Web3: The Web's Next Frontier

When social media channels such as Facebook, YouTube, and Instagram became mainstream, people flocked to them in large numbers. The FOMO was real. With Web3 getting more attention, one begins to wonder if it's a shiny new thing to get onto soon, not to mention invest in various parts of it. But what really is Web3? To understand the term better, we need to go back to the beginning of the Web itself.

Web 1.0 and Web 2.0

Web 1.0 was the first version of the Web where information was available on static web pages, and frames and tables were used to align page elements. Web 2.0 was an improved version of Web 1.0. Pages were more dynamic, easy to use, and interactive. Social media platforms are also a big part of Web 2.0, allowing users to upload their content on the web, which wasn’t possible before.

While it’s been all fun and games for Web 2.0 users, large technology companies saw a business model that could drive revenue through advertisements – given these platforms were free to use, the companies needed to generate income one way or another. Users didn’t have to pay a cent to use the social media platforms, but the price was paid in the form of user data that was sold to third parties or advertisers who could use that data to create targeted marketing campaigns.

Web 3.0 onto Web3

The relatively new Web 3.0, also called semantic web, is a read-write-execute version of the web. Using artificial intelligence and machine learning, it aims to make the Internet smarter. In short, it is an improved version of Web 2.0. 

Web3, on the other hand, is a term that first entered the picture in 2014. The idea was to create a decentralized system based on blockchain. Such a system would take control away from the big corporations and place it back in the users’ hands. If implemented, Web3 could truly change the way things work – who will control the information? Will monopolies cease to exist? How will money be valued with cryptocurrency in the picture? 

What is Web3?

Web3 is a new form of the Internet that is open source, better connected, and relatively secure. It is a decentralized model powered by blockchains, cryptocurrencies, and non-fungible tokens (NFTs). In crypto advisor Packy McCormick’s words, “Web3 is the Internet owned by the builders and users, orchestrated with tokens.” When ownership is decentralized, users can own a piece of the Internet using tokens.

Web3 also seeks to solve many problems that plague the Internet today. For example, when a user needs to access a platform, they have to provide personally identifiable information (PII) such as name, date of birth, and, address. The platform also owns the data that users upload – images, videos, and written content. Web3 seeks to change that. It will allow users to use an Ethereum address and ENS profile that supports a single login across multiple platforms. This address would keep the user’s identity anonymous and secure.

Another interesting aspect of Web3 is the flat and hierarchical model called Decentralized autonomous organizations (DAOs) – organizations managed by various communities rather than a single entity. In a traditional world, decision-making and voting processes are somewhat restricted to internal parties – the government or the stakeholders. With DAO, one could collect donations from around the world and the community members could vote on the causes that the members want funded. All DAOs are open and transparent and any financial transactions in a DAO are recorded on a blockchain – eliminating the need for a third-party. 

Web3 and Metaverse

Though Web3 and Metaverse intersect at various junctions, they are quite different in their essence and functionality. Both are open-source and decentralized platforms powered by blockchain and cryptocurrency. However, the Metaverse is a virtual reality environment where users create digital avatars and buy and sell digital tokens within it. Decentraland, The Sandbox, and Facebook’s Metaverse (META) are some of the famous metaverses of today.

Metaverse can often incorporate virtual reality (VR) or augmented reality (AR) technology which can be used to play games and interact in the virtual world. VR and AR applications are also part of Web3 infrastructure. We’ll explore more on that in a future article.

In terms of the future of Web3 and Metaverse, the former is entirely open-source and its development isn’t attributed to one person. On the other hand, Metaverses are built by companies or organizations – especially in the early stages of development. In the future, Metaverse code may ultimately become fully open-source. 

Investment opportunities

While Web3 is still in the development stages, early investors and participants in the crypto networks may get a share in the game compared to the latecomers. Investment funds will also be watching blockchain infrastructure and cryptocurrencies for entry opportunities. Digital assets such as NFTs are already popular and the revenue is expected to grow. Statista estimates an annual growth rate of 18.55% — a projected total amount of $3,162.00 million by 2027. OpenSea, Rarible, Binance (BNB), and SuperRare are some of the common NFT marketplaces where users regularly buy and sell NFTs.

Cryptocurrency, the transactional money in Web3, is going through a cold winter with Bitcoin (BTC) trading at 30,552.57 on June 24th, 2023. Strong headwinds are expected as strategists believe the current recession may cause Bitcoin to retest the $20,000 level. Ethereum (ETH) has also shown a downward trajectory – 0.57% down and trading at $1,879.00 on June 24th, 2023. The technical charts are indicating a bullish pressure that’s eying the price at $3000 if investors can push the price above the resistance levels between $1,900 and $2000.

Investing in the Web3 space can be tricky given how young the sector is. As the space germinates, we’ll see if Web3 turn into a fad or a fortune. Investors should practice caution at this time. Stay tuned for part 2 of this 3-part series on understanding and investing in Web3.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

BTC ETH

Other Topics

Innovation Artificial Intelligence Blockchain Cryptocurrencies