Discover more from The Letts Journal
Web 3.0 Begins
The latest version of the internet is nearing and it could change things all over again. Here's the what, why and how of Web 3.0
As the internet settles into a fourth decade it is looking to change its skin again. Right now, these changes are mostly happening underground, like the early days of the internet, but in the back corridors of techno chatter something is stirring. The architects of the next version of the Web are out to fix its current misalignment from its original promise to today where corporations and authoritarian states increasingly control our every move.
Web 3.0 will soon be upon us and, as it arrives, it will fundamentally change the underpinnings of the technology we all use. The promise of Web 1.0 and the technology advances of Web 2.0 are coming together to create a more open and community-managed network. New advances such as distributed ledgers, blockchain, crypto and NFT, with decentralised organisations and finance are here to dazzle many a geekfest.
But what will Web 3.0 mean to its users?
The history of the internet is short, just 30 years long, and it has developed in three distinct phases.
Web 1.0, from around 1990 to 2005, was created by Tim Berners-Lee and featured open protocols that were distributed and community-governed. Most of the value accrued to the edges of the network — which meant its users and builders.
Web 2.0, from 2005 to 2020, was about silos. The new internet pioneers built out centralised services that were rolled up by corporations. Value was handed to a small number of companies like Google, Apple, Amazon, and Facebook. They started out by attracting and cooperating with their users and creators, later they started to abuse their position, taking an increasing amount of the pie with them. They mined our personal data and they out-competed, bought-out or subjucated many of their early creators and developers.
You just have to look at Microsoft versus Netscape, Google against Yelp, Facebook versus Zynga, Twitter and its third-party clients, and Epic’s battle with Apple. But there is a fight back underway. The most recent case saw one of the App Store’s most successful games creators force Apple to offer multiple non-Apple payment options in-app for the first time - eroding a key pillar of the closed, controlling nature of app stores. The tail is starting to wag the dog.
Web 2.0 is characterised by profit maximisation through increased corporate control, particularly amongst the biggest consumer tech companies. Yet their power might begin to wane as we move into Web 3.0, combining the decentralised, community-governed ethos of Web 1.0 with the advanced, modern functionality of Web 2.0.
Web 3.0 could see the internet once again owned by its builders and users, this time orchestrated with tokens. The tokenization of the Web could unshackle the corporate stranglehold in a shimmering cascade of digitally empowered consumer ownership. Which is code for ‘we all get to stop the endless ads by cashing up for the photos we pinch’.
Users and builders will be able to own pieces of internet services by owning tokens, both non-fungible (NFT’s) and fungible (crypto currencies). These tokens give users property rights - in effect, the ability to own a piece of the internet.
The original promise of the internet was that we could binge on free media and software, paying for it by viewing a constant stream of ads while handing over our personal data. And we got what we asked for! Web 3.0 will change this by allowing us to pay directly for the ownership of digital assets and services, giving us more autonomy and greater protection of our personal data.
Web 3.0 is in many ways a return to Berners-Lee’s original web, where “no permission is needed from a central authority to post anything ... there is no central controlling node, and so no single point of failure ... and no “kill switch”! Today we just want to throw the switch at Facebook.
The rise of technologies such as distributed ledgers and storage on blockchains will allow for data decentralisation and create a more transparent and secure environment, overtaking Web 2.0’s centralisation and somewhat exploitative advertising. Decentralised infrastructure and app platforms could displace centralised tech giants, with individuals being able to rightfully own their data.
Using this technology, participants can confirm transactions without a need for a central clearing authority. Potential applications can include fund transfers, settling trades, voting, and many other issues. But one of the most significant implications of decentralisation and blockchain technology is in the area of data ownership and compensation.
In effect, Web 3.0 will bring us a fairer internet by enabling the individual to be in control - owning and managing who profits from our time and information. Web 3.0’s decentralised approach will enable individuals to connect to an internet where they can own and be properly compensated for their time and data, eclipsing a more exploitative and unjust web, where giant repositories are the ones that mostly own and profit from our data.
Which applications of Web 3.0 will really make the difference?
Let’s start with non-fungible tokens. NFT’s might sound like a new football game but in fact they give users the ability to own objects, which can be art, photos, code, music, articles, videos, game objects, credentials, governance rights, access passes, and whatever else people crack up next. Thanks to NFT’s the digital asset is logged, protected and stamped with its identity and history so that it can be protected in perpetuity. NFT’s also provide a royalty system enabling the creator and owner to make money from its resale.
So an artist could create a digital version of a painting or street art and sell it stamped with an NFT. Voila! the authenticity of the original digital image is maintained and the artist/creator makes a pretty dollar every time it is bought and resold. Great for Banksy and his supporters, not so hot for Sotheby’s.
NFTs exist on top of blockchains like Ethereum. Ethereum? Its so much more than a digital currency. It’s a decentralised global computer owned and operated by its users. These are special computers that anyone can access but no one owns. A bit Matrix-like but with loads of potential.
Owners of these special computers are incentivised to add them to the blockchain through payment from its users - be it bartered services or tokens. Today, this is done by communities of super techies creating a Berners-Lee like utopia on top of a grid of smart computers. Tomorrow these hidden pieces of infrastructure will become widely accessible to the rest of us - with slick interfaces and popular apps.
Blockchain’s infrastructure makes it possible for new innovations such as NFT, crypto currency and distributed ledgers to operate. The latter opens up a whole new world of friction-free, open transactions.
This includes decentralised finance (DeFi) which is a weird sounding term for financial products and services that are accessible to anyone who can use blockchain systems – and one day anyone with an internet connection. With DeFi, the markets are always open and there are no centralised authorities who can block payments or deny you access. Bye bye Barclays.
Services that were previously slow and at risk of human error are automatic and safer given that they're handled by code that anyone can inspect and scrutinise. There goes the Matrix bit again.
There's a booming crypto economy out there, where you can lend, borrow, create long or short positions, earn interest and more. Crypto-savvy Argentinians have used DeFi to escape crippling inflation. Companies have started streaming their employees’ wages in real time. Some users have even taken out and paid off loans worth millions of dollars without the need for any personal identification. Where do I sign up?
DeFi can potentially solve a number of problems that exist today including for people that are not granted access to set up a bank account or use financial services, often making them unemployable. Equally many of us would welcome a world that is not controlled by fluctuating credit scores and data hungry financial institutions. DeFi’s can also open up trade as commissions are lower and trading hours are not limited to business hours of specific time zones. Money transfers can be practically instant.
Web 3.0 will also create distributed autonomous organisations. DAO’s offer an effective and safe way to work with like-minded people around the globe - mostly other super-geeks - but this will hopefully broaden as increasingly user friendly Web 3.0 apps develop.
Think of DOA’s like an internet business that's collectively owned and managed by its members. They have built-in treasuries that no one has the authority to access without the approval of the group. Decisions are governed by proposals and voting to ensure everyone in the organisation has a voice. In other words nothing like the Trump organisation.
There's no CEO who can authorise spending based on their own whims and no chance of a dodgy CFO manipulating the books. Everything is out in the open and the rules around spending are baked into the DAO via its code.
Examples of where DAO’s could change things up include:
A charity – you can accept membership and donations from anyone in the world and the group can decide how they want to spend donations.
A freelancer network – you could create a network of contractors who pool their funds for office spaces and software subscriptions.
Ventures and grants – you could create a venture fund that pools investment capital and votes on ventures to back. Repaid money could later be redistributed amongst DAO members. Sorry Andreessen Horowitz!
The backbone of a DAO is its smart contract which defines the rules of the organisation and holds the group's treasury. Once the contract is live on a blockchain, no one can change the rules except by a vote. If anyone tries to do something that's not covered by the rules and logic in the code, it will fail. And because the treasury is defined by the smart contract too that means no one can spend the money without the group's approval either. Its like an open toed community-centred sovereign sub-state!
DAO’s don't need a central authority. Instead the group makes decisions collectively and payments are authorised automatically when votes pass. This is possible because smart contracts are tamper-proof once they go live. You can't just edit the DAO’s rules (the code) without people noticing because everything is public.
With Web 3.0, humans, machines and businesses will be able to trade value, information and work with global counterparties they don’t know or yet explicitly trust, without an intermediary. The most important evolution enabled by Web 3.0 is the minimisation of the trust required for coordination on a global scale. Like Greta 3.0! This marks a move towards trusting all constituents of a network implicitly rather than needing to trust each individual explicitly or seeking to achieve trust. Which is gobbledygook for no one trusts anyone in any case so we may as well trust a computer!
If this becomes reality it will fundamentally expand the scope of both human and machine interactions far beyond what we can imagine today. These interactions, ranging from seamless cyber payments to richer information flows, to trusted data transfers, will become possible with a vastly increased range of potential counterparties.
The next version of the internet will allow us to interact with any individual or machine in the world, without having to pass through fee-charging middlemen. The shift will support a whole bunch of new businesses and business models: from global co-operatives to decentralised autonomous organisations and self-managed data marketplaces.
It will matter as societies become more independent and efficient - reducing the power and cost of monopolistic third parties. Equally organisations operating in Web 3.0 can become more resilient and change-ready. Humans could be open to sharing their data in such a democratic, secure and transparent system - assuming the next set of super corporations don’t figure out how to usurp this as well.
Consumers might soon be in a position to better control digital assets, transactions and resources. Managed right, Web 3.0 could open up more opportunity and group problem sharing for all. Tim Berners-Lee will feel like his dream has returned to reality, rather than a somewhat warped version of the internet that ended up being usurped by corporations and autocratic states.
Thanks for reading Letts Journal! Subscribe for free to receive new posts and support our work.
Keep up to date with the Letts Journal’s latest news stories and updates on twitter.