What Is Web 3.0 & Why It Matters
What technology benefits more than 3 Billion people for 80% of their waking hours every single day?
In a single word, the answer is Web 2.0.
Web 2.0, coined as such by O’Reilly and others between 1999 and 2004, moved the world on from static desktop web pages designed for information consumption and served from expensive servers to interactive experiences and user-generated content that brought us Uber, Airbnb, Facebook, and Instagram. The rise of Web 2.0 was largely driven by three core layers of innovation: mobile, social, and cloud.
With the launch of the iPhone in 2007, mobile internet access drastically broadened both the user-base and the usage of the Web: we moved from dialing up to the internet a few hours a day at home at our desktops to an “always connected” state — the web browser, mobile apps, and personal notifications were now in everyone’s pocket.
Until Friendster, MySpace, and then Facebook in 2004, the Internet was a largely dark and anonymous place. These social networks coaxed users into good behavior and content generation including recommendations and referrals: from persuading us to share photos online with specific friend groups; to entrusting unknown travelers with our homes on AirBnB; and even getting into a stranger’s car with Uber.
Cloud commoditized the production and maintenance of internet pages & applications: new cloud providers aggregated and refined mass-produced personal computer hardware within numerous, vast data centers located around the world. Companies could shift from buying and maintaining their own expensive and dedicated infrastructure upfront to renting storage, compute power, and management tools on the go. Millions of entrepreneurial experiments could benefit from low-cost resources that scaled as their businesses grew.
While the Web 2.0 wave is still bearing fruit, we are also seeing the first shoots of growth emerge from the next large paradigm shift in internet applications, logically entitled Web 3.0. As hard to believe as it might seem, Web 3.0 (originally coined the Semantic Web by Tim Berners-Lee, the Web’s original inventor), is an even more fundamental disruption, one that in time will leave everything hitherto in its shade. It is a leap forward to open, trustless and permissionless networks.
‘Open’ in that they are built from open-source software built by an open and accessible community of developers and executed in full view of the world.
‘Trustless’ in that the network itself allows participants to interact publicly or privately without a trusted third party.
‘Permissionless’ in that anyone, both users and suppliers, can participate without authorization from a governing body.
The ultimate outcome of these new open, trustless, and permissionless networks is the possibility to coordinate & incentivize the long tail of work, service, data, and content providers that are the disenfranchised backdrop to many of the world's most acute challenges such as health, food, finance, and sustainability.
Where Web 2.0 was driven by the advent of mobile, social, and cloud, Web 3.0 is built largely on three new layers of technological innovation: edge computing, decentralized data networks, and artificial intelligence.
While in Web 2.0 recently commoditized personal computer hardware was repurposed in data centers, the shift to Web 3.0 is spreading the data center out to the edge, and often right into our hands. Large legacy data centers are being supplemented by a multitude of powerful computing resources spread across phones, computers, appliances, sensors, and vehicles which are forecast to produce and consume 160 (!) times more data in 2025 as compared to 2010.
Decentralized data networks are making it possible for these data generators (from an individual’s personal health data to a farmer’s crop data, or a car’s location & performance data) to sell or barter their data without losing ownership control, giving up privacy, or reliance on third-party middlemen. As such, decentralized data networks can bring the entire long tail of data generators into the emerging ‘data economy’.
Artificial intelligence & Machine learning algorithms have become powerful enough to create useful, indeed sometimes life-saving, predictions and actions. When layered on top of new decentralized data structures giving access to a wealth of data that would be the envy of today’s tech giants, the potential applications go far beyond targeted advertising into areas like precision materials, drug design, and climate modeling.
Web 3.0 enables a future where distributed users and machines are able to interact with data, value, and other counterparties via a substrate of peer-to-peer networks without the need for third parties. The result: a composable human-centric & privacy-preserving computing fabric for the next wave of the web.
So much for the technology but what difference will this make to the individuals and society as a whole? And how could this be even greater than the impact today’s applications have had on our families, businesses, and governments? It has been said² that the characteristic which sets humankind apart is our ability to organize ourselves in the pursuit of a commonly envisioned goal.
Thus it is highly instructive to cast our minds back in time/history, to identify four major social & technological stages in human collaboration:
In Villages, people could trade value, information & work with the small group of counterparties they already knew — their set of counterparties was limited by geographic proximity & personal trust bonds. The small scale meant individuals frequently had multiple roles in society e.g. farmer, fireman, warrior, and father. Consequently, transactions were focused on food, security, and leisure, and included little coordination beyond largely self-sustaining families.
In Urbanised Cities, the set of counterparties with whom people could trade value, information & work increased significantly. It became economically viable to launch new specialized businesses, produce accounting at the level of that business, and rely on others to produce all the remaining goods and services required by the city’s population. While some geographic restrictions remained, the larger spatial playing field and higher population density led to much wider coordination of skills across individuals.
Web 1.0 & Web 2.0 radically shrunk the latency and cost at which people & businesses could trade value, information & work with geographically distributed counterparties they didn’t necessarily know, via trusted intermediaries. Truly global businesses started to form, as the reach of counterparties expanded by a few orders of magnitude. At its heart, today’s internet allows global coordination via a set of intermediaries, providing a digital social trust layer for strangers to interact: from Facebook to eBay & AirBnB. Unfortunately, we’ve become overly dependent on these platforms, and when they move from “attract” to “extract”, their users (whether individuals or businesses) suffer via higher fees or platform risk (i.e. the platform has the power to destroy your business running on it). While today’s interactions might magically and reliably take place on a global scale, it is predominantly the $200Bn digital advertising business³, with ‘we the users’ as the product, that fuels this machine. It is now also broadly understood that these platforms of the ‘post truth’ world have created echo chambers within which unfiltered and unashamedly populist or indeed fallacious claims reverberate and reinforce — sometimes with chaotic consequences.
With Web 3.0, women, men, machines & businesses will be able to trade value, information & work with global counterparties they don’t know or yet explicitly trust, without an intermediary. The most important evolution enabled by Web3.0 is the minimization of the trust required for coordination on a global scale. This marks a move towards trusting all constituents of a network implicitly rather than needing to trust each individual explicitly and/or seeking to achieve trust extrinsically.
Web 3.0 will fundamentally expand the scale & scope of both human and machine interactions far beyond what we can imagine today. These interactions, ranging from seamless payments to richer information flows to trusted data transfers, will become possible with a vastly increased range of potential counterparties. Web 3.0 will enable us to interact with any individual or machine in the world, without having to pass through fee-charging middlemen. This shift will enable a whole new wave of previously unimaginable businesses and business models: from global co-operatives to decentralized autonomous organizations and self-sovereign data marketplaces.
This matters because:
Societies can become more efficient by disintermediating industries, reducing rent-seeking third parties, and returning this value directly back to the users and suppliers in a network.
Organizations can be intrinsically more resilient to change through their new mesh of more adaptable peer-to-peer communication and governance ties between participants.
Humans, enterprises, and machines can share more data with more privacy & security assurances
We can future-proof entrepreneurial & investment activities by virtually eradicating the platform dependency risks we observe today
We can own our own data & digital footprints by using a provable digital scarcity of data & tokenized digital assets
Through ‘modern mutual’ ownership and governance of these new decentralized systems of intelligence and sophisticated & dynamic economic incentives, network participants can collaborate to solve previously intractable or ‘thinly spread’ problems
The forthcoming wave of Web 3.0 goes far beyond the initial use case of cryptocurrencies. Through the richness of interactions now possible and the global scope of counterparties available, Web 3.0 will cryptographically connect data from individuals, corporations, and machines, with efficient machine learning algorithms, leading to the rise of fundamentally new markets and associated business models. The result is akin to a “return to the global village” — daily immersion in the human-centric & highly personalized interactions from which we used to benefit, yet now delivered at the global scale of the internet and supporting an ever-increasing myriad of human and machine skills specializations.