Web3: Emilie Choi, Changpeng Zhao and Chris Dixon Explain

Web3 (or Web 3.0) represents the next generation of internet technology. Think of it as the holistic experience of a decentralized, user-owned internet. By utilizing blockchain technologies like cryptocurrency tokens, it affords users more ownership and privacy over how they interact with the web.

To understand its place in history, visualize the internet’s history in three separate stages. Web 1.0 was read-only (i.e., you could only read webpages, rather than interact with them). This period lasted from Tim Berners-Lee’s invention of the World Wide Web in the early 1990s to the early 2000s. Web 2.0 came about when companies began to toy around with their HTML and JavaScript to allow users to comment and interact with their webpages. This led to the rise of social media companies, online advertising, and the increasing centralization of the internet.

Web3 application developers aim to yield all the benefits of Web2’s advances at the same time they correct some of the prior era’s shortcomings. As such, privacy concerns and decentralization are at the top of the agenda for Web3 developers.

Web3 constitutes an expansive new approach to overhaul the very essence of the internet. Here are four of its central tenets:

1. 1. Blockchain-based technology: All Web3 innovations take advantage of peer-to-peer ledgers called blockchains. “The internet is just a new technology for transferring information,” Binance cofounder Changpeng Zhao says. “Blockchain is just a new technology for transferring value.” Blockchains allow for greater control, transparency, and anonymity.
2. 2. Cryptocurrency: Navigating Web3 will require the widespread adoption of cryptocurrency. “We believe that the world is gonna be tokenized,” Coinbase COO Emilie Choi says, “and there will be all sorts of different types of tokens.” Independent app developers might create unique cryptocurrencies of their own or utilize tried-and-true virtual money like Bitcoin (BTC) or Ethereum (ETH).
3. 3. Decentralization: Web3 runs on a permissionless and decentralized network of multiple computers rather than one central server. Venture capitalist and Web3 advocate Chris Dixon says, “You're taking the power and—instead of giving it to these centralized entities and letting them have unilateral economic and governance control—you're giving that power back to the users.” This is what enables the blockchain’s DeFi (decentralized finance) transactions in the first place.
4. 4. Privacy: So long as you keep your crypto wallet information private, you’ll have maximum privacy on Web3. “A user can take their wallet and port their identity wherever they want to on whatever terms they want to,” Emilie Choi says. Internet providers and social media companies will have a much harder time scraping your user data when you use this sort of encrypted technology.

Proponents of blockchain technologies believe Web3 will upend business models, financial markets, and the internet itself. These are a few reasons why it's important:

• To bolster interactivity: As VR (virtual reality) technology becomes more effective, the call of a virtual world or “metaverse” beckons. Web3 enthusiasts believe their technologies will allow fandoms around the world to experience their favorite media in a more interactive way than ever. “Imagine if you could harness that community,” Chris Dixon says. “Instead of being kind of enthusiastic bystanders, they could actually be participants.”
• To increase user control: Previous phases of internet development allowed for greater user input at the expense of autonomy and control. Web3 advocates hope to change that. “We like to think of it as ‘read, write, and own,’” Emilie Choi says. “With tokens, a user can participate in some form of ownership of a different project or product.” With the arrival of these new technologies, the world is trending toward increased user control of their content.
• To democratize ownership: Web3 is a broad movement, still hazily defined and in its early days, that’s meant to return control and ownership to you. “Now what we call Web 3.0,” Chris Dixon says, “we think of [it] as democratizing not just information, and not just publishing, but also ownership of the Web.” In other words, you’ll control all of your digital assets and apps rather than needing to rely on intermediaries.

As with any form of innovation, Web3 applications still face certain barriers at the present moment. Consider these three limitations facing the new technologies:

1. 1. Web3 is complex. Web3 is difficult for the average person to understand. As companies streamline the functionality of their interfaces and apps, however, more people might start to come on board.
2. 2. Web3 is in early development. This open-source, peer-to-peer version of the internet is still in its early stages. “We don’t fully know which [Web3] use cases are going to resonate the most for blockchain,” Emilie Choi says. “And one of the things that you have to remember about the blockchain is it is in its infancy.” There’s a lot of room for opportunity but still quite a few bugs to work out.
3. 3. Web3 is inaccessible. So far, tech startups, venture capital firms, and crypto enthusiasts are bigger fans of Web3 than the general public. Part of this has to do with the inaccessibility of Web3 marketplaces to average users at the present. As these decentralized web platforms become more user-friendly, more people will have an incentive to learn how to utilize them.

For proponents of blockchain and other new technologies, Web3 represents the future of the internet. For critics, these new innovations are too abstract to catch on in the same way search engines and social media platforms did. Only time will tell whether cryptocurrencies and smart contracts will have as deep an impact as, say, e-commerce platforms and smartphones.

All investments and investment strategies entail inherent risks and introduce the potential for financial loss or the depreciation of assets. The information in this article is for educational, informational, and referential purposes only. Consult a professional investment advisor before making any financial commitments.

From the rise of blockchain technology to the dawning of NFTs and Web3, the world of cryptocurrency has undergone dynamic changes and continues to innovate. With the MasterClass Annual Membership, get access to exclusive lessons from Hunch cofounder Chris Dixon, Binance cofounder Changpeng Zhao, Coinbase’s Emilie Choi, and economist Paul Krugman to learn about the ever-changing landscape of cryptocurrency and its place in the global economy.