Blockchain in Web3 and Web5
A side-by-side comparison
A new decentralized web platform termed “Web5”, a hybrid of Web3 and Web2, has been introduced by the former CEO of Twitter, Jack Dorsey. Ever since TBD published their idea on Web5, I wanted to have a deep dive into it. This blog post doesn’t aim to say Web3 is better than Web5 or vice-versa, rather the intent of this blog post is to demonstrate how Blockchain as a technology is being utilized in Web3 and Web5. For this, we will be comparing Web3 and Web5 on factors such as Blockchain Implementation, Ownership of Assets/Data, Application Deployment, Data Storage, Native Tokens, and Scalability.
Disclaimer: For keeping things simple we only concentrate on the Ethereum blockchain in Web3 and Bitcoin in Web5. And for those who would like to have a recap on definitions on Web3 please visit Ethereum’s docs here and for Web5, please do have a look at TBD docs here.
Blockchain Implementation
In Web3, blockchain platforms such as Ethereum are leveraged to deploy application logic in form of smart contracts. Then, user accounts can communicate with a smart contract by submitting transactions that carry out a smart contract function. Each transaction made in Ethereum is recorded in it and is publicly visible.
Whereas in Web5, Decentralized Identifiers (DIDs) are the only component that touches a blockchain. Blockchain such as Bitcoin is being used in Web5 for anchoring the DIDs. DIDs are a W3C proposed recommendation that links users to their information and has a standardized structure.
Ownership of Assets/Data
Through non-fungible tokens (NFTs), Web3 provides users with control of their digital assets in an unprecedented way. Like a deed for an item in the actual or digital world, NFTs can be used to indicate ownership of any unique asset. They are secured by the Ethereum blockchain and can only have one legitimate owner at a time; nobody can change the ownership record or create a new NFT by copying and pasting an existing one.
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A DID document that resides off-chain is connected to the subject of the DID (the person, business, or object being recognized) by a DID URI in Web5. With Web5, users can host their own personal data stores and isolate their data from the applications they use. If an application has access to the location of a particular user data store, it can send that user a request for accessing the data, giving users full control over their data.
Application Deployment
In Web3, instead of using a centralized server, Decentralized Applications (Dapps) run their backend code (smart contracts) on a decentralized network. They store data on the Ethereum blockchain and implement their app logic using smart contracts. Dapps can be decentralized because they are controlled by the logic written into the contract, not an individual or a company.
Web 5 enables developers to build decentralized web applications (DWAs) which are web apps enhanced with decentralized identity and data storage capabilities. DWAs work like Progressive Web Apps (PWAs), but you’d add the decentralized web node SDK, and then applications are free to go serverless because the data isn’t stored with them. (PWA stands for Progressive Web Apps a standard for installable web apps that is implemented in all major browsers today.)
Data Storage
Since Web3 dapps deployed on public blockchains such as Ethereum would require users to pay extra every time their transaction requires adding a new state, most Web3 dapps make use of decentralized off-chain storage solutions, like IPFS or Swarm in their architecture. IPFS is a distributed file system for storing and accessing data. So, rather than storing data in a centralized database, the IPFS system distributes and stores the data in a peer-to-peer network. Swarm is similar to other decentralized storage networks, but there is one key distinction. Swarm’s incentive structure is integrated and enforced using smart contracts on the Ethereum blockchain for data storage and retrieval, unlike Filecoin, which is a distinct system. For a more in-depth analysis of Web3 architecture please visit Preethi Kasireddy’s blog.
As we discussed earlier in the section “Ownership of Assets/Data”, Web5 allows its users to host their own personal data stores known as Decentralized Web Nodes (DWNs) and thus decouple user data from the applications. DWNs do not exist on blockchains and can hold both public and encrypted data. An application can send its user, a request for data if the application has the user’s DWN address. Since the data in DWNs are JSON objects that adhere to a global standard, any application can access and use the data given its semantic type. If the data is private, the node owner must authorize access to the application; if the data is public, those objects will be automatically returned to the application.
Native Tokens
In Web3, public blockchain platforms such as Ethereum offer native tokens. Ether (ETH) is the native token used by the Ethereum blockchain as a payment system for verifying transactions.
As we discussed earlier in Web5, DIDs are the only component that touches a blockchain, and Web5 utilizes a Layer 2 DID network that runs on top of Bitcoin known as ION for storing DIDs. Because ION is a decentralized alternative to DNS for identity identifiers, it lacks any centralized authority, coordinators, tokens, or bottlenecks.
Scalability
One of the major hurdles for the widespread adoption of Web3 apps is the necessity of enhancing the backend blockchain network’s speed and throughput. The basic objective of scalability is to boost transaction throughput (high transactions per second) and transaction speed (faster finality), without compromising security or decentralization. Due to excessive demand, the layer 1 Ethereum blockchain experiences slower transaction times and unprofitable gas pricing. Blockchain platforms like Ethereum offer various scaling solutions such as on-chain scaling, off-chain scaling, plasma chain, sidechains, etc.
Similar to Web3, Web5 also suffers from scalability issues since Web5 makes use of the Bitcoin blockchain platform for anchoring DIDs. To overcome Bitcoin’s scalability problem, Web5 utilizes ION, a Layer 2 DID network that runs on top of Bitcoin for storing DIDs. Since ION is built for scale, it can handle thousands of DID operations per second throughout the network. It is a permissionless network based on the fully deterministic Sidetree protocol that doesn’t need any additional consensus techniques, trusted validators, or special tokens to function; all that’s needed is the linear advancement of the Bitcoin timechain.
