What is web 3.0 and Why should I care?
NFTs, DAOs, Ethereum, blockchains, web 3.0 — what do all these seemingly hot terms mean? As an engineer from a traditional web 2.0 background at a social media company, I had absolutely no idea just a month ago and I’m still learning about this evolving space everyday. This post is meant to be the basic explanation of web 3.0 that I wish I had a month ago.
A little history
First, a little history about the internet. The first version of the internet was mostly static websites like news sites that were serving text and some images. Data and content were served from static file systems rather than a database like what we’re used to today. Creators on Web 1.0 were mostly developers with deep technical knowledge of how to build and host website. Web 1.0 is often called the read-only internet.
Around 2005, the internet started becoming a place for people to hangout and socialize. Websites like Facebook enabled internet users to create content for the first time ever. Creators no longer had to have deep technical knowledge to maintain a presence on the internet. This evolution in the way consumers could create content for the internet is often called Web 2.0 aka the social web. Creators can now simply press a button and publish their content for everyone to see. The rise of mobile phones with the iPhone in 2007 led to the proliferation of even more social + media apps like Snapchat and Instagram. Web 2.0 enabled the creation of an entirely new class of jobs called the internet creator. It was now possible to make a living posting educational, informative, or entertaining videos on the internet. From 2010-2020, over 2 million people made $100k+/year posting videos to Youtube, Instagram, Facebook, and Twitch. Web 2.0 made the internet more democratic and more accessible to the average person. Web 2.0 is often called read-write internet.
But not everything is pretty in Web 2.0. Living in a Web 2.0 world is coming at a cost - our digital souls. By creating and consuming content on platforms like Youtube and Instagram, consumers give up their personal data to centralized platforms. These platforms then use the data to monopolize and monetize your attention. Side note: Creators on these centralized platforms are largely unfairly paid (ex. Youtube takes 45% of ad revenue, leaving only 55% to creators).
Introducing Web 3.0
Web 3.0 is the distributed, decentralized, and immutable version of the internet that it was always meant to be. In plain english, Web 3.0 changes the rules of the internet from being centralized and owned by corporations to an internet where users control and own their identity and data. So what technology advancements make web 3.0 possible?
First, the fundamental unit of Web 3.0 is the blockchain - a publicly distributed peer to peer database (this definition is highly simplified). Being publicly distributed results in the blockchain being trust-less and publicly verifiable. In plain english, anyone can verify any given transaction is valid whereas in the Web 2.0 world, websites and apps would rely on centralized services from AWS, Google Cloud, and others. In Web 3.0, since blockchains are distributed globally across thousands of nodes, your identity and data are not owned by Google, Youtube, Facebook, etc. They’re owned by you. A side effect of decentralization is it’s extremely hard to hack or take down meaning Web 3.0 has essentially 24/7, 365 days a year uptime.
Secondly, Web 3.0 has native currencies called cryptocurrencies like Ether, Solana, MATIC, Bitcoin, etc. Web native cryptocurrencies enable the incentives of creators and users to be fully aligned. In Web 2.0, we would rely on centralized networks funded by corporations. In Web 3.0, blockchain networks reward users directly via cryptocurrencies, enabling them to support and maintain the network themselves. Web 3.0 is often called the read, write, and exchange internet.
Ok great, why should I care?
First off, Web 3.0 is coming and it’s coming fast. OpenSea - a marketplace for buying and selling NFTs (I’ll explain what NFTs are in a future newsletter) - did $325m in sales in July. Think that’s a lot? Well guess what, OpenSea did $3.4b just a month later in August - yes that’s BILLION with a B. Already there are thousands of finance and gaming DApps and mission oriented decentralized organizations on Ethereum and other chains.
Secondly, Web 3.0 disrupts almost every business model that exists today. Here’s an example related to the creator economy: Today, internet video creators often use websites like Patreon to supplement ad revenue coming from Youtube, Twitch, and other platforms. On Patreon, creators post paywalled content at various price tiers for their super fans. This comes with a problem - the monetization model of Patreon is bounded by the number of subscribers you have resulting creators having to constantly push out high quality content to maintain and grow their subscriber base. This ultimately leads to creator burnout. Web 3.0 can incentivize fans to actively participate in the creation process, take some of the load off the creator, and share in the upside. Creators can issue crypto tokens to community members for suggesting video ideas, holding IRL meetups, or for hosting other community building activities. Over time, as the creator’s “clout” goes up, so does the value of the token. Eventually, fans can sell their tokens for USD at a higher price than what they were issued for. This model fully aligns creator incentives with fans and even makes them an active part of the creation process.
If nothing else, I’ll leave you with some advice from Justin Kan, co founder of Twitch - if you want to get rich in 2021, you should be a blockchain engineer or be in Web 3.0 aka crypto in some way.
How do I get involved?
First, make a crypto wallet and buy some Ethereum. Metamask and Rainbow are 2 very popular wallets. If you’re having trouble making a wallet, DM me on Twitter and I’ll walk you through it.
Second, if you’re an engineer, start building some basic DApps to get yourself familiar with Smart Contracts, web3.js, and other tooling. I built 5 very simply DApps that you can find on my Twitter (each one is doable in 1 - 3 hours). Again DM me if you have any questions.
If you’re not an engineer, check out these very informative articles detailing how Web 3.0 impacts the Creator economy:
Still want to learn more? Subscribe to my newsletter and share it with your friends! In the next edition, I’ll explain what NFTs are, why you should care, and how NFTs are being used today. Thanks for reading!