Blockchain: Exploring the building blocks of Web 3.0

NFT and web 3.0
Once it becomes a reality, the virtual world will see resources, applications, and content that is accessible to all. Photo: Pedro Nunes/Reuters

Web 3.0, also known as the decentralised web, is the latest generation of internet applications and services, powered by distributed ledger technology, the most common being blockchains.

It focuses on connecting data in a decentralised way, rather than having it stored centrally, with computers able to interpret information as intelligently as humans.

The term was coined by ethereum (ETH-USD) co-founder Gavin Wood in 2014. However, the idea started to gain more interest this year from cryptocurrency enthusiasts, as well as large tech companies, venture capital firms, and more recently Tesla (TSLA) and Twitter (TWTR) chief executives Elon Musk and Jack Dorsey.

Web3 is the “new internet” in comparison to the current Web 2.0.

Web 2.0 is where data and user-created content, such as social-networking services and blogs, are centralised in a small group of Big Tech firms, largely controlled by Google (GOOG), Apple (AAPL), Amazon (AMZN), Meta (FB), and Microsoft (MSFT).

"There's a small group of companies that own all this stuff, and then there's us who use it, and despite the fact that we contribute to the success of these platforms, we don't have anything to show for it," said researcher Mat Dryhurst.

Read more: London Stock Exchange: How 10 most popular companies fared in 2021

Meanwhile, Web 1.0 refers to the period from the early 90s to around 2004, where most websites were simply static web pages, providing essentially a read-only service. The vast majority of users were consumers of content rather than producers like we see today.

As more people seek custom services, search engines in Web3 will provide personalised insights based on an individual’s browsing and search context, where people also control their own data.

Centralised servers will be replaced with information present on multiple computing devices, acting more as a peer-to-peer internet with no single authority.

Another one of the benefits of Web3 is that it is believed to be able to avoid internet hacks and leaks as it acts as a system for specific users, thus being a great pioneer for data security and privacy.

Once it becomes a reality, the virtual world will see resources, applications, and content that is accessible to all.

Watch: Why Web 3.0 Tokens Might Be the Next Hot Trade in Cryptocurrencies

Due to its role in assisting developers with decentralised apps, Ethereum is one of the more popular Web3 blockchains, meaning that some investors who are buying up the crypto are in it for its long-term benefits.

The blockchain building block behind Web3 is the technology behind many major cryptocurrencies and also non fungible tokens, or NFTs.

NFTs are unique, one-of-a-kind crypto assets that enable collectors to authenticate, own and trade original authenticated versions of special digital goods using blockchain technology.

They can be anything digital from drawings and paintings to music, but they can also be applied to a physical item such as coins or a stamp.

Read more: Non-fungible tokens: What are NFTs and why are they creating such a stir?

When an NFT is bought, the person purchasing receives a certificate secured in blockchain technology, which makes them the owner of that specific digital asset. Specifically, NFTs are typically held on the Ethereum blockchain, but other blockchains support them too.

This cannot be replicated or substituted, and it can only have one official owner at any given time.

While Web3 is a new space it is not without its critics. Elon Musk said the concept is more of a “marketing buzzword” than a reality, while Jack Dorsey this month argued that it will ultimately end up being owned by venture capitalists. They pair have often been seen tweeting about it.

“You don’t own “web3,” Dorsey said this week. “The venture capitalists and their limited partnerships do. It will never escape their incentives. It’s ultimately a centralised entity with a different label.”

“Know what you’re getting into…” he added.

Meanwhile, Musk said: “I’m not suggesting web3 is real, seems more like a marketing buzzword than reality right now, just wondering what the future will be like in 10, 20 or 30 years. 2051 sounds crazy futuristic!”

Later he tweeted: “Has anyone seen web3? I can’t find it.”

But En Canada, a community leader for Wonderverse said Web3 is particularly important for younger generations.

“Millennials and Gen Z, who make up the majority of Web3, want to feel belonging at work and the respect and boundaries to work autonomously. Web3 companies are poised to capture much of the young talent since Web3 ethos is about collaboration, cooperation and reciprocity.”

Web3 has also often been tied to talks surrounding the metaverse. The metaverse is an extensive online world in which people are able to interact via digital avatars.

It is a hypothesised 3D environment, through personal computing, smartphones, and virtual augmented reality headsets, combining both virtual and physical spaces. It also implements social media elements such as avatar identity, and content creation.

Read more: What is the metaverse and Web 3.0?

So far, a number of companies have announced plans to develop metaverse experiences, services and hardware, particularly social media firms and gaming companies.

Similar experiences already exist in the gaming world, such as Pokemon Go which is played on mobile phones. Epic Games’ Fortnite, and Roblox, have both similar technologies and have previously hosted virtual concerts with artists such as Ariana Grande, Travis Scott and Lil Nas.

Metaverse companies are also looking at hosting sporting events for thousands of people simultaneously.

However, many have criticised its tie into Web3, saying that the metaverse will be controlled by big tech firms such as Meta and Microsoft, which goes against what Web3 stands for.

Watch: Is Jack Dorsey the Unbridled Bitcoin Maximalist? Investors and Advocates Defending Web3 Projects