Computer scientist Gavin Wood coined the term “Web 3.0” in 2014, explaining his vision of the future of the Internet.
The phrase, also abbreviated to “Web3,” has recently become an internet buzzword with high-profile technologists, including Twitter founder Jack Dorsey and Tesla CEO Elon Musk, debating the meaning of the term.
Wood, one of the co-founders of Ethereum and founder of blockchain infrastructure company Parity Technologies, spoke to CNBC on an episode of the “Beyond the Valley” podcast to discuss his Web3 vision.
What’s Wrong With Today’s Web?
Proponents call Web3 a decentralized version of the Internet — a version not dominated by a handful of powerful players like Amazon, Microsoft, and Google.
Web1 started with the idea of an open and decentralized Internet, but Web2 — the Internet we know today — gave birth to trillion-dollar tech companies that have a strong influence on the Internet and own much of the infrastructure the Web is built on. .
“The big problem with this is… kind of like putting all your eggs in one basket, if something goes wrong with one of these services, you know, the service is suddenly unavailable to an awful lot of people,” Wood told CNBC’s “Beyond the Valley” podcast.
“In addition, the key word here is trust. We have to trust the people behind the services. We have to trust the owners of the companies running the service… And so yes, we kind of managed to design ourselves in this, kind of like a dystopian version of what the world could be.”
So what is Web3?
For Wood, Web3 is truly decentralized and a more democratic version of today’s Internet.
“Web3 is actually kind of an alternative view of the web, where the services we use aren’t hosted by a single service provider company, but rather some kind of purely algorithmic business that is hosted by everyone in a sense. So it’s like it’s very peer-based. to peer, right?… The idea is that all participants contribute a small portion of the ultimate service,” Wood said.
“And so no one really has any advantage over anyone else… not in the same sense, at least if, as you know, when you go to Amazon, for example, or to eBay or Facebook, where the company behind the service has really absolute power over what they do in delivering the service.”
Web3 Key Terms and Technology
Blockchain is a key technology behind Web3. It is usually associated with the cryptocurrency bitcoin and is the technology that underlies it. The bitcoin blockchain is a public ledger of bitcoin network activity. But bitcoin is not owned by one company or person and is not issued by a central authority such as a central bank. Instead, it is decentralized and the network is maintained by a global group of people using specialized computers.
So blockchain is a key technology and decentralization is an important expression.
Web3 is based on the idea of a “trustless” model. Right now we have to trust that companies deliver the service they promise. But if Web3 products and services are built on blockchains and decentralized, all you need to do is trust the underlying algorithm to deliver that product.
Of course, that comes with its own risks.
What could a Web3 version of Twitter look like?
Wood gave the example of a Web3 version of Twitter that he said would give more users control over their posts and make verifying identities easier, for example.
“So it’s a lot harder for someone to like, fake my identity, because we have … cryptographic evidence that I did this, and only I could possibly have done this,” Wood said.
“We probably have something bigger, like free speech…in the sense that the system won’t inherently have gatekeepers. As you know, there are Twitter employees who act effectively as gatekeepers to the system.”
Where does cryptocurrency come in?
Proponents of Web3 suggest that cryptocurrencies will play a key role in the future of the Internet. An example could be where there is a Web3 application running on a particular blockchain using a specific digital currency.
For example, services running on the Ethereum blockchain may require Ether-based digital tokens.
Thousands of virtual currencies have popped up in recent years. But Wood said Web3 doesn’t rely heavily on cryptocurrencies as he envisions it.
“I suspect that currency will continue to play a role in services. But I think … in general we will start to see services delivered without having to use tokens,” Wood told CNBC.
“And I think that’s going to be a big jump. And I think it’s one of the main factors that will open the door to the mainstream,” he added, suggesting that most people probably don’t want many different tokens buy to use a service.
How will regulation work?
Bitcoin itself has never been regulated as it is very difficult to do as it is not owned by a single entity. However, companies that come into contact with cryptocurrency in one way or another, such as exchanges, are often under some sort of regulation.
So if a Web3 service is built on the same theory of decentralization as bitcoin, how will regulators approach it?
For now, countries around the world are still trying to figure out how best to regulate cryptocurrencies and related technologies. Web3 is part of that conversation.
Wood suggests it will be difficult for authorities to regulate Web3 services themselves. Instead, it could be in an app’s “self-interest” in terms of their product to put rules in place that align with regulators, Wood said.
He added that regulators may want to regulate the “users of the service rather than the service itself”.
Will this be the end of the tech giants?
Proponents of Web3 suggest that Web3 could challenge the power of technology giants.
But the same companies like Microsoft and Twitter are also investing in Web3.
Wood said it’s going to be “hard to make a dent… in these Goliaths,” but he compared their potential situation to Microsoft in the late 2000s and into the years to come.
“It didn’t matter if you were using the Windows operating system or you wrote your document in Microsoft Word… we use the web as a platform and the web can be used on any operating system,” Wood said.
“Ultimately…I would hope that Web3 fulfills the needs of the future in a way that can never really be met by these centralized service providers,” he added.