Key Features
Although it can be difficult to define exactly what Web3 is, the creation of this next-generation version of the web is governed by several basic principles:
- Web3 is decentralized: unlike other versions of the internet, where large sections of the network are controlled and owned by centralized organizations, ownership in Web3 is shared between developers and users.
- Web3 is permissionless: everyone has equal access to participate in Web3.
- Web3 has its own payment system: it uses cryptocurrency to spend and send money on the internet, instead of relying on the outdated infrastructure of banks and payment processing tools.
- Web3 is trustless: it operates on the basis of incentives and economic mechanisms, rather than relying on trusted third parties.
Although the key features of Web3 are not isolated and do not fall into clear categories, we have tried to separate them for simplicity and better understanding.
Web3 gives you ownership of your digital assets in an unprecedented way. For example, suppose you are playing a game on the Web2 network. If you buy an in-game item, it is linked directly to your account. If the game developers delete your account, you will lose the purchased items. Or if you stop playing the game, you will lose the value you invested in the items purchased in the game.
Web3 can enable direct ownership of digital collectibles and in-game assets through non-fungible tokens (NFTs). No one can take ownership away from you – not even the creators of the game. And if you stop playing, you can sell or trade your in-game items on open markets and recoup their cost, ensuring that the time and energy spent on these games don't go to waste.
The dynamics of interaction between platforms and content creators are highly unbalanced.
OnlyFans is an adult content site with over 1 million creators, many of whom use the platform as their primary source of income. In August 2021, OnlyFans announced plans to ban sexually explicit content. The announcement sparked outrage among creators who felt they were being robbed of revenue on the platform they helped build. After backlash, the decision was quickly reversed. While content creators have won this battle, this example points to the problem in Web2: you lose reputation and accumulated readership if you leave the platform.
On the Web3 network, your data resides on the blockchain. If you decide to leave the platform, you can take your reputation with you by connecting it to another interface that better aligns with your values.
Web2 requires content creators to trust platforms and hope they won't change the rules, while resistance to censorship is an inherent property of Web3 platforms.
In addition to owning your data in Web3, you can own the platform as a collective using tokens that act as shares in the organization. DAOs make it possible to coordinate the decentralized ownership of the platform and make decisions about its future.
Technically, DAOs are defined as negotiated smart contracts that automate decentralized decision-making using a pool of resources (tokens). Users with tokens vote on how resources will be spent, and the code automatically executes the voting results.
However, many Web3 communities are considered DAO organizations. All of these communities have varying levels of decentralization and automation through code. We are currently exploring what DAOs are and how they might evolve in the future.
Traditionally, you created an account for each platform you use. For example, you might have a Twitter account, a YouTube account, and a Reddit account. Want to change your display name or profile picture? This must be done for each account. In some cases, you can log in through social media accounts, but this creates the familiar problem of censorship. In an instant, these platforms can block you from your entire online life. To make matters worse, many platforms require you to trust them with your personal information in order to create an account.
Web3 solves these problems by allowing you to control your digital identity with your Ethereum address and ENS profile. Using an Ethereum address provides a single sign-on for all platforms —secure, censorship-resistant and anonymous.
Web2's payment infrastructure relies on banks and payment processors, leaving the 1.7 billion people around the world without bank accounts on the sidelines. Web3 uses tokens like ETH to send money directly in the browser and does not require a trusted third party. This way, anyone can participate in a global financial network as long as they have an internet connection.