Web3 — A Technological Leap to Decentralized Structure
We live in polarizing times. Whether you’re still reading the newspaper or swiping through news applications on your phone while drinking your morning coffee, the content is fairly similar, if not identical. The world is spiralling out of control, society may never find middle ground between opposing opinions again, and artificial intelligence has begun to overtake and eliminate humanity.
It’s all about doom and gloom, as it always has been. However, thanks to the internet and its capabilities of speed, versatility, and anonymity, the information exchange is literally on steroids. It’s not the internet’s fault; we seek instant access to everything at all times, despite the throbbing headaches caused by the sheer amount of information at our fingertips. This has repeatedly led to desperate outcries for control and regulation on one side, while on the other side, critics fear their imminent ideological imprisonment.
“Web3 is the solution to all of our problems,” a voice in the back declares confidently.
“Web3,” the crowd turns around with puzzled expressions. Indeed, what on earth is Web3? It sounds like another buzzword intended to lure us into reading articles with little value. Aren’t we still trying to figure out the internet we know? Only recently have the majority of us discovered how simple it can be to communicate with distant family members, friends, and even colleagues through the wonders of digital devices and modern fiber-optic technology. While we can now choose to work from home and clock our commute from bed to desk in under two minutes, we still fail to comprehend all the benefits the internet has given us. Just looking at traffic data surpassing pre-pandemic levels in some parts of the world can make you wonder if the technological leap may have been too great for our socially driven species. One moment we embrace the internet wholeheartedly, only to criticize it in the next. While you’re hastily logging onto your first work call in rush hour traffic, the three delivery trucks in front of you painfully remind you of that convenient online shopping spree before bedtime. Meanwhile, the clock on your dashboard is mockingly ticking time away. Why didn’t you work from home?
While these mental gymnastics play in your head, the next technological leap is unfolding before our eyes, whether you are ready for it or not: Web3 is coming. Before you cover your face with your hands, see this as an opportunity. You’ve made it this far to find the article, and the world hasn’t even begun leaping yet. This is your chance to gain initial insights and understanding before you become completely overwhelmed. The future is approaching.
The Conceptual Evolution of the Internet
Let’s start by discussing some key features that define Web3 technology and why it has the potential to revolutionize our online lives. At its core, Web3 aims to decentralize control and ownership, providing greater user sovereignty and privacy. Most importantly, this technology is built on the blockchain, which is a distributed ledger recording transactions and data across a network of computers to ensure transparency, security, and immutability. Instead of relying on centralized authorities such as governments and corporations, Web3 aims to distribute control and decision-making power across a network of nodes. Furthermore, Smart Contracts are essential building blocks for efficiently developing Web3 applications with superior capabilities. Smart Contracts are essentially self-executing contracts with terms of the agreement directly written into code. Their primary purpose is to automatically execute specific tasks when pre-defined conditions are met, thus eliminating the need for potentially time-consuming intermediaries.
When discussing Web3, the term ‘tokenization’ plays a crucial role because it allows creators to develop digital tokens for their content, serving as assets, proof of ownership, and many other forms of value. As this process occurs on immutable blockchain ledgers, traceability, transparency, and smart contract properties give these developments legitimacy and value that would otherwise be challenging to create and prove.
Furthermore, tokenization in the form of cryptocurrencies provides users worldwide with monetary inclusion (i.e., Decentralized Finance) that they previously lacked due to various imposed restrictions. For peer-to-peer trading and access to blockchain applications, users only need internet access (which is not always guaranteed but is often easier to obtain than a loan at a bank). This means that Web3 can not only create job opportunities for tech-savvy individuals looking to explore new possibilities but also allows a broader global audience to support developments by providing financial backing. Your five bucks may not achieve much on its own, but when millions of small contributions come together, they can change the world. Web3 can make this process much more efficient than Web2 ever did. Web3 is a catalyst for collaboration, transparency, and community growth, fuelled further by its open-source code principles.
How Innovation Can Be Complementary
Blockchain technology also encompasses Non-Fungible Tokens (NFTs), and a primary concern for content creators is how to store and access related assets seamlessly and without greater risks than those that already exist. To further explain this, we must explore a technology that is not exclusive to Web3, known as the InterPlanetary File System, or IPFS.
IPFS is a peer-to-peer network for storing and sharing data in a distributed file system. This aligns with the decentralized nature of blockchain technology, making it crucial for NFT compatibility. IPFS uses content-addressable storage, where files are uniquely identified by their content rather than their location, ensuring data permanence and tamper-proofing. This is also referred to as a Content Identifier (CID), working like a digital fingerprint, making it another key component for NFT technology.
While IPFS itself is not on the blockchain, it complements blockchain technology and addresses some of its limitations, especially in terms of data storage and retrieval. Non-Fungible Tokens, for example, often consist of content-heavy, high-resolution data. Thanks to the IPFS off-chain integration, which remains secure and verifiably linked to the blockchain, global storage and instant accessibility become possible without reliance on a single server.
Despite the complexity for non-tech-savvy individuals (like me), using NFT technology from a user perspective is not that difficult. To be honest, you don’t need to know much about InterPlanetary File Systems. As interesting as it is to learn about this, it’s hardly crucial to own Non-Fungible Ape images in your crypto (hardware)-wallet.
What’s important to understand is that nearly every NFT out there depends on IPFS technology and the benefits it brings to the table. Whether we’re talking about art and collectibles, gaming and virtual assets, real estate and tokenization, music and media, or identity and certification, each of these use cases benefits from the technological integration of IPFS into the Web3 space. This also demonstrates that despite the sometimes negative image associated with cryptocurrencies, the Web3 community is tightly woven into the broader digital landscape that we love and don’t want to give up.
Acknowledging the Web3 Challenges
While the above integration may highly praise the technological advancements and integrations made, we cannot neglect the fact that there are still some considerable drawbacks within Web3 that must be considered before diving head-first into the world of decentralization.
Scalability can be a major bottleneck for some blockchain networks, leading to slow transaction processing times and exorbitantly high transaction fees, in some cases even higher than the desired transaction amount. This not only appears reckless but also defeats the purpose of avoiding third-party fees that banks would charge. In addition to poorly built decentralized applications (dApps), confusing wallet systems, and network specificities, high fees directly contribute to the poor user experience some people face, causing them to turn their backs on embracing this innovation as something useful.
Furthermore, the entire Web3 space still faces significant hurdles when it comes to regulatory clarity, standardization regarding protocols and interfaces, and questionable energy consumption in some cases.
Last but not least is the importance of security. Despite many measures that users can take to protect themselves from hackers and scammers, the space is still very young and vulnerable to attacks. User responsibility regarding security should always be one of the most important lessons that platforms teach their members. Especially online, and even more so with Web3, the anonymity and decentralized nature can make it very difficult to track bad actors (though, not impossible). Therefore, vigilance is a necessity for all users, which can at times be tiring and discouraging.
The Open-Ended Conclusion
Although Web3 is still in its infancy, there are certainly some important issues that need to be addressed. However, there seems to be little doubt that the internet is evolving more and more towards Web3. The desire for decentralized applications with greater data privacy and control has been outgrowing the capabilities of Web2 over the past decade. It would be surprising, especially if developers deliver on their promises to make Web3 more accessible, user-friendly, and secure, while government bodies implement reasonable regulations, if this innovation doesn’t make it to the top of the list of the most crucial inventions of the twenty-first century.
Now, all we need from decentralization is just a little bit more structure.
If you found this article interesting and would like to further discuss this topic and many other blockchain-related subjects with like-minded people, come join the Fish and Chips Discord server (https://discord.gg/bvHEv9N5pP). Until soon and thank you for reading.
