We used to live in an age where everything was centralised. Centralisation was the core to running our lives effectively and predictably.
If you wanted to withdraw money, you had to do it from a bank (a central authority). You misplaced your university graduation certificate? You had to go back to your alma mater to twist an arm and a leg in order to get them to reach into their storage reserves and draw out the document for you.
The physicality of such processes permeated through all parts of our lives, we’ve become used to living life centred around centralisation.
So when the advent of the Internet came about, people thought of it as a place where you could be anyone and say anything. Renegade cowboy stuff basically. Well, that was true until the Internet became more and more accessible to people. Then it began to mimic the centralised behaviour that was happening in real life, although the Internet was borderless, every single website that we know if is central in nature.
Like in Facebook, our personal information is kept on their servers and under their custodianship and as a result they remain the single point of failure, prone to data hacks and poor governance policies leading to the misuse of sensitive private information.
I stumbled upon the concept of Web3 through my research in Pratu and TrueSign. I saw it being thrown around in the media many times, but never really understood what it represented.
If the beginnings of the WWW is considered to be Web1, then the more mature, more programmable improvement of the Internet is be considered to be the Web2 era. This is the period that brought about the proliferation of social media, ecommerce and other information platforms.
Although Web2 has democratised social interactions (in many ways), it is always brokered by a known middleman. Just think about how Facebook, Uber, Google and the like conduct their business. They broker the interactions, but only on their terms.
So what about Web3?
If the bulk of Web2’s innovation comes from it’s front-end usability and the procedures that support such a user interface, then Web3 completely changes the wires behind the Internet.
While Web2 still works on a centralised protocol, Web3 is designed to be decentralised in nature, with computers working in tandem with one another, built on the backbone of distributed ledgers, powered by unknown actors in the ecosystem, incentivised by a tokenised reward to facilitate transactions.
This completely redefines our understanding of how information flows as well as the means in which we are primed to access it.
Bitcoin and it’s role in Web3
The gold being mined from Web2 advancements comes from the control of personal data. This data monopoly is the main reason why we have had the famous FANG stocks achieving great successes over the last decade. Companies like Facebook, Amazon, Netflix and Google hold an absurd amount of personal information on their servers.
In 2008, came the biggest innovation in decentralisation when Satoshi Nakamoto released his whitepaper on Bitcoin. The whitepaper’s key innovations were in 3 main points: it’s auditable database, its consensus protocol and it’s timestamped, append only data blocks which are powered by cryptography. Nakamoto essentially solved the double spending issue that plagued his predecessors.
These 3 innovations form the starting point for what Web3 can become, opening up the floodgates to more rapid future innovations. Although Bitcoin is not the perfect medium to conduct any form of transactions (not even monetary), it’s underlying innovation has given rise to other protocols such as Ethereum, etc etc which is built for more unique and useful transactions.
Key Issues To Overcome In Achieving Web3
Blockchain, is not the be all end all in this whole Web3 ecosystem. It’s merely a means of accounting, taking note of all the transactions moving within this ecosystem and facilitating it.
Having the right decentralised file storage solutions are paramount to achieving Web3. There are many solutions out there such as IPFS, filecoin, Swarm etc etc, but none of them can rival existing centralised solutions … yet. In terms of performance, general speed and usability of the architecture, IPFS et al still lags behind. If I were to built a decentralised video streaming platform today, file storage would be the biggest obstacle I would need to overcome. I would also need to formulate a way to incentivise actors in this ecosystem to faciliate and approve transactions.
There is a silver lining though, with decentralised solutions being more resistant to data breaches compared to their centralised counterparties.
This is however, just one core part to achieving Web3 capabilities.
You still need the right APIs and libraries to make accessing decentralised solutions intuitive and easy from a user standpoint.
Right now as things stand, we are now in a state of transitioning over from a fully centralised Web to a partially centralised one and finally a fully decentralised Web. Centralised solutions will continue to hold value in society, but they will likely be used in more specific and niche cases. That of course, will take time and incremental technological advancements.
Current Web3 Functions We Can Use
Ethereum has led the way with it’s smart contracts and DApps (Decentralised Apps), this has given rise to countless of applications that are accessed and ran within the Ethereum network. From NFT marketplaces, to games and DeFi applications, the possibilities are endless, but right now these are the few classes of DApps that are most popular within the ecosystem.
The allure of decentralisation and the parallels that it draws to lawlessness is often what draws people who are hungry to make a quick buck. However, I believe the biggest thing that Web3 has to overcome (apart from the aforementioned points) is governance or regulation.
In order to be taken seriously by governments and corporate businesses, a strong governance infrastructure is key to evoke trust and reliability. For that to happen, more skilled individuals need to be drawn into this ecosystem for the real problem solving to begin.
Right now many DApps are run by young upstarts that do not have experience in what it takes to govern a token exchange for example. Although yes, their work proves that certain use cases are indeed executable.
In the next week, I’ll dive deeper into:
- How to access decentralised apps
- What are some of my favourite apps to explore!
Till next week!