The term Web3 is often used as shorthand to talk about the new phase of the Internet. It describes coming out of 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 stands for anything crypto-adjacent.
To clarify this topic, the Cointelegraph Research team has released a new report detailing the nature of the real Web3. This key information is invaluable for investors to separate facts from fundamental misconceptions.
The blockchain web and the decentralized web
“Web3: Marketing Buzz or Tech Revolution?” from Cointelegraph Research? makes a clear distinction between the “web blockchain”, which is the integration of blockchain technology into the web, and the decentralized, permissionless, trustless alternative of the internet known as the “decentralized web”.
The web blockchain has fostered the growth of ecosystems of non-fungible tokens, Decentralized Autonomous Organizations (DAOs), and GameFi that veterans of the cryptoverse will be aware of. Ideally, these ecosystems have no central authority and value comes from the creation of rare digital assets. The report explains how, using blockchain technology, these ecosystems can spill over into the real world and bring new efficiencies to traditional industries.
The Decentralized Web seeks to break the oligopoly of content delivery websites in today’s Web2 world. This goal is achieved by building a new web around the principle of decentralization by being permissionless (anyone can participate) and trustless (code so robust that it removes the need for third-party authorities).
Are we already there? No.
There is a long way to go when it comes to implementing the idealistic principles of decentralization in both the blockchain web and the decentralized web.
The web blockchain, built on top of the current internet infrastructure, requires hosting services in order to communicate between users and applications. Unfortunately, 60% of all these nodes on Ethereum are hosted on Amazon Web Services. This gives a centralized authority the power to shut down the 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, isn’t much better, but there is reason for optimism. Currently plagued by monopolies such as Google, Amazon, Meta, Apple, Microsoft and Tencent, there is very little decentralization when users go online. However, alternatives using technologies such as distributed hash tables are beginning to make it possible to create decentralized versions of popular applications.
The Cointelegraph Research Team
Cointelegraph Research Department includes some of the best talent in the blockchain industry. Combining academic rigor with practical, hard-won experience, the team’s researchers are committed to bringing the most accurate and insightful content available to the market.
Demelza Hays, Ph.D., is a research director at Cointelegraph. Hays has assembled a team of subject matter experts in all areas of finance, economics and technology to bring to market the premier source of industry reports and insightful analysis. The team uses APIs from a variety of sources to provide accurate and useful insights and analysis.
The opinions expressed in this article are for general informational purposes only and are not intended to provide advice or recommendations specific to any individual or on any specific security or investment product.