Web3: Unlocking the Potential of the New Web

by Dan Chichester

Technology

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Who remembers the 90s? (1990s, not 1890s — important to make the distinction, here in the 21st century!) Back in them days, web pages were little more than assemblies of static text and images, curiosities for the techno-curious and distinguished by the magic trick of links that would transport you between pages with just a click. (No taps in that era.) 

Now, of course, we live an age of dynamic apps, social networks and e-commerce platforms: a complex ecosystem of digital that’s become integral — even essential — to our daily lives.

Despite this progress, the web is far from perfect. Pick your problem: centralized power and/or influence among too few individuals or systems; data monopolies; privacy breaches — or maybe it’s just a general lack of transparency and trust. (Need a few more gripes and grievances? Spend a few real-time moments doom scrolling through your favorite news feed and report back.)

That brings us to today’s savior — or promised land. Web3 is the next gen of the web, that promises to address these issues — and unlock the full potential of the internet. (Yes, traveler, even if you thought it was pretty delicious so far, there’s apparently more delights to come!) Web3 promises to be decentralized, open, and to put the You back in “user.” 

It will do this with a combination of blockchain technology, smart contracts and peer-to-peer networks, harnessed together to fashion a more secure, private and transparent internet. It’s the digital landscape where users can explore and interact with each other while being assured that YOU maintain control over your data, your identity and your digital assets.

It is indeed a paradigm shift: that important change that happens when the way we’ve thought about things gets replaced by the new and different. In terms of potential, this web3 internet is intended to be inclusive, democratic, and empowering. Users are meant to be more than consumers and can become even more active participants and creators. 

It holds special opportunities for developers seeking to realize their dreams of innovation and entrepreneurship, with the possibilities of decentralized applications (dApps) that are not limited by the constraints of centralized platforms.

Wrapping our Villain-ous arms (and brains) around what the whole world wide web is saying about web3, we’ve gathered together its key features and benefits; its challenges and opportunities; its technical aspects — and the implications for privacy, security and scalability. And just because it promises to “change everything” — we’ll take a swing at web3’s implications for reshaping industry, politics, economics. Heck, maybe society itself!

Fire up your modern-day browser and strap in.

A Look at Web2 and Web3: The Pros and Cons

Before we race ahead into the future… let’s devote a moment for what was: the internet known as Web2. (And let’s also pause the hyperbole for a moment — Web2 is what the internet still *is*, for the very most part.) 

This current generation of the internet is also known as the “social web” and is dominated by centralized platforms. You may have even heard of a few of them, with names like Facebook, and Google and Amazon. Web2 has its upsides and downs, as evidenced here.

Web2 Pros:

  • Innovative: Web2 platforms have spurred a wave of innovation in software development, data analytics, and artificial intelligence.
  • Easy to use: Designed to be user-friendly, with simple and intuitive interfaces that require no technical skills to use.
  • Convenient: Offering a wide range of services, from social networking to e-commerce, that are designed to make lives easier and more efficient.
  • Network advantaged: Web2 platforms benefit from network effects, where the more users, the more valuable they become to users and businesses.

Web2 Cons:

  • Centralized: Because they are controlled by a few large corporations, prominent Web2 platforms have significant power over users’ data, privacy, and online behavior.
  • Data monopolies: The massive amounts of user data that Web2 platforms collect are used for targeted advertising, market research, and other purposes.
  • Privacy challenged: Web2 has a poor track record of protecting user privacy, with frequent data breaches, leaks, and scandals.
  • Censorship: Web2 platforms can censor or restrict access to content, often without clear guidelines or accountability.

Not to be outdone or upstaged, let’s consider web3’s pros and cons as it seeks to address the shortcomings of the current internet:

Web3 Pros

  • Decentralization: This means Web3 platforms are not controlled by a single entity or authority, but rather by a network of users and nodes.
  • User control: Users have more control over their own data, identity, and digital assets, which should allow them (us) to interact with each other and with applications in a more direct and trusted way.
  • Privacy and security: Cryptographic protocols better ensure the privacy and security of user data, transactions, and interactions.
  • Transparency & trust: Web3 platforms provide a transparent and auditable record of all activities on the network, which can increase trust and accountability.

Web 3 Cons:

  • Interoperability: While decentralization is an ultimate strength of Web3, current fragmentation means a lack of interoperability among platforms — hindering usefulness.
  • Complexity: Web3’s technical underpinnings require knowledge of the (currently) more complex building blocks of blockchain, cryptography, and smart contracts.
  • Scalability: Early days means Web3 faces development challenges in terms of scalability, speed, and cost.
  • Adoption: Web3 platforms are still new and unfamiliar to most users, which can limit their adoption and impact.

Net net of this new internet? Overall, web3 represents a promising — but still evolving — vision of the internet that has the potential to address many of the issues of web2 and create a more user-centric, secure, and inclusive web. Even so, it also faces many technical, social, and economic challenges that need to be addressed for it to fulfill its intent.

Exploring the Potential of Web3

What, then, is this web3 potential? This “new vision” of the internet may have its impact in these key areas:

  • Decentralization of the internet: The creation of decentralized networks and apps (not controlled by a few large corporations or central authorities, but rather by a network of users and nodes) can increase transparency, trust — even the resilience of the internet. This may also reduce the risk of censorship, data monopolies, and other forms of abuse.
  • Increased user control and privacy: When users have more control over their data, identity, and digital assets, this should lessen the risk of data breaches, hacks and other forms of abuse. Users may then enjoy an increase in privacy, security and autonomy.
  • New business models and opportunities: With the ability to build decentralized applications (dApps), developers will no longer be limited by the constraints of centralized platforms. This web3-fueled entrepreneurship can create new business models and revenue streams that can promote market diversity and competition.
  • Financial inclusion and democratization: Decentralized finance (DeFi — web3 has no shortage of acronyms) allows anyone with an internet connection to participate in global financial markets, without the need for intermediaries or traditional financial institutions. This can empower individuals and communities that have been excluded from traditional financial systems.
  • Social and political transformation: On the higher end of aspirational thinking, web3 is being promoted to enable decentralized governance, social coordination, and collective action. New forms of (TBD) collaboration, cooperation, and participation may help individuals and communities to shape their futures in ways free of the constraints of centralized institutions and systems.

A Journey Through Web Development: The History of the Web

With its bold vision for internet resiliency, sustainability and equitability for all, web3 certainly sounds amazing —. But how did we get here? 

Sir Tim Berners-Lee — one man! — invented the World Wide Web in 1989. While working at CERN (the European Organization for Nuclear Research) Berners-Lee published the first website — which was primarily information about the world wide web project and how to use it. The original purpose of the Web was to allow scientists to share information and collaborate on research projects across different locations.

This early web was very basic, consisting mostly of text and simple hyperlinks. But it quickly grew in popularity — maybe you’ve heard of it? — and became the dominant platform for publishing and sharing information. 

The mid-1990s marked a period of fast growth and innovation for the web, with code enhancements to HTML, CSS, and JavaScript making it possible for more sophisticated websites to offer dynamic content, multimedia, and interactivity. This time also saw the rise of the first commercial websites, such as Amazon and eBay, which paved the way for e-commerce and online business.

By the early 2000s, the web’s evolution had been labeled Web 2.0 (or web2) for its new generation of technologies and applications that emphasized user-generated content, social networking, and collaboration. Facebook, Twitter, and YouTube — all examples of web2 platforms — transformed the internet from a static collection of documents into a dynamic and social space where users could interact, share, and co-create content.

Next up: mobile devices, cloud computing and artificial intelligence have continued the pace and integration of the web into our daily lives, with literally billions of people using it to communicate, work, learn, and entertain themselves. (Plus: cat videos.)

The Current State of the Web: Current Trends and Limitations

The web you’re using today — still a largely web2 environment — follows some common trends and suffers from some known limitations. Keeping these in mind can help in evaluating the path to web3.

Current Trends:

  • Mobile-first design: Based on the fact of so many people using their mobile devices to access the web, “mobile-first” emphasizes designing websites for mobile devices first, and then adapting them for desktops and larger screens.
  • Progressive Web Apps (PWA): These web applications can be installed on a user’s device like a native app but are accessed via a web browser. (Vs. an “app store.”) The increasing popularity of PWAs is based on their ability to offer app experiences while being faster, lighter, and more accessible than native apps.
  • Serverless Architecture: This enables developers to build and run applications without worrying about the infrastructure, scaling, or maintenance. A common example of this would be running things off Amazon’s cloud service. This approach allows for greater agility, flexibility, and cost-effectiveness.
  • Artificial Intelligence (AI) and Machine Learning (ML): All the rage today, AI and ML are increasingly integrated into web applications, allowing for personalized experiences, predictive analytics, and automation of routine tasks. (And some early days weirdness, to be sure!)

Current Limitations:

  • Centralization: The web remains dominated by a few large corporations and centralized platforms that control much of the data and content on the internet. This centralization can limit competition, innovation, and user control.
  • Security and Privacy: With so much personal, sensitive data being shared on the web, security and privacy are major concerns for users. (Or should be!) Malware, phishing, and data breaches are common, and many users are unaware of the risks and vulnerabilities they face using the web.
  • Accessibility: In spite of efforts to improve accessibility, many websites and web applications are still “off limits” to people with disabilities or who use assistive technologies.
  • Complexity: As new technologies, frameworks, and standards continue to emerge, small businesses and independent developer can have a hard time keeping up.
  • Performance: Many websites and web apps are still slow and resource-intensive, which lead to poor user experiences and frustration. Improving web performance can be difficult, especially for complex or data-intensive applications.

Blockchain Technology and its Role in Web3

We’ve mentioned blockchain previously. And if you’re this deep into our read here, there’s a fair chance you’ve heard the term before. But what exactly is blockchain technology?

Blockchain technology is a key component of web3. It provides the underlying infrastructure for many of the decentralized applications and services that make up this new web. At its core, blockchain is a decentralized ledger that allows for secure and transparent record-keeping. In web3, blockchain technology is used to create decentralized applications (dApps) and services that are not controlled by any central authority or intermediary.

Because blockchain is decentralized and immutable (read: unchangeable), it is very difficult to tamper with or manipulate the data that is stored on it. This makes blockchain-based applications more secure and trustworthy than traditional web applications, which rely on centralized servers and databases.

Another benefit of blockchain technology in web3 is that it allows for greater user control and ownership of data. In traditional web applications, users often have little control over their data and must rely on intermediaries to store and manage it. With blockchain-based applications, however, users can own and control their data, and can choose to share it or keep it private as they see fit.

Blockchain technology is also being used to create new forms of digital assets and currencies, such as cryptocurrencies and non-fungible tokens (NFTs). These assets can be used to ease transactions and exchange value on the web3 ecosystem, without the need for traditional financial intermediaries.

Overall, the role of blockchain technology in Web3 is to provide a more secure, transparent, and decentralized infrastructure for the new web, and to enable new forms of digital assets and applications that were not possible before.

Distributed Ledger Technology and Beyond: The Architecture of Web3

The architecture of web3 is fundamentally different from that of web2, with a focus on decentralization, user control, and privacy. At the heart of web3 is distributed ledger technology: a type of database that is spread out over a network of computers or nodes, rather than being stored on a centralized server. Each node on the network has a copy of the database, which is updated and synchronized in real-time using consensus algorithms.

One of the most well-known types of distributed ledger technology is — you guessed it — blockchain. In a blockchain network, transactions are validated and added to the ledger by a distributed network of nodes, rather than by a central authority.

In similar fashion, distributed ledger technology is used as a foundational building block for decentralized applications and services. DApps are basically software applications that run on a decentralized network, rather than on a centralized server. They use distributed ledger technology to validate and record transactions, and often use cryptocurrencies or other digital assets as a means of exchange.

Smart Contracts: The Foundation of Decentralized Applications

“Smart contracts” are self-executing computer programs that are built on top of a blockchain or other distributed ledger technology. They are designed to automatically execute the terms of a contract when certain conditions are met, without the need for intermediaries or trusted third parties. (If you’re at all familiar with coding, a greatly simplified way of thinking about this is a classic “if/then” scenario: “if” this equals that, “then” move on to the next line of code.)

For example, a smart contract could be used to automatically release funds from one party to another when a project is completed, or a product is delivered. Smart contracts provide a foundation for decentralized applications because they enable trusted, secure, and transparent transactions on a decentralized network. Because smart contracts are executed automatically and transparently, they can significantly reduce the costs and complexities associated with traditional contracts and transactions.

Decentralized Applications (DApps): The Future of the Web

While web2 has brought about many innovations and conveniences, it has also given rise to serious privacy concerns, security risks, and power imbalances. Web3’s decentralized applications offer a new vision for how the web can work. By leveraging distributed ledger technology, smart contracts, and other decentralized technologies, dApps can provide a more secure, transparent, and user-controlled experience.

Decentralized social networks can offer an alternative to centralized social media platforms that monetize user data and algorithmically manipulate user attention. Decentralized marketplaces suggest a substitute to centralized e-commerce platforms that charge high fees and exert significant control over the buying and selling process.

While these disruptions to existing industries and services are not here yet (and it’s not entirely clear by example how they will take root and work) the more “democratic” potential of dApps is about a future web experiment that yields new forms of collaboration, value exchange, and ownership.

Interoperability: Connecting the Web3 World

Crucial to the web3 world ahead, interoperability enables different blockchains and decentralized applications to communicate and work together seamlessly. With web3’s diverse array of decentralized networks and protocols, interoperability is essential for creating a connected and cohesive ecosystem.

One of the main challenges of achieving interoperability is the lack of a standardized protocol for communication and data exchange. However, there are several initiatives and protocols working towards achieving just those goals.

Cross-chain bridges are one approach, for the transfer of assets and data between different blockchains. Cross-chain bridges can be built using a variety of techniques, such as atomic swaps, sidechains, and interoperability protocols. 

(An “atomic swap” is an exchange of cryptocurrencies from separate blockchains. “Sidechains” operate as a separate blockchain, running in parallel to the main chain.) 

One example of interoperability protocols is the Interledger Protocol (ILP), that enables communication, payments and data exchange between different ledgers, including blockchains and traditional financial systems.

In the spirit of interoperability, these efforts are not in isolation. Initiatives and organizations — such as the Web3 Foundation — are funding the development of several interoperability projects, such as Polkadot and Kusama.

Web3 in Action: Real-world Use Cases

As with many a “work in progress,” web3 can seem like a lot of jargon, or just theory. In other words, “That all sounds great, let me know when it’s something I can use.” In that spirit of practicality, let’s spin out some use cases for web3 in terms of industry and individuals.

Decentralized Finance (DeFi): The Rise of Web3 Finance

Web3 finance, or DeFi (decentralized finance) describes the ecosystem of decentralized financial applications and services built on top of blockchain technology. DeFi is a major use case for Web3 and has the potential to transform the way we think about and interact with traditional financial systems.

Traditional finance relies on centralized intermediaries and institutions to manage transactions and financial services. (Your almighty bank is one such central manager of services.) DeFi operates on a decentralized, peer-to-peer network that is transparent, secure, and trusted. By leveraging the power of blockchain technology, smart contracts, and decentralized networks, DeFi applications can offer expected financial services — such as lending, borrowing, trading, and asset management — but with lower costs, greater accessibility, and higher security than traditional financial systems.

A key benefit of DeFi is that it is open to anyone with an internet connection, regardless of their geographic location or financial status. This makes DeFi particularly attractive to individuals and communities who are underbanked or underserved by traditional financial systems.

Popular examples of DeFi applications include:

  • Decentralized exchanges (DEXs): to trade cryptocurrencies and other digital assets without the need for intermediaries.
  • Decentralized lending and borrowing platforms: earn interest on cryptocurrencies or obtain loans using cryptocurrency as collateral.
  • Stablecoins: cryptocurrencies designed to maintain a stable value, often used in DeFi applications to provide stability and predictability.
  • Asset management platforms: to manage and invest in various digital assets through automated algorithms and strategies.

Digital Identity: Web3 and the Future of Identity Management

Web3 technologies enable individuals to store and manage their own identity data on decentralized networks. This would give individuals ownership and control over their personal data. Approaching identity with this mindset and technology not only provides greater privacy and security for individuals, but also makes it easier to verify and share identity information across different platforms and applications.

Blockchain technology can be used to create decentralized identity systems that are transparent, unchangeable, and secure. For example, self-sovereign identity (SSI) is an approach to digital identity that is built on top of blockchain technology and enables individuals to create and manage their own digital identities. SSI systems use cryptographic keys and other secure technologies to enable individuals to control access to their personal data and share it only with trusted entities.

Other web3 identity technologies and projects exploring new approaches to identity management include the Decentralized Identity Foundation (DIF), a consortium working to develop decentralized identity standards and protocols. Blockchain-based identity platforms, such as uPort, are focused on creating new decentralized identity solutions.

Supply Chain Management: Web3’s Impact on Supply Chain Efficiency

If the pandemic years have taught us anything, it’s the importance of the supply chain. If the future internet has anything to say about it, web3 technology can enable more secure and efficient tracking of goods and services throughout the supply chain, from sourcing to distribution.

By leveraging blockchain technology, companies can create a tamper-proof record of every transaction in the supply chain, allowing for greater transparency and traceability. This means that companies can easily track the movement of goods and services from suppliers to customers, making it easier to identify and address any issues that may arise.

Web3 technology can also streamline the supply chain by automating many of the processes involved in supply chain management. Smart contracts can be used to automate payment and fulfillment processes, reducing the need for intermediaries, and speeding up the supply chain.

The risk of fraud and counterfeiting can also be reduced. By creating a transparent, tamper-proof record of every transaction in the supply chain, blockchain technology can help prevent the introduction of counterfeit or fraudulent goods into the supply chain.

Gaming and Virtual Reality: Web3’s Impact on Entertainment

The world of web3 isn’t all work. Tomorrow’s technology has the potential to transform the entertainment industry, particularly in gaming and virtual reality (VR). Blockchain-based gaming and VR platforms can enable players to truly own and control their in-game assets, allowing them to buy, sell, and trade digital assets (weapons, resources, costumes, treasure) in a secure and transparent manner. This can create new opportunities for players to monetize their gaming experiences, such as by selling rare in-game items or participating in player-run economies.

Web3 technology can also enable new forms of collaboration and co-creation in gaming and VR. Decentralized networks can facilitate the creation of player-driven games and experiences, where players can contribute their own content and ideas to the development process. This can lead to more diverse and innovative games and VR experiences, as well as greater engagement and loyalty from players.

Then there is the opportunity for new business models for developers. Smart contracts can be used to create new revenue streams for developers, such as the use of in-game tokens or other forms of decentralized currency. This can enable new forms of funding and monetization for game and VR development and create new opportunities for developers to connect with their audiences.

Other Web3 Use Cases: The Limitless Possibilities of the Web3 World

Beyond these four, web3 technology suggests many more innovative, exciting, and transformative applications.

  • Decentralized Social Networks: With more control over their data and content, users will have new opportunities for collaboration, community building, and peer-to-peer interaction.
  • Healthcare: By creating tamper-proof medical records and enabling secure data sharing between patients, doctors, and other health stakeholders, web3 tech can enable more secure and efficient healthcare systems.
  • Energy: Decentralized energy systems can make it possible for individuals and communities to generate, store, and share renewable energy in a more efficient and sustainable manner.
  • Voting: Web3 technology can enable more secure and transparent voting systems, by creating tamper-proof records of votes and enabling secure and decentralized vote counting.
  • Real Estate: With secure transfer and tracking of property ownership, web3 can create more efficient and transparent peer-to-peer transactions.
  • Charity: Blockchain’s tamper-proof nature protects donations and enables more direct giving to individuals and communities in need.

Navigating the Web3 Ecosystem

While the future is still to come on some fronts, web3 isn’t waiting on “go” — it’s off and running. There are several major platforms leaning hard into these technologies and are likely to become/remain players as the ecosystem expands.

Ethereum: The Pioneer of Web3

Ethereum is a decentralized, open-source blockchain platform that officially launched in 2015. Ethereum’s native cryptocurrency is called Ether (ETH), which is used to pay for transaction fees and incentivize network participants. But Ethereum is more than just a cryptocurrency: it is a full-fledged computing platform that allows developers to create complex applications and programmable contracts on top of its blockchain.  This has enabled the creation of a wide range of innovative applications and use cases, from decentralized finance (DeFi) to digital identity, supply chain management, and more.

Ethereum is currently the most widely used web3 platform, with a large developer community and a wide range of tools and resources available for building decentralized applications. It has also been a major driver of the Web3 ecosystem and has inspired the development of other Web3 protocols and platforms, such as Polkadot, Cardano, and Solana.

EOS: The High-performance Web3 Platform

Launched in 2018, EOS is a blockchain platform with the goal of providing a high-performance infrastructure for decentralized applications. The platform is designed to support the creation of highly scalable, decentralized applications, with the aim of addressing some of the scalability and usability issues that have traditionally plagued blockchain technology.

One of EOS’s key “high performance” features is its delegated proof-of-stake (DPoS) consensus mechanism. This is designed to be more efficient and scalable than the traditional proof-of-work (PoW) mechanism used by many other blockchains, such as Bitcoin and Ethereum.

In the EOS DPoS system, token holders can vote for a limited number of block producers who are responsible for validating transactions and creating new blocks. This system is designed to be more energy-efficient than traditional PoW mechanisms and can support much higher transaction throughput. In fact, EOS is capable of processing thousands of transactions per second, making it one of the fastest blockchain platforms available.

EOS is also known for its user-friendly development environment and tools. The platform provides developers with a number of resources, including programming libraries, software development kits (SDKs), and integrated development environments (IDEs), to help them build decentralized applications quickly and easily.

TRON: The Web3 Platform for Decentralized Content

If you’re a Disney+ fan, “Tron” may conjure images of a virtual adventure featuring light cycles. If you’re a web3 fan, TRON is a blockchain-based platform for the creation and sharing of digital content. It was founded by Justin Sun in 2017.

TRON has a focus on the entertainment industry, providing a platform for content creators to share their work and connect with their audience in a decentralized, censorship-resistant environment. TRON has also made a number of high-profile partnerships with entertainment industry players, including BitTorrent, which was acquired by TRON in 2018. The TRON platform includes tools and resources for content creators, among them a decentralized content distribution network, a digital rights management system, and a token-based incentivization mechanism.

TRX is TRON’s native token, used to incentivize content creators and consumers on the platform. Content creators can earn TRX for creating and sharing their work, while consumers can use TRX to purchase content and support their favorite creators. This token-based incentivization model is designed to create a more fair and transparent content ecosystem, where creators and consumers can interact directly without the need for intermediaries.

Other Major Web3 Platforms: Comparing the Leaders in the Space

Of course, Ethereum, EOS and TRON are not alone. There are many web3 platforms competing to be leaders in the space, each with its own unique features and capabilities.

  • Polkadot: A next-gen blockchain platform that enables interoperability between different blockchains. It is designed to be scalable, secure, and customizable, making it a popular choice for building complex, multi-chain applications.
  • Solana: A high-performance blockchain platform designed for fast and low-cost transactions. It uses a unique proof-of-history consensus mechanism that enables it to process thousands of transactions per second.
  • Cardano: Designed to be secure, sustainable, and scalable, this blockchain platform uses a proof-of-stake consensus mechanism that is designed to be more energy-efficient than traditional proof-of-work systems.
  • Binance Smart Chain: Built on top of the Binance Chain, this blockchain platform is designed to be compatible with the Ethereum Virtual Machine (EVM), making it easy for developers to migrate their existing Ethereum dApps to the Binance Smart Chain.
  • Cosmos: Designed to be modular and customizable, making it easy for developers to build complex, multi-chain applications that support interoperability between different blockchains.

Scalability: The Challenge of Web3

One of the biggest challenges facing any of these web3 platforms — and web3 technology overall — is scalability. Scalability means how well can a blockchain or web3 platform handle many transactions without slowing down.

In the case of blockchain-based systems like Ethereum, the scalability challenge arises from the fact that every transaction on the network must be validated by all participating nodes. This means that as more users join the network and more transactions are processed, the network can become congested.

Interoperability in general will help to address this challenge, as well as the previously mentioned “proof of stake,” which requires a great deal less energy. Other scalability solutions being explored include: 

  • Layer 2: These protocols run on top of existing blockchains, allowing for faster and cheaper transactions. Examples of layer 2 solutions include state channels, which enable off-chain transactions between two parties, and sidechains, which are separate blockchains that can interact with the main blockchain.
  • Sharding: This technique partitions a blockchain into smaller, more manageable pieces called shards. This allows for parallel processing of transactions, improving scalability.

The answer to scalability is still being explored, and it remains to be seen which approaches will prove most effective in the long run.

Interoperability: The Key to Web3’s Success

As we touched on throughout our tour of web3, interoperability is a critical component of the future web’s success. As an ecosystem of multiple blockchains and decentralized applications, web3 depends on interoperability between these different components for communication with each other, and to create a more connected and efficient web3 environment.

In the current web2 world, different applications exist in isolated silos, and transferring data and assets between them can be complicated and inefficient. Interoperability in web3 aims to solve this problem by allowing different blockchains and applications to communicate and share data seamlessly.

Interoperability also allows for greater scalability, by enabling different blockchains to handle different parts of a transaction or application. In the example of a DeFi app (decentralized finance), one blockchain might be for transactions, another for storage, and a third for identity verification. Interoperability enables these different blockchains to work together with no gaps, providing a more efficient and streamlined user experience.

Interoperability also enables innovation by fostering collaboration and cross-pollination between different projects and communities. With interoperability, developers can build on each other’s work and create new, more complex applications that leverage the strengths of multiple blockchains and decentralized systems.

Security: Protecting the Web3 World

Decentralized systems rely on trust and transparency — making security of utmost importance to web3. Protecting our digital tomorrow will require a combination of: 

  • Network Security: Securing nodes, validators, and miners that operate on the network will ensure they cannot be hacked or compromised.
  • Smart Contract Security: With their role in managing funds, executing transactions, and enforcing rules, it’s essential that smart contracts are free from vulnerabilities that could be exploited by attackers.
  • Cryptographic Security: Cryptography secures transactions, encrypts data, and creates digital signatures. These algorithms must be implemented correctly and their keys securely stored and managed.
  • Identity and Access Management: With great power comes great responsibility: while web3 systems give users back their own identity autonomy, that also makes users responsible for securing their own private keys and managing their own identities. It will be crucial to ensure that access control mechanisms for these systems are robust and that users have adequate tools to securely manage their keys and identities.
  • Governance Security: Decentralized systems rely on a distributed governance model where stakeholders vote on changes to the network or protocol. That makes it essential that the governance mechanism is secure and free from collusion or manipulation.

Adoption and User Experience: Making Web3 Accessible to All

The possibilities of web3 only become meaningful if they involve as many people as possible. This makes it especially important that web3 becomes widely accessible. For that to happen, there are several aspects of adoption and user experience that need to be addressed:

  • Usability: Decentralized applications built on web3 technologies can be complex and confusing for users who are not familiar with them. To improve adoption, developers need to focus on creating user-friendly interfaces and experiences that make it easy for users to interact with these applications.
  • Education: Users need to understand the benefits and potential of decentralized systems and be equipped with the knowledge and tools to both want to adopt them — and to then interact with them effectively.
  • Interoperability: It all comes back to this: web3’s full potential only becomes real with interoperability between different platforms and networks. This will let users move seamlessly between different applications and platforms, creating the necessary user-friendly and accessible ecosystem.
  • Scalability: As discussed, today’s web3 faces challenges that will limit its speed and efficiency. For web3 to grow a user population, it will need to scale to accommodate increasing demand. 
  • Integration: Existing systems won’t just vanish. It will be essential to integrate these legacy systems and infrastructure so users can leverage the benefits of web3 technologies without having to completely overhaul their existing processes.

The Road Ahead: Future of Web3

While web3 seems to be everywhere, it’s still very much coming into being. Technologies are still emerging, and predictions abound.

Emerging Technologies: What’s Next for Web3?

The future of web3 is likely to be shaped by a diverse range of emerging technologies that address the current limitations of the ecosystem and enable new use cases and applications. We’ve touched on a few of these already, but important concepts include:

  • Layer 2 Scaling Solutions: Addressing the big challenge of scalability, layer 2 scaling solutions include sidechains and state channels. By enabling off-chain transactions that settle on the main chain, these solutions can dramatically improve the speed and efficiency of web3 applications.
  • Decentralized Storage: Storage solutions like IPFS and Swarm are emerging as alternatives to traditional cloud storage solutions, providing greater security, resilience, and accessibility. As web3 applications continue to generate larger amounts of data, decentralized storage solutions will become ever more important.
  • Interoperability: Perhaps *the* key focus for the web3 ecosystem, emerging technologies like Polkadot and Cosmos represent the cross-chain interoperability needed to enable the seamless movement of assets and data between different platforms.
  • Web3 Integrations with IoT: IoT is “the Internet of Things” — your ‘net connected devices, from microwaves to door locks to car alarms. IoT is rapidly expanding (sometimes in peculiar ways…do we really need an IoT mug warmer?) — and the integration of web3 tech with these devices has the potential to enable new use cases and applications, from decentralized energy grids to autonomous vehicles.
  • Privacy and Confidentiality: Emerging technologies like zero-knowledge proofs, secure multi-party computation, and homomorphic encryption have the potential to enable truly private and confidential transactions on web3 platforms.

(Yes, that’s a lot of future speak. Let’s take a moment and break some of that down:

Zero-knowledge proofs: Cryptographic protocols that allow one party to prove to another that a certain statement is true without revealing any additional information beyond the truth of the statement itself. 

Secure multi-party computation: A method for computing a function on private data without revealing that data to any of the parties involved in the computation. This allows for secure computation even when parties don’t trust each other, as the data remains encrypted and private throughout the computation. 

Homomorphic encryption: Allows for computations to be performed on encrypted data without the need to decrypt it first. This means that the data remains private and secure throughout the computation.)

Predictions for Future Developments: Web3’s Impact on Society and Industries

Throughout this knowledge-share, we’ve reviewed some of the major ways that Web3 is expected to bring significant changes to industries — and even society as a whole. To recap those “predictions:” 

  • Finance: Decentralized finance (DeFi) could lead to more financial inclusion, more accessible financial services, and greater transparency and security in financial transactions — perhaps even a more efficient global economy.
  • Supply chain: The potential here is for greater transparency and traceability, enabling more efficient and secure transactions and a reduction in waste and fraud.
  • Identity: Greater individual control over one’s own data and personal identity management can reduce the risk of identity theft and improved user security.
  • Healthcare: Truly secure and interoperable healthcare data could be the key to improved patient outcomes and reduced healthcare costs.
  • Social media: Imagine decentralized, user-owned and user-controlled social media platforms, where the community has greater control over their personal data and privacy.
  • Gaming: The ability to own and trade in-game assets could help revolutionize immersive, interactive gaming experiences, especially in virtual reality and augmented reality.
  • Energy: With its potential for greater transparency and efficiency, web3 could power (sorry, had to go there…) a more sustainable and secure global energy system.

Of course, the best way to “predict” the future is to make it happen. That’s precisely what web3 affords in terms of potential. We began our journey in the early days of web 1.0. These relatively “early days” for web3 are not ones to “wait and see” — but instead an opportunity to be part of making these new internet experiences real. Whatever your business, web3 is a chance to learn — and grow. 

Just remember to decentralize, scale, and interoperate along the way!

Technology

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