The internet has evolved tremendously over the past three decades, and we are glad that it has. Most of the information and communication in the world today is happening over the Internet from the comfort of your couch. All you need is an Internet connection and an internet-enabled device; this was unimaginable a few years ago, but what has made this possible?
The answer is the Web 2.0 version of the internet. As the name suggests, Web 2.0 is the second version of the internet. The first version of the internet was Web 1.0, an internet version limited to static websites that presented users with information which could only be read and not updated or transferred.
While the ParticipativeSocial Web, another name for Web 2.0, was indeed a step up from the first version of the internet, we have not settled for it, despite it encouraging information sharing, collaboration, and participation by giving users more freedom to interact with each other than Web 1.0. Instead, we are slowly transitioning to the Web 3.0 version of the internet.
Web 3.0, has many enhancements over Web 2.0, and it has the potential to transform our experiences into the new World.
Let’s explore some of the finer points of the Web 3.0 version of the internet:
- Greater Online Privacy and Security Than Web 2.0, Web 3.0 promises to prevent online privacy and security chaos by providing a decentralized way of securing internet data.
- The Promise of Cryptocurrency, Another way that Web 3.0 adds value to the internet is by allowing cryptocurrency — regarded by many as the future of currency worldwide. Web 3.0 enables the payment networks to eliminate the need for an intermediary such as banks, agencies, etc. to perform transactions such as money transfers, real estate registrations, and more.
- Internet of Things (IoT) is another breakthrough feature of Web 3.0. Using just a smart device, consumers can give commands to a variety of connected devices including cars, smart refrigerators, smart TVs, lights, and more to perform a variety of tasks over the internet within a fraction of a second. Additionally, Web 3.0 combines artificial intelligence (AI) and virtual reality (VR) to enhance the experience for internet users.
What is the potential of Blockchain Technology in Web 3.0?
When discussing Web 3.0, it is critical to mention blockchain technology, which serves as the foundation for Web 3.0. Blockchain technology, also known as Distributed Ledger Technology, brings incredible value to Web 3.0’s main features while fixing many of the undermining issues that exist in Web 2.0. In other words, the blockchain technology is the driving force behind Web 3.0 that is making previously impossible tasks possible.
Following is an example of blockchain-based Brave browser to understand the opportunities enabled by Web 3.0 and the blockchain technology.
What Makes the Brave Browser Unique?
As of March 2019, the Brave browser had reached almost 20 million downloads. In many ways, the Brave browser epitomizes what the Web 3.0 version of the internet aims to achieve. Therefore, understanding the Brave browser and what makes it unique will allow you to get a good idea of the advantages of the Web 3.0 internet.
The main objective of the Brave browser is to provide internet users with private, secure, and fast browsing. Built with user privacy in mind, the Brave browser is open source and allows users to browse the web eight times faster than Web 2.0 based browsers like Chrome, Internet Explorer, and Safari that netizens currently use to surf the internet.
However, the best thing about the Brave browser is that it blocks unwanted advertisements and does not track user activity and location. Compare this to the likes of IE and Chrome that not only keep track of and store user activity but also sell this data to other companies that are looking to improve their targeted marketing. For instance, do a google search for ‘best laptops,’ and you’ll be bombarded with advertisements for laptops on each website you visit from that point onwards.
The Brave browser, on the other hand, protects the privacy of internet users while allowing them to browse the internet securely. Additionally, the browser rewards users who wish to spend time seeing verified advertisements.
Below is an example of a Brave browser welcome page, it shows statistics of the blocked content such as Trackers, Ads, etc., and the estimated time saved.
These rewards are in the form of cryptocurrency, also known as BAT (Basic Attention Token). Imagine being able to browse the internet eight times faster than now with increased privacy and security while earning rewards for watching advertisement? The best part is that Brave is just one example of the many blockchain-powered applications that are transforming the business model of digital advertisements.
What’s the Key Point?
Web 3.0 will change our lives in several ways. However, none of these changes would be possible without blockchain technology, as seen in the case of the Brave browser; it is the backbone of this latest version of the internet.
Now is the best time for entrepreneurs, developers, investors, and even general Internet users to not only learn about the opportunities brought forth by these decentralized technologies but also use them to their advantage.
How to catch-up with this technology?
Today, blockchain technology is being used in several different ways. Therefore, anyone interested in learning about and applying the blockchain technology — be it startups or aspiring blockchain professionals — should understand how the blockchain technology and platform work. I have covered the fundamental concepts relating to blockchain and the issues that can be solved with it in my previous blog post.
Here, the focus will be on understanding the two main concepts that are driving blockchain. By understanding these concepts, you can discover a blockchain platform that is the right fit for your unique business or professional needs.
The two main concepts driving the blockchain technology are:
- Mining: A process that validates and saves data on a blockchain-distributed ledger
- Consensus Protocols: Rules that define how nodes on the network function
Let’s take a more in-depth look at both these key blockchain components.
Blockchain is a peer-to-peer(P2P) network comprising of nodes. What are the nodes? They are an electronic device, such as individual computers, that participate in the P2P network. However, not all nodes have the same function to perform. For instance, some nodes validate the network data while others save it on the blockchain.
The nodes are owned by individual participants in the network and those who contribute to the computing power over the network to process the data. These participants are rewarded when they process the data using their computer. The particular blockchain’s cryptocurrency, in the form of digital coins, is the incentive paid to these network participants.
New coins are created as the data gets processed, and these coins are awarded to the owner of the node. This process is referred to as mining, and those perform it are called miners.
What’s the Key Point?
Since miners are the ones validating the blockchain network’s data and maintaining it, they play a key role in the blockchain ecosystem. Therefore, the very first thing we should do when choosing a blockchain platform is to find out who the network’s data validators or miners are.
One of the greatest innovations of recent times, consensus protocols synchronize all the nodes on a blockchain network while providing a way to ensure the integrity and truthfulness of the data on the network. Consensus protocols help accomplish two key tasks:
- Allow the blockchain to be updated with the network of nodes based on the agreement/protocol. Additionally, the consensus protocols reward the nodes as data blocks are processed. This helps bring the network of nodes to a single state. This is because the blockchain, at any given time, should represent a single state. If this doesn’t happen, then the blockchain network will be in a state of disagreement.
- Prevents the blockchain network from being controlled by any single authority
How the consensus protocols function will depend on the particular blockchain network in which they validate the blocks. In other words, consensus can take on a variety of forms.
What’s the Key Point?
By understanding the consensus protocols of a blockchain network, one can determine how information on the network is being validated and stored. More importantly, we will know if the information is accurate and trustworthy.
In addition to the above, consensus protocols can give us an idea of how much it would cost for the miners to run a network as well as what amount is needed by businesses to run a decentralized application on a blockchain platform.
What are the types of blockchain platforms?
Since miners and consensus protocols are the driving force behind the blockchain platform, the type of blockchain platform will change with the type of miners (also called data validators) and the type of consensus protocols. However, a blockchain platform can be categorized into three general types.
1. Public Blockchain
The first category or classification for blockchain platforms is public blockchain. A peer-to-peer network of computers, the public blockchain does not require any permission to join. Data on the network can be viewed and updated by all participants.
As mentioned above, no permission is needed for joining a public blockchain. However, the blockchain platform makes up for this by having strong rules or consensus over the network between the computers or miners. This is done to ensure the platform’s reliability and accuracy. Following is a brief description of the popular blockchain consensuses protocols:
Proof-of-Work (PoW) requires the participating computers or miners in the network to solve a mathematical puzzle before anyone else on the network and then validate the data. Miners who do this successfully are rewarded with the platform’s cryptocurrency, paid in the form of digital coins. An example of this would be the public blockchain Bitcoin. A platform that runs on Proof-of-Work algorithm, Bitcoin provides miners with its crypto coins when they solve the puzzle before anyone else and then validate the data block.
What is the mathematical puzzle that needs solving?
You’re bound to have this question in mind. The simplest way to explain the mathematical puzzle would be producing an expected output for the given input using your intuitive abilities. Although us humans are blessed with incredible intuitive abilities, mining computers to solve the mathematical puzzle can be challenging as a lot of computational power is needed for it.
Special computer components such as GPUs are needed by the miners to solve the puzzle. The main concern with these computers is that they require massive amounts of electricity to run and participate in the mining process. For example, the success probability of solving the bitcoin puzzle is one in nine trillion. Furthermore, this difficulty in solving the puzzle increases as more nodes (computers) join the network.
For the above reasons, typical personal computers (PCs) cannot compete with the special computers involved in Proof-of-Work (PoW). If you’re thinking about sourcing these special computers, then keep in mind that they are a huge investment which is a significant drawback of the PoW consensus protocol.
Another issue with Proof-of-Work algorithm is that the chances of a 51% attack. This problem occurs when a group of miners combine their computational power, take charge of the network, and form a separate blockchain while leaving the rest of the network as it is. In other words, they split a single blockchain platform into two. This practice is referred to as a hard fork.
Usually a hard fork is not a good practice because it puts the credibility of the blockchain platform at risk.
In Proof-of-Stake (PoS), miners or data validators are selected to verify blocks based on how much stake (coins) they have in the network. This is far better from the Proof-of-Work protocol, which requires solving a puzzle. Instead of having to solve a puzzle, miners are required to deposit platform-specific coins into a secure wallet to become a validator. In PoS, several methods are used to select the data validators, including randomized selection and selection based on how much stake the participating nodes have in the network.
The selected data validators are rewarded by the blockchain platform in the form of cryptocurrency which they receive for executing the transactions. They may be granted additional benefits depending on their consensus agreement.
PoS has several advantages over PoW. Following are the two main advantages:
- The lower computational power requirements and electricity consumption. Someone with even a typical personal computer (PC) can meet the minimum deposit requirement demanded by PoS and join the blockchain network’s validation process
- The 51% network attacks with Proof-of-Work (PoW) protocol is significantly reduced with PoS
In addition to Bitcoin, another incredibly popular public blockchain network is Ethereum. The current version of Ethereum is 1.x which runs on Proof-of-Work (PoW) consensus protocol. However, the next major release of Ethereum ETH 2.0 is expected to run on the Proof-of-Stake (PoS) consensus. Ethereum protocol switching to PoS should be good news to many.
2. Private Blockchain
A private blockchain differs from a public blockchain in terms of who is allowed to participate in the network, execute the consensus protocol, and maintain the distributed blockchain ledger. Unlike a public blockchain, you need an invitation to join a private blockchain network. Additionally, the participants in a private blockchain have to be validated by either the network starter or a set of rules that are put in place by them.
Another term used for private blockchain networks is permissioned blockchain. This is because private blockchains require permission for the data validators, miners in the case of PoW, to join the network. However, there is a silver lining; unlike public blockchains that require complex puzzle computation proofs, private blockchains can take advantage of lighter-weight consensus algorithms. These algorithms rely on voting rounds and digital signatures for protection.
The outcome of the above is far greater performance and throughput than public blockchains. Also, the need for expensive hardware processers and electricity consumption is eliminated. For example, if the Bitcoin public blockchain network takes 10 minutes to execute a block, then the same block will be executed in a private blockchain in 10 seconds. That’s how big the difference is!
Below is a comparison between public and private blockchain networks of their characteristics.
3. Hybrid Blockchain
A blockchain that lies between extremes, i.e., the private blockchain and the public blockchain, hybrid blockchain is a platform having attributes of both these blockchain types. For example, participants in a hybrid network can choose to keep some transactions public while confining others to a smaller audience. A hybrid blockchain that comprises of both a Public and a Private network state maintains the privacy of every transaction and at the same time, ensures that the transaction can be verified by an immutable record on the blockchain’s public state.
Hybrid Blockchain Use Cases
The integrity of cross-border payments made for trade and financing purposes is maintained in a hybrid blockchain, all thanks to the platform’s robust security and high transaction throughput. Other areas where hybrid blockchain can be successfully implemented are applications in industries like Travel, Energy, Aviation, Supply chain, etc.
Below is an example of a few popular blockchain platforms and their basic characteristics.
What’s the Key Point?
The success of any blockchain platform depends on the network of nodes, which validates the data accuracy, and the consensus protocols that direct the network. Concentrating on these two components is critical when investing time and money to choose the right blockchain platform for business need or learning.
Possibilities are endless in Web 3.0 with revolutionary Blockchain Technology. The blockchain concept was introduced to create a decentralized ledger maintained by anonymous consensus. The most noticeable commonality between blockchain and Web 3.0 is that they both facilitate the transition from a client-server-based architecture to a decentralized network.
By understanding the basic concept behind blockchain technology, its types, and the components enabling it, we can discover the connection between the blockchain technology and Web 3.0 that promises to revolutionize the internet and the world of finance.