Corpo versus Crypto — Scaling Mass Market from Web2 to Web3
There is currently a significant usability gap between the trusted comfort zone of corporate Web 2.0, where our content is hosted, moderated, and managed by giant web corporations, and the Wild West zone Web 3.0 of the decentralized crypto revolution.
Throughout the past years, humanity has genuinely made solid progress in scaling from Web1 to Web2, and the relatively recent blockchain technology has shown us the passageway to the next level of Web3.
Ever since the release of crypto into the world, there’s been a “Clash of the Titans” between the corporate GAFA (Google, Amazon, Facebook, Apple) companies and decentralization zealots (Bitcoin, Ethereum, and other crypto projects) when it comes to Web2 and Web3 technologies.
Web2 is controlled and taken care of by colossal GAFA corporations that establish a relatively safe and trusted environment for their consumers.
However, when it comes to the Web3 vision of decentralized applications and cryptocurrencies, the blockchain trust level isn’t quite there yet since it is impossible to have a completely decentralized web with trustable sources not moderated or controlled by anyone.
We are at a point in time where we need to close the gap between modern Web2 and the dream of safe and trusted Web3, where the customer content is moderated and where existing GAFA corporations have a legit enterprise environment to operate.
If you like it short and visual, take a few minutes to watch the speech of Louis Bellet, CEO of Yellow and grand designer of the Yellow Network. Louis explains the brief history of the Internet in past iterations from Web1, how the modern corporate Web2 looks like, and what technical solutions are available to proceed to the brand new Web3 Internet of Finance powered by Blockchain technology.
Let’s go ahead and analyze in-depth how Internet technology evolved over the past years, where we are now, and what’s ahead of us.
Web1 — How It All Started
The earliest version of the Internet emerged from the Defense Advanced Research Projects Agency (DARPA). It became the first global network representing the digital future of communications, referred to as Web 1.0.
Interestingly, “Web 1.0” didn’t appear as a term until Web 2.0 was coined in 1999 by Darcy DiNucci.
At this point, Internet resources went under a significant transformation. In web 1.0, most websites were static HTML pages, with minimal user-generated content, and running on the static data center infrastructure built by the ISP (Internet Service Provider) companies.
The Internet essentially started through Internet Service Providers connecting us. The first “datacenters” were literally a bunch of computers piled at the ISP office.
Some of us still remember when you had to dial in to use the Internet using a modem, taking over your phone line to transfer data, which was a source of plenty of jokes and domestic scandals by itself.
The first social interaction apps like the ICQ messenger conquered the hearts and minds of early online communities, connecting people worldwide and laying the groundwork for modern chat applications like WhatsApp, Viber, and Telegram.
Before Internet Explorer from Microsoft settled in, and long before Google Chrome was in sight, the first most popular browser was the Netscape Navigator. Loud anti-monopoly lawsuits were flying around as the large corporations conquered and split the newly formed online market.
The start of ISP Infrastructure
ISP is an acronym for Internet Service Provider — a company providing fee-based Internet access. America Online was the flagship company dedicated to getting people online as the other service providers evolved.
The first internet service providers of the late ’80s were companies offering the public direct internet access for a monthly fee, primarily established in the United States, UK, and Australia. The main achievement of these pioneer companies was a significant reduction of the barrier for online entry.
Dial-Up Internet Access
Dial-Up internet was essentially a form of internet access that relied on the public switched telephone network (PSTN) to connect to an internet service provider (ISP) by dialing a telephone number on the conventional telephone line.
Using a phone line for data transfer restricted any call possibility, which meant that you could either be connected to the Internet or have a voice phone call, but never both.
You don’t want to know how many house dramas that caused when you wanted to play Blizzard’s Diablo multiplayer, while your spouse wanted to chat with her friends on the phone 😅
Telecommunications and RFCs
RFCs or Request for Comments is a formal document from the Internet Engineering Task Force (IETF), which showcases the basic building blocks of today’s modern computer network, as well as the Internet. Today’s current network protocols are built based on the RFCs.
At the early stages of the Internet, every vendor out there had their proprietary network communication protocols — very much like the modern crypto industry has every new project introducing their cryptocurrency, blockchain, and whatnot.
AltaVista and Yahoo! Search
AltaVista was launched in 1995 by Digital Equipment Corporation. It was developed to tap into a commercial opportunity that its developers saw. The cornucopia of new features in relevant web search led to AltaVista becoming a hit with web users. At the time, AltaVista indexed around ten times the number of pages that competing search engines could handle.
Yahoo! Search used to be one of the most significant search engines and a directory of World Wide Web sites organized in a hierarchy of topic categories. It stood out because it provided both new and seasoned web users with a well-structured database of hundreds of thousands of websites and millions of web pages. It was founded in 1994 by Jerry Yang and David Filo, who were just graduate students at Stanford University.
AltaVista was the first search engine to allow users to research things using natural languages. It was the first to attempt to create a complete index of the web, using its data, and its crawler known as Scooter was capable of indexing full-text pages. All of this made AltaVista the first searchable full-text database on the web.
Eventually, AltaVista lost the race to Google and their groundbreaking search and indexing algorithms.
Early Netscape Navigator and Internet Explorer
The Netscape Navigator was the first web browser that saw commercial success in the 90s. It was created by a team led by Marc Andreessen, a programmer who co-wrote the code for other browsers. This browser had a massive point of appeal. Its importance cannot be understated because it essentially helped influence the development of the web into a graphical user interface, rather than just remaining a text-based web.
Throughout the 90s, Netscape Navigator was a pioneer in web browsing technical innovations. That said, it implemented a lot of, at the time, unique features that were seen on the web browsers for the very first time.
We saw numerous web browsing tech innovations:
- Web pages displayed as they loaded, which provided users with quicker access to them. Remember, at the time, the Internet wasn’t as fast as even the most basic internet plans today.
- Cookie files were first introduced to keep session information for the first time through this web browser.
The last update to the Netscape occurred on February 1, 2008, after which the browser eventually died off in terms of popularity.
Despite all innovative developments, the Netscape browser lost its initial dominance on the consumer market and got crushed by competition like Microsoft’s Internet Explorer, Opera, Mozilla, and eventually Google Chrome.
Instant messaging revolution of ICQ Messenger
The ICQ Messenger was an instant messaging service along with Google Talk, which was introduced in 1996 by an Israeli company known as Mirabilis.
ICQ was an innovator for instant messaging and was the first instant messenger client that used a graphical user interface (GUI) and was easy to install and use for just about anyone.
ICQ still exists today, and it is updated regularly. It is simply one of those messaging services that survived through time. The client is kept to modern messaging standards and has emojis, multi-user chats, email support, SMS capabilities, and file transfers.
ICQ lost the technology race to Skype introducing video calls and ultimately lost the market to the plethora of new-generation instant messengers that followed — Viber, WhatsApp, Telegram, and similar.
The DotCom Bubble & Crash of DotComs
The Dotcom bubble refers to an Internet gold rush period between 1995 and 2000 when institutional and private investors started pumping serious money into online-based startups, hoping for a jackpot.
The DotCom companies had a commercial “.com” domain extension in their internet name address, which is why it’s dubbed that way.
Throughout this period, the DotCom bubble was heavily associated with the NASDAQ Composite index, which rose by an unprecedented 582% from 751.49 up to 5,132.52 from January 1995 to March 2000.
And then, the market experienced the DotCom crash, where it fell 75% from March 2000 to October 2002, essentially erasing most of the investors’ gains since the DotCom bubble started building.
The burst of the DocCom bubble caused market panic through massive sell-offs of DotCom company stocks, which drove their values down even further. By 2002, investor losses were estimated to be around $5 trillion.
Why did the DotComs fail?
- Instead of focusing on fundamental company analysis through analyzing the revenue generation potential and business plans, many investors focused on the wrong metrics, such as traffic growth to their websites.
- Many startups didn’t adopt viable business models, such as cash-flow generation, and were overvalued and speculative.
- Share prices of these companies continued to go up because the demand was overwhelming, so the burst was inevitable and resulted in a market crash. Reminds of the Bitcoin market somewhat.
A large amount of online and technology entities declared bankruptcy and faced liquidation. Although, a few companies that survived, such as Amazon, eBay, Microsoft, and Cisco, are giants of the IT industry today.
They say history repeats itself, and I cannot help but notice how much the DotCom bubble crash of the late 90s was similar to the crypto ICO hype and crash of the late 2000s. As perfectly noted by Mr. Kristian — “Much trust, and perhaps too much freedom.”
What’s the highlight of the Web 1.0 era?
The Web1 version is typically known because most of the online content was deployed by the website owners without much interaction. That’s why Web 1.0 is referred to by many as the “read-only” web, not very interactive, not very helpful when finding information — which is the core concept and mission of how the Google corporation was born.
In other words, you could go online, but instead of using a search engine, you would need to know and type in the full URL of the page. Additionally, while you could read and access content, uploading your content, like a blog, would be technically challenging and require good knowledge of scripting and programming languages like HTML.
No matter how bumpy the road was, the main highlight of the Web 1.0 era was to bring users online and introduce them to the Internet. This first infrastructure laid out the foundation for Web 2.0 as we know it.
Web2 — The Internet We Live On to Share Selfies and Food Photos
As soon as emerging web corporations realized the value and uniqueness of user-generated content, and there were enough online users to drive the new iteration of the Internet, Web 2.0 came into existence.
Broadband was developed and started to replace dial-up Internet in the early 2000s.
By 2007, half of all internet users had a broadband connection. It essentially allowed a much higher volume of data to be transferred faster by using an ADSL (Asymmetric Digital Subscriber Line) connection.
I guess by now you’ve got the idea how many housewives were made happy with the introduction of accessible broadband Internet connection. Connecting to the Internet no longer took over the phone line. Although cellular phones were already charging the mass market, and phone connectivity issues started to dissipate naturally.
GAFA monetizing our time with user-generated content
In Web 2 websites became a lot more interactive, with many new features and toys. Best of all, users could contribute the content to the web, and interact with other web users. Online interactions dramatically shifted the web landscape in a short time.
With the launch of modern Web 2.0 applications by Google, Facebook, YouTube, and others, users got access to nearly everything they could ever think of.
As a Web 1.0 user, you could only read content for the most part; now, you could meet just about anyone digitally, launch your websites, create videos, blogs, and pursue any creative activity you could think of.
Many new programming languages were introduced, which enabled web developers to have much higher flexibility in creating new web applications. Every day some new cool web applications are released, and everyone is trying to have them all.
You can think of Web2 not just by a technical upgrade of how it worked but as a shift in how the Internet became used.
Elastic Virtual Cloud infrastructure
To explain elastic cloud in layman’s terms, every time you log in to your webmail these days, or start an online Google Meet call or want to edit an image online, a virtual container is created on the web server to secure your access and process the task. When you do your thing and close the browser, the virtual cloud container is destroyed, saving any necessary information for future use in the next session.
The Elastic Virtual Cloud infrastructure essentially enabled preconfigured virtual server images and storage and network connectivity that customers might provide through the usage of a self-service interface. Monitoring information is also provided to inform the user about resource utilization required for traceable billing and automation of management tasks.
Modern web service-centric companies like Google, Amazon, and Microsoft serve dozens of billions of temporary virtual cloud instances daily for their users. That’s how the web hosting scale changed by uniting the servers in data centers worldwide, allowing them to seamlessly merge and share physical storage and computing resources.
When we talk about clouds, most people look up and think, “oh, so that’s where the Amazon is storing the data.” But we geeks know better.
The Web of Trust by SSL and big brands
The information transferred online had to be encoded, so the Secure Sockets Layer (SSL) was developed and became the most widely deployed cryptographic protocol.
Netscape first introduced SSL in 1994, intending to provide security over internet communications, before its successor, the TLS (Transport Layer Security), was introduced in 1999.
The transport layer security protocols help avoid data theft through an unprotected stream of information. Network traffic sniffer applications allowed the theft of sensitive data like passwords and credit card numbers on local networks and online unless the data was encrypted with SSL or TLS.
At the time of YouTube’s acquisition by Google back in 2006, Google’s founders called YouTube “the next step in the evolution of the Internet.” And that it was, as the online attention switched from reading pages and posts to watching more inspirational videos and stories.
YouTube introduced people to streaming video content and community-uploaded videos. Users went nuts uploading and sharing everything from movies to video clips, often produced by themselves, acting on their own, which started rapidly growing in popularity throughout the world.
YouTube essentially allowed users to create and monetize their content, which completely reshaped the way we used the Internet at the time.
Over fifteen years ago, Google bought YouTube for $1.65 billion. At the time, the figure was considered eye-popping to pay for a startup only a year and a half old. Looking back, though, the YouTube acquisition is regarded as one of the best tech acquisitions ever.
Scaling to Mass Market
Web2 achieved web scaling through the cloud infrastructure. We came from a small community of internet users to a mass market.
Web2 can be defined as a web rich with applications with a web-oriented architecture and a social web. This is the Web2 we currently live in.
Corporate GAFA can facilitate rules to how users can interact with their services, what they can do with the services, and how much freedom they have while using the services in question.
The Web2 scaling came at an unexpected cost that we realize and aim to improve with Web3. Web2 as we know it features a high level of centralization, where giant GAFA corporations (Google, Amazon, Facebook, Apple) have complete control over our creative content and personal data.
Nasdaq-100 is $15 Trillion
Nasdaq-100 is one of the world’s preeminent large-cap growth indexes, including 100 of the largest domestic and international, non-financial companies listed on the Nasdaq Stock Market based on market capitalization.
Nasdaq is home to some of the world’s most innovative companies of Web2, such as Apple, Google, Intel, and Tesla, and has grown to $15 trillion in value.
The Chasm Between Trusted Web2 and Decentralized Web3
The crypto industry took financial markets by storm, and there is no sign of it passing any time soon.
Coinbase is a $100 billion company listed on Nasdaq. Crypto has a market cap of $2.7 trillion, with over 15,000 cryptocurrency tokens in existence at the time of writing.
However, there are major cross-chain and usability issues. Many developers are currently working on solving these issues; however, at its current state, when you use blockchain technology daily, you can notice these difficulties.
The global blockchain industry is currently chaotic, with no significant mass-market adoption and no international consensus on using crypto and blockchain for the mass market.
Web3 — Smart, Personalized, and Decentralized
Like with the crypto industry itself, there is still no clear community consensus on a specific vision and mission of Web3.
Elon Musk didn’t make us wait long to satirize it on Twitter:
As satirical as it is, Elon is right here. Where is Web3?
How can there be one when the blockchain development community itself is all over the place with no clear vision of it?
Over 15,000 Cryptocurrencies
According to data from CoinMarketCap, there are currently 15,078 cryptocurrencies in existence at the time of writing. A little bit too much to wrap your head around, don’t you think?
As with any gold rush, the Blockchain industry shows an incredible level of growth, overshadowing many other sectors.
While most cryptocurrencies do not feature their native blockchain network and are based on pre-existing networks like Ethereum or Solana, it is clear that the asset digitalization industry is evolving rapidly.
Coinbase Reached $85.7 Billion Evaluation on Nasdaq
One of the largest cryptocurrency exchanges on the market, Coinbase, settled at an $85.7 billion valuation following its first day of public trading on Nasdaq, according to The Wall Street Journal.
Coinbase’s session-ending share price multiplied by the 261.3 million shares of common stock resulted in a valuation of $85.7 billion.
Coinbase was initially founded in 2012 by Brian Armstrong and Fred Ehrsam as one of the few pioneering Bitcoin exchanges at the time but has grown over the years to have more than 56 million customers. Just in 2018, the valuation of Coinbase was at $6 billion, showcasing how much it has grown in value in just a few years.
CoinMarketCap’s Listings $2.5 Trillion Evaluation
The market capitalization of all of the cryptocurrencies put together crossed the milestone of $2.5 trillion according to the cryptocurrency tracker CoinMarketCap, at the point in time where Bitcoin’s value crossed the $60,000 mark.
As a point of comparison, at the start of 2021, the total market capitalization of cryptocurrencies circled $830 billion, and as such, has seen a growth of 233%.
Major Cross-Chain Issues
Currently, there are issues when it comes to transferring a cryptocurrency token built on one blockchain to a completely different blockchain.
With the number of blockchain projects rising, countless blockchains are being developed, each with its native token and ecosystem of projects with tokens built on that native blockchain network.
That said, cross-chain technology is becoming increasingly popular, intending to be a solution that can enhance interoperability between blockchains, but this does not change the fact that there are major cross-chain issues currently within the sector.
Low Trust and Absence of Moderation
In Web2 websites, for example, you place your trust in YouTube and Google to filter the content for your children when they use these resources for fun and education.
In perspective, YouTube and Google are relatively safe places, and while not perfect, still doing a solid job of moderating content for specific audiences.
Let’s get realistic here. We cannot expect to have fully decentralized Web3 without the trust safeguards of Web 2 people are used to. Multi-billion giants of Web2 like Facebo…, err, Meta, Google and Amazon are not going anywhere, and if there is no place for them in decenralized Web3, they’ll make their own version of it — they’ve got the resources and manpower.
No Global Consensus on the Benefits of Crypto Technology
Global brands like Youtube, Amazon and Google might not do a perfect job of making the Internet a safe place, but they are working on it.
The decentralization warcry of the blockchain community goes in completely opposite way here, but coming to think of it, relying on brand trust might not be that bad. It should not be discarded entirely going forward towards Web3.
First, the industry needs to keep building global interconnected cross-blockchain infrastructure. This process will take time, and we can see progress as multiple liquidity networks, and layers of architecture start to interconnect.
Solana is an example of an infrastructure-centric project where it has built an ecosystem of decentralized applications (dApps) that work within its infrastructure.
However, even if the infrastructure gets built soon, another major issue will quickly need to be resolved: the migration of current Web2 applications to Web3.
And this new infrastructure has to emerge organically within the existing Web2 Internet infrastructure — not as some separate Web3 Internet.
No Mass-Market Adoption
Finally, just as with cloud technology adoption in the 2000s, many companies require expert assistance in the process of modernizing their legacy applications to move to crypto-powered Web3.
And while the modernization process will bring additional expenses, the benefits of partaking in the new Web3 infrastructure are undeniable — from blockchain-wide transparent audits to worldwide-accessible ownership rights encoded in NFT and to more convenient financial remittance for the customers.
This has alredy happened back in mid-2000s when most companies had to move from static resource hosting to the elastic cloud. DevOps with cloud modernization experience were some of the highest-sought after specialists on the job market. And you can expect same situation when corporate world has to adopt crypto Web3.
State Channels Resolving Blockchain Scaling
Everyone in touch with the blockchain industry remembers all too well the global scaling issues Bitcoin and Ethereum hit as more and more people adopted the tech, and crypto transactions started flying around on a massive scale.
Crypto sounded nice, fast, and cheap, all the way to the point when promised “lightning-fast transactions” and “super low fees” were no longer a thing, and the Ethereum network, for example, had no problem asking for a bedazzling 20 USD fee on a 100 USD transaction.
But bright minds are restless, and the recent state channel technology comes to the rescue, focusing on scaling the blockchain technology properly this time.
State channels are cryptographic systems used to run off-chain transactions before storing the final record on the blockchain without paying for the cost or having a downside associated with the blockchain. Users can transact with one another through state channels directly outside the blockchain. This simple and effective solution minimizes any on-chain operations and is a scaling solution closest to production-ready.
The state channel tech debuted with Lightning Network — the first horizontally scalable blockchain network scaling to billions of transactions per second (TPS).
If you like it short and visual, check out this in-depth explainer video by Xangle on Layer2 Blockchain scaling solutions and state channels specifically:
The beauty of state channel technology is that it is blockchain-agnostic and multi-chain capable — it’s just a protocol designed to defeat the growing transaction issues of older blockchains and facilitate fast and cheap transactions across any network.
As long as Fintech developers respect the same protocol, they can initialize a channel from any blockchain to any blockchain. These properties that state channels have are a great buffer and imitate the layer for the next application.
State channels are a great way to connect the Internet of value to the pure-run Internet. The current value of the Internet is the amount of traffic — live online users.
As part of the growth of Web3, and with the introduction of Metaverse, we can expect a significant shift of value from real-world assets to virtual world digital assets.
Building the Web3 Internet of Finance
To cross the chasm between Web2 and Web3, the blockchain industry needs to define base-level protocols and unite the currently chaotic crypto market.
Cross-chain KYC systems also have to be introduced, so people don’t have to grind the same identity verification procedures from website to website.
Token wrapping technology is also becoming significantly important, as you can wrap funds with the confirmed sources with a KYC system, resulting in pre-approved “clean” funds in one package.
However, for our current Web2 to work with Web3, the industry needs to keep things as simple as possible for legacy Web2 applications.
State Channels enable the ability to bring legacy web applications into the blockchain ecosystem.
Additionally, there is no need to oppose the Web 2.0 corporate trusted environment with a trustless environment introduced with blockchain. When it is an internet of trust, it can remain safe for the entire family to use. This way, everyone gets all of the benefits of blockchain without the downside of its complexity.
When companies such as Google and Amazon are brought to the blockchain, their notion isn’t to just accept Bitcoin (BTC) or other cryptocurrencies as an alternate payment option.
State Channels are a great tool that can bridge us to Web3. Still, it’s the developer consensus for companies like Consensys and Yellow on the low-level Fintech protocols to reap the benefits of blockchain technology without downsides.
Since scaling the blockchain is a complex process and is just getting started, major blockchain development companies need to migrate to Web3 and utilize state channel tech in their solutions.
- Blockchain tech in general offers borderless cross-currency financial and information exchange.
- Fintech Networking tech combines world markets into one living and breathing entity.
- Augmented Reality tech is unavoidable with the shift to Metaverse to experience the Internet visually, and will revolutionize the way we search for and process information online.
- Non-Fungible Tokens (NFT) tech hints at a new legal international standard of unique ownership rights verification.
There must be solid groundwork for existing multi-billion corporations to have a new and compatible business model for this new web, and Facebook throwing all the eggs into the Metaverse basket is a sign.
The Web3 is coming, and I have no doubt it will include most if not all recent technologies, reshaping the way we search for, analyze, and use the information for fun and work.
Got your own opinion on the vision and mission of Web3 powered by crypto tech? Please give me a clap and comment below.