What is Web3?

Web3 is the third era of the internet: a read/write/own web built on public blockchains, where people hold their data, identity and digital assets directly rather than renting them from platforms. Web1 was read-only and Web2 is read/write. Web3 adds ownership, enforced by code rather than by a company's terms of service.

The rest of this guide covers where the term came from, how Web3 differs from Web2 in practice, how blockchains underpin it, and what it changes for anyone marketing a product.

What is Web3?

Web3 is what many call the future of the internet. The Ethereum Foundation defines it around four core ideas: it is decentralised, permissionless, has native payments built in, and is trustless — it operates through incentives and economic mechanisms rather than relying on trusted third parties. In practice that makes it the read/write/own era of the net, where users have more control over their data and the content they share. Tech firms and corporations are no longer in charge of users' data. In fact, users no longer need to exchange data for web services, as we currently do in Web2.

In web3, users have more ownership of the net, their data, and online identity through tokenisation and democratic voting rights. They have more influence on how the internet works. Users are rewarded by receiving tokens or crypto for their contributions to web3, such as validating transactions or reporting bugs.

Web3's foundation is built on decentralised blockchain technology, which consists of shared ledgers or databases run on peer-to-peer, community-based networks. Web3 is also where users buy and exchange cryptocurrencies like Bitcoin, Ether, and Tether for digital goods, including Non-Fungible Tokens (NFTs) and digital collectibles.

Gamers can use web3's decentralised social networks to earn rewards, crypto tokens, or buy small fragments of digital culture. There are also Decentralised Autonomous Organisations (DAOs), where a community uses either tokens or NFTs to make decisions and vote on different initiatives.

To help you understand web3, imagine web2 was a garden-filled city governed by tech firms, and each tech firm had a 'walled garden.' Web3's city wouldn't have any walls. There'd be no tech firms to tell the people what they can or can't do. It would be one self-governing gigantic communal garden city for everyone to play in.

How the web evolved: Web1, Web2 and Web3

Does the term "world wide web," "surfing the web," or "information highway" ring a bell? These are the names users gave to web1 or web 1.0, which had its spotlight from 1990 to 2004. Back then, the internet was a read-only space. It was fully decentralised because it was the early days of the internet, and anyone could host a server.

Users like you and I could find information on static websites, links, and homepages. But it was practically impossible to interact with other users. Large companies and corporations owned these websites, and individual users had very limited access to publishing content.

After web1, we entered the read/write era of the internet, otherwise known as web2 or web 2.0. It's our current stage in internet history where content sharing, social media, and e-commerce were put on the cyberspace map. Users can edit files, publish content on internet forums like Tumblr and Reddit, and advertise on cloud-based marketplaces and e-commerce websites like eBay, Airbnb, and Uber. This era includes Software as a Service (SaaS) and hosted sites (Google Maps), to name a few.

In the Web 2.0 space, social media platforms including Twitter, YouTube, and Instagram give users the ability to post and create their own content more freely. Additionally, internet companies offer user-generated content where users can interact with each other.

Web2 has opened the doors to advertising-driven revenue models and seamless online payment opportunities. However, any form of transaction requires third-party involvement. Plus, Web 2.0 is run on centralised servers and systems, meaning there's a significant user demand, and hackers can easily access large amounts of data by breaching only one system.

Key differences between Web2 and Web3

Let's examine three ways in which web2 and web3 operate differently.

Ownership: Users may have greater interaction and creation abilities in web2 compared to web1. However, it's still controlled and owned by centralised platforms and corporations, which could result in manipulation and deletion of user-generated content without user consent. In the realm of web3, everyone has equal access, and users are participants and shareholders. Web3 gives users true ownership over virtual assets, including NFTs, digital art, music, and virtual real estate. Plus, users have the capability to sell or trade these assets directly on the blockchain.

Data control: Only authorities and large tech firms like Meta and Google have control over users' privacy and data in web2. However, web3 takes this control away from them and reinstates it to the users and the larger network of the 'communal garden.'

Due to the nature of web3's blockchain technology, data is accessible to anyone, regardless of their location in the world or the device they are using within web3.

Trust in transactions: With virtual assets, users can own and trade unique and rare digital collectibles. The power dynamic has shifted from big tech firms and middlemen to individual users. User engagement and transactions take place through digital wallets in Web3. Its native payment systems rely on decentralised blockchain technology, crypto payment systems, and NFTs. This sets Web3 apart from Web2, which is closely monitored by institutional banking payment processes and systems.

How blockchain underpins Web3

Imagine you're at a supermarket, purchasing groceries. Each shop has a book that's accessible and transparent for everyone to see. Every time the shop makes a sale, the manager records it. The manager notes who bought what and at what price. This is analogous to how blockchain and web3 operate: like an open book for all to see. It's a digital record shared across numerous computer networks known as nodes. Whenever a digital transaction or new piece of information occurs, it gets added to the database.

Blockchain

So, if you were to send a digital collectible to a friend, your transaction would be broadcasted to global networks of computers (nodes). These nodes verify that you're sending a collectible and that the recipient is correct. Once the accuracy of the information is confirmed, the transaction is executed on a new block of the digital ledger, which is the blockchain, and becomes visible to everyone. Tampering with or altering a block is challenging since it would necessitate changing all subsequent blocks as well. This is why the blockchain is secure.

Why Web3 matters: eight advantages

There are numerous web3 advantages and reasons to be excited about web3's potential.

Access: The 'communal garden' of web3 is open and accessible to all users and developers to observe.

Privacy: All participants can engage publicly or privately without involving a third party. This allows users to interact directly with one another without being subject to censorship.

Identity: Forget the need to register a new profile on various websites. Instead, you can have a single digital ID, which is anonymous, censorship-resistant, and secure.

Security: Each user has a private key that empowers them to make transactions on the blockchain without compromising or exposing their personal information or assets to cybercrime, theft, or fraud.

Payments: With web3, you can send tokens like native cryptocurrency directly through the browser, without requiring a third party like PayPal or Revolut to facilitate the transaction.

Decentralisation: Users don't need permission to participate. There's no centralised governing body, granting users control over their data and virtual assets on the blockchain.

Ownership: Web3 enables users to own, sell, or trade NFTs. For instance, in a web3 game, if the creator decides to delete it, a user wouldn't lose their account. They'd retain complete ownership over it. Users play a significant role in shaping the gaming industry, and players become the ultimate owners of the digital assets they accumulate.

Creativity: Web3 provides artists, musicians, and creative individuals the opportunity to monetise their work and receive fair compensation. Unlike a third party like Spotify or a record label that takes a commission for distributing the artist's work, artists can do it themselves, obtaining royalties and a larger share of the earnings, and establishing a sustainable creative economy.

That said, web3 is still in its early stages of development and faces challenges. Blockchain poses a high entry barrier that may require the involvement of specialised engineers, and it can be challenging to understand. That being said, numerous DAOs, NFT projects, and web3 initiatives are in the development process, which is proof that people recognise web3's potential.

How Web3 marketing differs from Web2 marketing

The shift from Web2 to Web3 brings fundamental changes to how marketing works. In Web2, marketing relies heavily on collecting user data through cookies, tracking pixels, and centralised platforms like Facebook and Google. Brands target audiences based on data they don't own and pay platform fees for access.

Web3 marketing flips this model entirely. Instead of interrupting users with ads, brands create value through community building, rewards, and direct relationships. Think of it as moving from "advertising to" people to "building with" them. Users own their data and choose what to share, while brands earn attention through genuine utility rather than targeted manipulation.

Simply put, Web2 marketing is about capturing attention, while Web3 marketing is about earning participation.

What Web3 changes for marketplaces

One of the major benefits of web3 for marketplaces is transparency. Participants can trust the integrity of a transaction through a public ledger on the blockchain. Web3 ensures that anyone can verify these digital records and be confident that they won't be altered. Additionally, smart contracts eliminate any uncertainty regarding third-party involvement by self-executing the agreement in the form of code on the blockchain.

Web3 marketplaces also place greater emphasis on the community through decentralised governance models. This enables users to shape and vote on the direction of the marketplace based on their needs and values. Web3 marketplaces have the opportunity to create a more inclusive and user-centric economy, granting more power to users and fostering potential for innovation.

Where Web3 goes from here

We are moving toward a revolutionary and decentralised future where users gain more power over their work and possess the capability to buy, exchange, and receive rewards without the involvement of centralised parties. We find ourselves in the infancy of Web3, and it holds many opportunities for creators to innovate and showcase their creativity. More individuals are becoming intrigued by cryptocurrencies, NFTs, digital collectibles, as well as the potential for digital identities and new forms of governance.

As our understanding of decentralised Web3 marketplaces, user empowerment, enhanced privacy, and tokenised economies grows, these promises will reshape the way we interact and communicate with one another online. This transformation will lead to a more diverse, inclusive, safe, and dynamic online experience. As Web3 unfolds, an increasing number of users will embrace its potential for both businesses and individuals. So, keep an eye on this space and continue to embrace the exciting world of Web3.