This article is a continuation of a previous piece, where the evolution of the internet in regards to Web1 and Web2 was explained, leading to the creation of Web3.
If you are not familiar with the meanings of Web1 and Web2, we recommend clicking the link.
What is Web3?
Did you know that your online profile sells 376x a day*. Welcome to the world of Web3 – the new era of our collective online existence. A place where you regain control of your own data and regain control of your privacy.
In this article, we pull back the veil on Web3 and clarify the principles behind this technological evolution. We will review both the evolutionary benefits and lessons learned from Web2. This approach offers you, the reader, a good understanding of Web3 and why it is a logical development in the world of the Internet.
What is Web3?
The birth of crypto
Crypto and Web3 are not the same thing; crypto’s origins lie in 2009, when Bitcoin was introduced in response to a crisis. It concerns the financial crisis of 2008, which we overcame by printing additional euros and dollars to fill the gaps in the balance sheet. As the state prints additional money, more money comes into circulation with the result that money becomes worth less. You and I as consumers, who keep the same amount of money, are put at a great disadvantage by reprinting.
This is considered unfair, a (group of) techie(s) comes up with a concept that could potentially improve this system. A concept where everyone has the same rules and where money cannot be added.
Part of this concept is that everyone manages their own money, thus sidelining the 2008 culprit – the banks. This concept is completely digital and with self-managing money comes something we have never experienced before: online possession. For the first time ever, you can be the sole owner online. No middleman, no provider, no central authority. Just you and your wallet. The wallet can be compared to an account, but unlike, say, a Facebook account that belongs to Facebook, your Bitcoin wallet is all yours.
So with the introduction of Bitcoin, you can move and own value online since 2009. This is done through the blockchain, a technology that verifies the accuracy of property and transactions.
This creates a cryptovision in which the monetary system is improved by crypto(currency).
Thus a new financial instrument has emerged which we have never seen before.
The birth of Web3
After a period of familiarization and development, a new blockchain called Ethereum was introduced in 2015. Rest assured, the Bitcoin blockchain will continue to exist and function independently of Ethereum.
With the advent of Ethereum, a new functionality is emerging on the blockchain, which is the moving possession and movement of data. This is quite an extension of Bitcoin, where only value can be possessed and sent.
This greatly expands the possibilities of blockchain. In the years that followed, we see more blockchain developments that addressed shortcomings of the Internet and offered improvements for users like you.
Thus was born the vision of Web3, where an honest and verifiable Web is central.
Important to note is that on most blockchains, operations are stored decentrally, which means That everyone can see these actions and no one can change them. This ensures transparency and verifiable truth for you, the end user.
To understand the advantages of Web3, you must first know the shortcomings of Web2. Web2 has been around for more than two decades and has resulted in a handful of large technology companies, such as Google, Apple and Facebook, controlling the majority of data, and thereby power, online.
These companies greatly simplify Internet use; for example, think of when you want to use a new web page and you can always log in with your account from one of the companies mentioned. Because this practice is widespread, these companies continuously collect your data and compile a digital profile of you. This profile often knows more about you than you do yourself, and as we began this article, you know that this profile is used and sold on a very large scale.
‘If you’re not paying for the product, you’re the product.’
Privacy and trust
Privacy is a tricky issue within Web2, and so is trust. The digital world often blindly asks for our trust without a solid foundation. Within Web2, the means to thoroughly verify the authenticity of information are often lacking. This weakness has made the Internet a fertile ground for the spread of fake news, fake profiles and fraud for years.
In addition to individuals’ data, businesses are also experiencing problems managing online data storage. We often see a lot of sensitive information becoming publicly available these days. A crucial point here is that the storage of this data, and therefore its ownership, is in the hands of third parties. This entails “trust”; you as a user just have to assume and trust that a third party will handle your privacy carefully and correctly.
Within supply chains based on the Web2 standard, we encounter shortcomings, such as lack of transparency, inefficient communication and the risk of data manipulation. The confidence that all parties within the chain are acting correctly is often unfounded. This leads to the delivery of incorrect products, product age inaccuracies, late payments and failure to keep similar agreements.
The gaming industry aptly illustrates the shortcomings of Web2. The success of this industry depends largely on player involvement. Games in which players have ownership over in-game objects tend to stay engaging longer and constantly introduce new challenges for users. However, within the Web2 model, these in-game objects belong to large corporations, limiting players’ control and ownership.
The last shortcoming we mention is the most important, so important that it has ushered in a new era of being online. This shortcoming is that there is no watertight way of property verification online.
Let’s make this example a little simpler and clearer:
Suppose you have a digital file, such as a concert ticket or a doctor’s prescription, and you send it to someone else over the Internet. In a typical Web2 environment, this file is not really “moved,” but copied. This means that in addition to the recipient, multiple copies of your file may exist in different places on the network.
When sending this file, much more happens behind the scenes. Your file travels through various servers and may be stored in the cloud, backup systems and on other computers. Any of these steps can leave your file vulnerable to error, fraud, or theft.
The big problem here is: if everyone can have a copy of the file, how do we determine who the real owner is? In a Web2 world, this is a complex question because the system is not properly set up to ensure clear ownership.
How are current challenges going to change because of Web3?
Web3 also has its own major players, with Ethereum being the most well-known and largest within the Web3 world. By comparison, Ethereum has a market value of over 200 billion, which positions it within the top 50 largest companies in the world by market value. A significant change from Web2 companies is that with Ethereum, control lies with the users. As a user, you have the opportunity to vote and contribute to the development, making you not only a consumer, but also a co-owner.
With Web3, you can perform the usual online activities, but now you have the choice of doing so anonymously or opting for personalized ads, for example. If you choose to share your data, you will be compensated appropriately.
Privacy and trust
A verifiable Internet is more important today than ever. Artificial Intelligence (AI) will have an important role in our lives, creating faster and more content than ever before. The problem, however, is that AI can process data in a fast manner, but verification of its sources is not possible. Within Web3, there is a solution to this verification problem, namely the blockchain. The blockchain is just right for verifying data, a match made in heaven you might say. Read HERE how Google AI and Chainlink Labs envision the solution.
When Web3 is applied in supply chains, it is possible to instantly identify where each operation was performed. This allows you to immediately discover if there is a leak somewhere in the supply chain.
Take, for example, a supermarket in the Netherlands that receives a shipment of rotten bananas. If blockchain is the basis for the supply chain, then every link, from banana growing to the supermarket, is captured. In this scenario, the supermarket can check each link to find out where it went wrong. Although the information of all the intermediaries is known, they can alter the truth. When it is actually their fault that the bananas are rotten, they now often shift the blame to a link two steps earlier in the chain. This is a simple example of how fraud can be minimized through the use of blockchain.
The gaming industry is an excellent example to illustrate the benefits of Web3. In the Web3 era, it is the players who control ownership of in-game objects. They can trade these objects freely in an open market. This significantly empowers and influences the gaming community, allowing them to actively contribute to the development and enrichment of their favorite games.
Web3 tackles the challenge of online ownership verification with a structure that establishes ownership as a direct right. Using blockchain technology, Web3 creates a system in which properties are registered as unique digital assets. Think of your files, tickets and doctor’s prescriptions. These are secure and non-copyable, making transfer transparent and fraud-proof. Thus, Web3 forms the basis for reliable online ownership.
Even the world’s largest banks are recognizing the potential of online ownership, read how major banks are focusing on developing their own blockchains.”(Web3 and the Banking World)
In short, Web3 solutions deployed in this early phase focus primarily on user ownership, privacy and verifiable truth. All this offers prospects for everyone from private individuals to international organizations and states. Moreover, the future harbors many opportunities that can contribute to the ongoing evolution and improvement of the digital landscape.
What is Web3 now?
Web3 is an evolution of the internet where transparency, fairness and online ownership prevail on a verifiable Internet.
The logos pictured above represent
the most famous founding fathers in Web3.
Six Capital and Web3
You have read about the birth of Web3, in which Six Capital’s roots were in the same year. After following these developments closely for nearly a decade and investing in multiple initiatives as an angel investor, in 2022, at the request of many, we opened an investment fund registered by the Financial Markets Authority called Core Fund. Herein we invest in Web3 for different types of investors, this from individuals to family offices. With the Core Fund, in addition to Ethereum, we are invested in more than 20 other projects that, in terms of potential, team and contribution to world improvement, should not be missing from a modern diversified portfolio.
Are you ready for the digital evolution?
Do you wish to continue enhancing your understanding of Web3?
Discover here the steps taken by multinational companies towards Web3 adoption.