Web TL;DR: A Breakdown of Web3
An explainer behind Web3 and the concepts needed to understand how we got here
If you’ve ventured into the internet or any form of media in the past 12 months, you’ve likely heard of the term Web3 (also known as Web 3.0) or some of the controversy and commentary from technologists such as Jack Dorsey (Block, formerly known as Square) just a few times.
Talking about Web3 in Tech is a lot like talking about Crossfit within the fitness community — if you’ve ever done anything related to it, there's a 100% chance you've told everyone about it and also tried to get your friends to get in on it (Disclaimer: I’ve tried CrossFit a few times and I enjoy the workout).
In this edition of Margin Squeeze, I’m going to give a brief explainer to what Web3 is, talk about the controversial discussions going on right now, and also lay the context to how we even got to Web3 in the first place.
0 before 1, 1 before 2, and 2 before the 3
To understand what Web3 means, it is critical to understand the road taken to get here — and that means understanding Web0, Web1, Web2, and then Web3.
Web0 (1969–1980)
A lot of the innovations we use in our everyday life originate from technology developed by the military — microwave ovens are a great example.
Likewise, the first iteration of the internet was also a military innovation known as Arpanet (Advanced Research Projects Agency Network) headed by DARPA to bring computer technology into American trenches during the Cold War.
Arpanet was by no means mobile, and as you can imagine, required the use of massive immobile computers that were extremely impractical in any wartime situation; this resulted in heavy investment in network building and communication to bring mobility to Arpanet.
This eventually resulted in two Arpa researchers named Robert Kahn and Vint Cerf publishing an early blueprint of an international networking community (the internet) in 1974 so that Arpanet could be expanded by setting a common language on the network. The early internet was born.
“a simple but very flexible protocol”: a universal set of rules for how computers should communicate.
Web1 (1980–2000)
The 1980s were the first mainstream occurrences of computers talking to one another with a standard language (Protocols) known as TCP and IP. Much like any language, these protocols were extremely important as they provided a universal rule-base of communication that every contributor to the internet could use. Without TCP/IP, it would be like a French speaker trying to communicate with a Mandarin speaker.
The core focus of Web1 was a lot like a newspaper, allowing anyone (with access) to consume information. There was no option for users to communicate back to the content producers; such as we do today with comment boards and chatrooms. Communication was one way.
This was the Netscape era where Netscape Navigator 1.0 was used by users to search and direct to static webpages and personal websites.
Web1 was a turning point in the information age but had 3 user pain points that needed further iteration.
- Difficult: Unlike today, where pretty much anyone can figure out how to use the internet as a creator or consumer, the interface that exists today to make user interactions non-technical did not exist. Using, and especially creating on the internet was very hard and required a lot of technical knowledge and financial access that most did not have. How can you expect to grow a network if most people don’t have the skillset to use it?
- Generic: The data collected (if any) was not representative of users and led to an internet that lacked personalization. Without personalization, experiences were really simple. Imagine a google search without any recommendations…not as useful, right?
- Simple: Functionality was missing; 2-way chat, payments, location, etc
Web2 (2000 — Today)
Web2 is how the 3 main shortfalls of Web1 were addressed. Read and write functionality was built as a key characteristic of Web2 to facilitate interaction between users with websites as a medium.
New languages and interfaces were built to make the Internet much more user-friendly both as a consumer and as a creator, and a lot of the missing functionality such as payment, email, etc. protocols were created.
Key players in this Web2 revolution include: Facebook, Youtube, Google, Paypal, Amazon, Microsoft, etc through technologies such as HTML, CSS, and JavaScript frameworks/libraries such as React.
However, while Web2 was much easier for users, it also created “Gatekeepers” that managed the rails and traffic of the internet. For example, SMTP (Simple Mail Transfer Protocol) used in email is an open technology, the functionality of SMTP is almost entirely controlled by Google and Microsoft. In theory, anyone can create their own blog/social page — but the network effects of Facebook, Youtube, and Instagram make them the place to be. Want to find something on the internet? Let me Google that for you.
Therefore, while Web2 has vastly improved functionality compared to Web1, it raises the question of who controls the Internet and highlights that the foundational infrastructure of the internet today is a closed system owned, run, and monetized by Big Tech. This is called Platformization.
Web3 (201? — Today)
Web3 is newer so the definition is not as clear as Web2 or Web1, but the ethos of Web3 is based on de-platformization. Web3 takes the best of the internet today and tries to package it to allow users to own the content that they create backed by decentralized technology such as blockchains. If successful, Web3 would seriously impact the P&Ls of Big Tech and open the theoretically closed Web2 into a standard and accessible market for all. Working under an open network, Web3 is expected to also speed up the pace of innovation. The concept of Web3 is game-changing and while I don’t know how it will work, the idea is one to strive for.
The Web3 Controversy
— Jack Dorsey
Jack Dorsey, founder of Block (Formerly Square) and Twitter raised a stir on the internet by sharing his belief that Web3 is not de-platformed because the protocols powering Web3 are backed by the same money that also backs Web2 and that Web3 is likely just Web2 with similar power brokers. Dorsey is not alone and other technologists such as Moxie Marlinspike (Signal) also seem to agree.
A very clear example, OpenSea, the jewel of digital ownership concerning the blockchain is funded by Andreeson Horowitz — the same folks that provided VC funding to Instagram and Facebook.
As a counterpoint, one could argue that DAOs (Decentralized Autonomous Organizations) are examples of Web3 without the backing of centralized venture capital.
However, the potentially anonymous decision-making power in a DAO is often earned from holding tokens — and tokens cost money whether it be time, computing power, or just cold hard cash. Access to tokens is often not equal, so the risk to platformization still exists.
Web3 is still early, and I do believe there exists the opportunity to truly de-platform and bring power back to creators, but I tend to follow the money, and the money seems to be leading back towards platformization, just in a manner that’s less obvious and apparent. Developments in Web3 will be a space that I will continue to keep a close eye on, but I share Dorsey’s concerns that this new internet is starting to look a lot like the old one.
To me this raises another question, is Web2 as bad as it sounds? Or for the vast majority of users, does platformization lead to a much simpler and focused internet experience while Web3 generates the most value for content creators that are looking to monetize or push on the edge cases of free speech and creatorship only?
