The internet is one of the most powerful tools that humanity has ever created.
Since the first web page went live back in 1991, the internet has completely changed nearly every aspect of modern society—from the way that we work and learn to the way that we make purchases to the way that we generate and consume information to the way that we communicate with each other and so much more.
But the internet today is not the same beast that it was back when it first launched. It has already undergone one massive evolution in the past 30 odd years and, depending on who you ask, it may be on the verge of a second such evolution today with the jump to Web 3.0.
But what exactly is Web 3.0? How does Web 3.0 compare to previous (Web 1.0) and current (Web 2.0) versions of the internet? What role does blockchain, cryptocurrency, and other digital assets play in a world where Web 3.0 is reality? And is Web 3.0 really the game changing technology it’s being made out to be, or is it really just a whole lot of hype?
We answer these and other questions about Web 3.0 below.
Web 3.0 Defined
Web 3.0 is a term used to refer to the theoretical next iteration of the internet, characterized by a reliance on blockchain and smart contract technology and the decentralization, security, and transparency that those technologies would allow.
Gavin Wood, co-founder of Ethereum and also the creator of Polkadot, is often credited as the person who originally coined the term Web 3.0 in this context.
Web 3.0 is also known as Web3.
To better understand exactly what Web 3.0 is and how it is different from the current iteration of the internet that we know and love today, we first need to take a look at the history of the web as a whole, from its earliest days to today.
Web 1.0: The Early Days of the Internet
Key Features: Static web pages, decentralization, fragmentation
The earliest days of the internet were ruled by static web pages and a fragmented, decentralized experience.
Generating content and maintaining a website during this period required an individual to have technical knowledge. Additionally, there were few opportunities for a user to interact with content directly or otherwise shape their experience. All of this meant that the vast majority of content was generated by a relatively small number of early adopters.
For this reason, Web 1.0 is often referred to as the “read-only web,” as the vast majority of users simply read (or consumed) content.
Web 1.0 existed in a time before search engines—powered by algorithms, artificial intelligence, and machine learning—could help users find the information that they were looking for. In order to find content, a user either needed to know the URL directly, or else had to follow hyperlinks from one piece of content to another. This meant that it could be incredibly challenging to find the proper resources online, unless a user already knew where to look. Directories were a critical tool at this point in time.
Web 2.0: Where we Stand Today
Key Features: Interactivity, centralization, interconnectivity
And thus Web 2.0 was born.
This time period gave rise to social media, personal blogs, wikis, file-sharing services, and other forms of user-generated content. For this reason, Web 2.0 is sometimes called the “read-write web,” as even non-technical users could both consume and generate content easily.
For detractors of the current state of the internet, Web 2.0 has come to be defined by Big Tech’s dominance over the space. A relatively small number of technology companies (including Facebook, Google, and Amazon, amongst others) own and control key platforms that billions of people use each and every day—and the data that those users generate.
According to the World Economic Forum, “as of 2019, 43% of total net traffic flows through Google (Alphabet), Amazon, Meta (previously Facebook), Netflix, Microsoft and Apple.”
This centralization has empowered these companies not only to monetize user data, but also in some cases to hold sway over their behavior and emotions. Giving rise, some say, to a need for the next iteration of the internet: Web 3.0.
Web 3.0 : The Next Generation of the Web?
Key Features: Transparency, ubiquity, decentralization
While the transition to Web 3.0 has not yet occurred, some believe that we are nearing that transition.
Exactly what Web 3.0 will look like is impossible to know, as there are competing views of the technology it will leverage. That being said, the currently dominant vision of Web 3.0 is an internet in which websites and applications are either built atop (or otherwise integrated with) blockchain and smart contract technology and likely paired with a burgeoning internet of things (IoT).
If a blockchain-enabled Web 3.0 comes to pass, it would in theory be characterized by the same qualities that have come to define blockchain: Decentralization, security, and transparency. This would potentially give rise to decentralized social networks, search engines, and other applications free of corporate or governmental control, censorship, and regulation.
In theory, these applications—and any data or content that they are used to create—would be owned directly by the user, and not a central company such as Facebook or Google. For this reason, Web 3.0 is sometimes termed the “read-write-own” web.
In such a world, users could receive compensation (potentially in the form of tokens or other digital assets) for participating in the network, which they could then use to vote on decisions that would impact the network or else trade for monetary value. It’s also possible that a user could interact with websites and applications across the web using a single log-in or account, making for a more consistent user experience.
Is Web 3.0 reality, or hype?
There’s no way of knowing whether or not the vision of Web 3.0 outlined above will ultimately come to pass. Blockchain is still in its infancy, and largely remains an untested technology. While in theory it appears that it may be a good candidate for the next-generation infrastructure of the web, more confidence must be instilled in the technology before it gains truly widespread adoption.
Additionally, a number of questions remain that must be answered before Web 3.0 as a concept truly takes off. These questions include:
Will Big Tech really allow itself to be supplanted by Web 3.0, or will it find ways to retain control—for example, by acquiring companies or developing new products and services?
Will world governments allow for a truly decentralized internet free of censorship and control?
Can a blockchain-powered internet exist in a scalable and sustainable way?
Will Web 3.0 actually solve the problems that exist with today’s internet, or will it simply allow for a new cadre of mega-corporations to emerge and consolidate power?
Will a Web 3.0 replace the current internet, or will it potentially exist alongside it as an alternative option for users and consumers?
While it’s possible that Web 3.0 will come to pass as a blockchain-enabled internet according to the popular imagination, it’s also possible that the next iteration of the web will be altogether different. Maybe blockchain will play an integral role in this future; maybe it will play no role in this future; maybe it will play some role, alongside legacy and yet-to-be conceived technologies. Until it comes to pass, there’s truly no way of knowing what the future will hold.
Investing in Web 3.0
In the earliest days of the internet, few people would predict the immense wealth that it would eventually create. Some of the largest, most influential, and most valuable companies that exist today were founded to address the challenges inherent in Web 1.0. Naturally, many investors wonder if the transition to Web 3.0 will bring with it a similar opportunity for wealth creation.
If you are interested in investing in the hypothetical future of Web 3.0, you have a number of options to do so. You might, for example, buy and hold various cryptocurrencies—such as Bitcoin, Ethereum, or a variety of other tokens and coins—which it is theorized will play an increasingly important role in a blockchain-enabled internet. Alternatively, you may invest in emerging companies vying for control over the future of Web 3.0, or in established companies which many believe are unlikely to “go quietly into that good night.”
Here at Allio, we believe that cryptocurrency has exciting potential to help build the infrastructure of tomorrow’s technological and financial ecosystem but currently as an asset, doesn’t have the regime in place to drive its price up. Bitcoin, due to its limited supply could come into high demand if the global financial system ever experienced hyperinflation. Rather than have our clients purchase a wallet or trade on a messy exchange with hidden fees to purchase coins, we prefer to seek this upside via the use of an ETF which includes the added benefit of not being directly exposed to the speculative underlying asset. That said, they are still volatile and investors should only purchase them if they’re willing to lose that entire portion of their portfolio. For that reason, we offer our clients the choice for whether they’d prefer to have crypto exposure, alongside traditional asset classes—like stocks, bonds, commodities, and real estate— for a truly diversified macro investment strategy.