Web3 promises plenty of lofty goals and ideas, but what is it really, and are we close to achieving the dream?
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This report belongs to Cointelegraph research team
The term Web3 is often used as shorthand to discuss the new phase of the internet. It describes leaving the era of centralized social media and massive e-commerce platforms and arriving at a utopia of user-controlled data. Web3, in a colloquial sense, is simply an umbrella marketing term that means anything crypto-adjacent.
To offer clarity on this topic, the Cointelegraph Research team has released a new report detailing the nature of the real Web3. These key insights are invaluable for investors to understand to separate facts from fundamental misconceptions.
Cointelegraph Research makes a clear distinction between the “blockchain web,” which is the integration of blockchain technology into the web, and the decentralized, permissionless and trustless alternative of the internet, known as the “decentralized web.”
The blockchain web has fostered the growth of the ecosystems of nonfungible tokens, decentralized autonomous organizations (DAOs) and GameFi that veterans of the cryptoverse will be aware of. Ideally, these ecosystems lack a central authority, and value is derived from the creation of scarce digital assets. The report unpacks how, using blockchain technology, these ecosystems can spill over into the real world and bring new efficiencies to traditional industries.
There is a long way to go regarding the implementation of the idealistic principles of decentralization in both the blockchain web and the decentralized web.
The blockchain web, being built on top of the current internet infrastructure, requires hosting services in order to communicate among users and applications. Unfortunately, 60% of all of these nodes on Ethereum are hosted on Amazon Web Services. This gives one centralized authority the power to shut down a majority of the entire blockchain web. The report shows how even DAOs run into the problem of a small group of whales consolidating voting power coupled with low user participation.
The decentralized web, unfortunately, is not much better, but there is a reason for optimism. Currently, plagued by the monopolies such as Google, Amazon, Meta, Apple, Microsoft and Tencent, there is very little in the way of decentralization when users go online. However, alternatives using technologies like distributed hash tables are beginning to make it possible to build decentralized versions of popular applications.
