platforms?
One word: Incentives. When people have true ownership in a platform they serve as the marketing for the platform. Everyone is working toward the same goals, it isn’t platform vs users, it’s platform + users working together towards a goal.
Best said by Naval:
How does the user experience change here?
It is so much better. Instead of making a login all you have to do is connect your wallet.
Here is an example of me signing into a discord-like platform. I’m not a member yet, but this shows how logins of web 3 works. It’s like having a one-click login for the entire internet. Bye passwords.
That concludes our broad overview of web 3 and some of the systems that make this innovation possible.
Next time we will cover DAO’s and dive deeper into the ownership on Web 3.
Sources
https://medium.com/fabric-ventures/what-is-web-3-0-why-it-matters-934eb07f3d2b
Cheers!
Tom