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What is Web3 and why does it matter?

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Avatar for wholelottajuju
Written by   10
7 months ago

Web3: The next iteration of the Internet. Instead of relying on central entities like tech giants and powerhouses, web3 enables open-source coding, building, deployment, validation, and authentication of actions taken on the web. Clicks, transactions, contracts—all part of the web3 ecosystem.

Ever heard of Alexa's role in Amazon's data collection? She's always listening to what you're saying, even if you're not directly talking to her. Creepy. Some would argue it's a violation of one's privacy, and most agree.

Web3 aims to eliminate the central intermediary. So say goodbye to gatekeepers like record labels and banks.

Instead of getting blasted by ads from Budweiser because you spoke to your friend once about IPAs with Alexa in the same room, targeted ads won't be as targeted anymore. As a result, data-collecting companies won't be able to monetize your data. In this scenario, Amazon won't have the capacity to sell your data to Budweiser.

The central theme of web3 is the decentralization of data. And guess what? Blockchain is the vessel for the evolution of the web, while crypto tokenizes the actions taken on the platform. Crypto provides an incentive for adopters of web3, comparable to purchasing stock from a public corporation—albeit, you have more power as a web3 investor.

Think of it as crowdfunding. The majority of capital isn't coming from one source; it's coming from hundreds, to even thousands of small-time investors. Retail investors will have a more considerable impact on the company’s arc.

The aforementioned "power" can range from governing rights to the allocation of resources, and most importantly, the ecosystem's success. What's more, when buying into decentralized projects, you aren't putting money into a single entity. You're servicing thousands of those who vest a considerable amount of money to keep the network running. You're helping people like you and me… at least on paper. Right now, we aren't at that stage.

With web3, startups, projects, and founders won't require the backing of venture capitalists (VCs) to aid in the structural development of their idea. Although VCs carry weight in the initial growth of companies and help startups graduate into public equity, they aren't the solution for web3. VCs are centralized in nature via their limited partners (LPs). The shot-calling would remain in the hands of wealthy individuals.

So, where are we at with web3? Is the web genuinely decentralized? Who are the major players?

Currently, we're seeing a chunk of forward-thinking individuals entering the space. Projects are taking off in various forms: NFTs, altcoins, decentralized social media, and so on.

We're sitting at the growth stage in the industry. Idealists are experimenting with the applications of web3. Developers are optimizing smart contracts and finding new ways to improve code. Leaders are creating all-star teams to revolutionize the space. And builders are, well, building.  

As the industry grows, so will competition. In any market, it's always been a battle between the best and the brightest. Web3 isn't excluded from the list. Which altcoin will surpass the scalability and networking effect of Ethereum? Which NFT collection can build the largest and strongest community? Which social media platform will outperform Twitter via its tokenization model and user experience?

You get the gist of it.

Competition is healthy for market growth. It forces people to adapt by thinking outside of the box. In the case of web3, this means thinking of new protocols or enhancing our current systems for the betterment of the movement. In our current situation, we must first focus on improving the underlying technology: Blockchain.

Blockchain is still relatively new and has yet to reach the design ethos of the anti-centralization crowd. Bitcoin's Proof of Work protocol powering its public ledger is inefficient, to say the least. It's costly, it's slow, and it's terrible for the environment.

Solana, on the other hand, uses a combination of Proof of Stake with Proof of History to get rid of expensive network fees and long transaction times. The downfall of SOL's blockchain is its inaccessibility when trying to become a validator for the network. Voting fees and staking requirements are high at the moment, and only a few have enough funds to reap the passive rewards.

You have to be careful when researching blockchain, as some projects may appear to be decentralized but are inaccessible for the majority of the population. Ethereum's network fees are are a perfect example of this. Solana's validation requirements are the cherry on top.

Once truly decentralized blockchains are formed and gain user transaction, we'll begin to see web3 at its best. But this will take time. Although our adoption of emerging technologies is much quicker than before, and the evolution of technology is outpacing historical data, I believe the web won't reach its next iteration until the next decade.

As for yourself, all you can do is learn about the ins and outs of web3. Read, read, and continue reading about web3. Maybe buy some crypto and support the cryptosphere.

You could also become a creator in the space and help with the movement. Try your luck at Solidity if you're a developer, or practice community engagement if you're looking to start your own project.

Your participation is needed to fuel the industry. Make sure you stay up to date with web3, as it is the future of the Internet.

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7 months ago
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