What is Web3: An Introduction to the Future of Decentralized Internet

Web3 is the name given to the concept of a decentralized internet, based around the shared ledger systems used by cryptocurrencies like Bitcoin and Ether and utilizing blockchain technology. While Web3’s current form is a bit anomalous, its purpose is fairly easy to understand: to give the executive power and decision making privileges of the internet to the users instead of the corporations and monopolies that currently hold said powers.

How Web3 works is through a variety of technologies and concepts not too dissimilar from the current form of the internet (known as Web2), but with extra security and protections in the shape of smart contracts and blockchain technology. All of this will be further explained throughout this web page, so allow this to serve as your guide to understanding Web3 and its multitude of applications.

The term itself has been around for some time, but has only recently come into common usage thanks to the growth of NFTs (non-fungible tokens) and proliferation of use by investors and individuals alike. What the term stands to mean is an internet service much like the one we are familiar with, but built and operated by users and builders alike: structured from therein via tokens and blockchain architecture. Web3 is, in short, an unrestricted and user-guided approach to internet service: completely decentralized and completely free of gatekeepers or middlemen.

Proponents of Web3 have envisioned the platform taking a multitude of different forms: forms like that of decentralized social media platforms, pay to win betting sites and video games (the rewards of which would be cryptocurrency), and NFT marketplaces, like OpenSea or Rarible, that let users buy and sell tokens at will. That is barely scratching the surface of what Web3 is all about, as idealists in the space envision the platform revolutionizing the way every person uses the internet: pushing toward a more open, middleman free digital economy and allowing people of all walks of life access to the vast possibilities of a decentralized internet.

To fully explain how Web3 is different from the internet we are all familiar with, we must take a look at the other phases of the internet.

Web1 was the early form of the internet—a sphere of blogs, message boards, chat rooms, etc.,—all harbored and overseen by portals like AOL and Compuserve. The main function of Web1 was a method of reading static web pages that were built with open protocols (HTML,SMTP, FTP, etc.,).

Web2, or the internet as we've been familiarized with over the last 15 years or so, was the next (and semi-current) phase of internet access. This is the phase where active participation and curation comes into the fold, as social media sites like Facebook, YouTube, and Instagram fostered a new type of internet user: the content creator. This generation of user-created content was distributed and monetized by the parent companies of the hosting sites, of which kept most of the profits and content to themselves.

What Web3 is hoping to achieve is a best-case scenario of the internet's two previous phases. The hope is that Web3 will be able to favor creators and users instead of the publishers and platforms: flipping the script on the archetypes of the internet's past incarnations. The new capabilities of Web3 will, hopefully, create a new renaissance of internet creativity and economy.

The recent influx of discussion surrounding Web3 and its possibilities are a result of the usual hype and marketing, although its boom in popularity and coverage does signal the vast opportunities of the platform in numerous spaces. Web3 has a lot of energy, capital, and talent coursing through its veins at the current moment, with major venture capital firms injected billions of dollars into crypto-related projects as of last year and huge tech companies like Reddit and Twitter have started developing their own Web3 projects in house. The possibilities of Web3 have been attracting a large swath of talent as well. Tech workers with high-level jobs in huge companies are quitting their positions to pursue creating their own within the space of Web3. Essentially, the reason you keep hearing about Web3 is because a lot of people who are intrinsically tethered to the internet as a revenue-generating and creative space are talking about it, which in turn pushes the discussion of its implementation to the front page of a lot of people's timelines.

There is a built-in caveat to take into consideration when talking about a trendy topic like Web3, as the concern over a developing bubble or fading virality is a genuine one. What is important to keep in mind with Web3 is that it is a developing series of projects, concepts, and technology: the full scope of which will only be seen in due time. Huge developments will happen in the near and distant future as this new format of the internet reaches its full potential, with maximum potential only being seen via hindsight. Of course, Web3 (and, in turn, blockchain technology and cryptocurrencies) has a huge amount of said potential, but these are things that we will only see in practice and that development comes with growing pains—like anything else. Keep your eyes peeled as Web3 grows and use the information here and elsewhere on the DataStax blog to build out your understanding of what a decentralized web could look like.

The way proponents of Web3 envision its implementation is a multi-part functionality: providing multiple benefits to the user and creator in the same breath.

First, Web3 would allow for content creators and frequent users to monetize their content and activity in a way that has never been afforded to the average internet user before. The majority of content mega-platforms we are familiar with don't actually pay content creators or curators all that much, as most of the profit for creators comes from third-party sponsorships and partnerships or viewer contributions (including merchandise sales, donations, membership fees, etc.,). Web3 would allow for these creators to monetize their content and profit from it more directly.

Secondly, Web3 platforms would—in theory—be governed by democratic tenets in a manner that they currently aren't. The current structure of the internet is characterized by large tech companies (Facebook/Meta, Youtube/Google) that function as essentially autocracies: governed by internal principles and guidelines and not the whims of the everyday user. Web3 social media networks built on blockchain architecture would relinquish those decisions to the users, who would be able to vote on matters like bannable offenses, platform rule changes, and general website maintenance. Essentially, web3 platforms would be controlled and maintained by the people using them instead of faceless corporations whose internal structure and guidelines remain unchecked by the public writ large.

Thirdly, a Web3 internet would no longer be as heavily reliant on the advertising-based business model that Web2 platforms are currently built around. The ultimate result of this possibility is that users would have more privacy while using platforms, as the main profit drive of said platforms would no longer be data collection and targeted advertising.

Fourth, Web3 would incentivize native payment structures through cryptocurrencies like Bitcoin or Ethereum. Web2 is currently built around third-party pay structures—utilizing banks and payment processors like PayPal— in order to accomplish transactions over the internet. Using tokens like ETH or BTC will allow purchases to be made directly in browsers with no need for extra processing or secondary sites: just a crypto wallet and the necessary funds.

The important thing to keep in mind is that these positive outlooks on the possibilities of Web3 implementation are just that: possibilities. This is a highly idealistic view of what can be achieved with a decentralized internet, but it hinges on a lot of logistical aspects of Web3 implementation going off without a hitch. Even still, its possibilities are enough to garner excitement in the average internet user which is understandable. The potential of Web3 as a platform is, in short, huge.

There are a couple of Web3-esque platforms currently available to look at as an example of how Web3 actually functions in process. The most commonly cited and oft-reported example of a current Web3 platform is Axie Infinity—a Vietnamese-based video game that uses NFT and Ethereum cryptocurrencies to reward players for meeting in-game criteria.Essentially, quest rewards in a regular video game (XP, in-game items, story progression, etc.,) are replaced with real-life incentives and monetary rewards via cryptocurrency and NFTs. The game's crypto-infused gameplay loop provides a real incentive for players to continue playing, but also has real world consequences tethered to the volatility of the cryptocurrency market. The main critique of something like Axie Infinity has been that it incentivizes players to (essentially) participate in crypto-based gambling, although proponents of the platform have argued that players should have the opportunity to be rewarded with real world incentives for investing their time into something like a video game.

The other commonly cited example of Web3 in practice is the NFT market, which allows for artists and creators to directly sell their work to collectors and enthusiasts through platforms like OpenSea or Rarible. Proponents of this system commonly refer to NFTs and their proliferation as an example of the “creator economy” at work: a software-facilitated economy that is driven by online content creators being paid accordingly for their creations through sites like YouTube, TikTok, Substack, etc,. NFT marketplaces operate in a different way than those sites, however, as the transactions are singular purchases of tokens and not subscription based models or advertising-based revenue.

General critiques of NFTs and their popularity is that the “creator economy” argument has not been seen in practice and more in the abstract, as most creators haven’t seen the level of success that huge NFT projects like Bored Ape Yacht Club or Clone X have. Others argue that this uneven distribution of revenue is just the free market at work and Web3’s decentralized design certainly emboldens this line of thinking. NFTs and their marketplaces (like Axie Infinity) are in their infancy and their full scope will be seen in the coming years, but they still represent Web3 in practice at the current moment.

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Dive deeper into Web3 with the Datastax blog team via the links below:

• Pulling Real-Time Ethereum Transactions with Web3.js
• Tracking NFT Transfers using Astra DB and Web3.js
• Web3 Changes Nothing for DeFi Apps and Here’s Why