Web 3.0 and blockchain technology are two of the hottest terms of the past few years. Seemingly coming together like a hand in a glove, these concepts have been hailed as the future of our digital lives. But what do they mean?
Block chain
Blockchains are a common ledger of transactions maintained by a network of computers. It uses cryptography to protect its records. The cryptographic hash function creates a unique digital fingerprint for each transaction. Each block contains a reference to the previous block, so once a block is added to the chain, it cannot be changed or removed.
Blockchains are protected by a network of peer-to-peer nodes that validate transactions and add them to the chain. These nodes are called miners. Miners use their computing power to solve complex mathematical problems. They are rewarded for doing so in the form of newly created coins.
Blockchain technology is most prominently used to power digital currencies and irreplaceable tokens (NFT).
Web 3.0
Web 3.0, on the other hand, refers to the next generation of the Internet. In short, this means transitioning from current web technologies to new web technologies, such as blockchain, artificial intelligence (AI) and machine learning (ML).
The term was coined by Ethereum co-founder Gavin Wood, who believes the next generation of the Internet will be built using distributed ledger technology (DLT). He says the current Internet is limited because it is based on several central servers.
Web 3.0 promises to revolutionize the way information is stored and shared around the world. This will allow everyone to access data anytime, anywhere without having to rely on third parties.
The foundation of Web 3.0 is built on three basic ideas: decentralization, openness, and improved consumer usability. These three ideas also provide Web 3.0 for technologies such as blockchain, cryptocurrencies and decentralized finance (DeFi).
For this reason, it is often assumed that the launch of Web 3.0 will naturally lead to wider adoption of blockchain and its constituent technologies. But is it cut and dried?
After all, Web 3.0 could be bad for blockchain adoption
While the consensus is that the upcoming Web 3.0 will increase the use of blockchain, there are several reasons why the opposite could be true.
monetization
The current iteration of the Internet, also known as Web 2.0, is supported by huge advertising revenues. By some estimates, the global advertising market could be worth around $800 billion by 2026. That mind-boggling number is why some of the most popular apps on Web 2.0 (including Facebook, TikTok, Snapchat, Twitter, and Spotify) are mostly free.
These platforms make money from advertising. They collect users' data and sell it to marketers at high prices. However, It is entirely possible that Web 3.0 will clog this lucrative advertising channel. The decentralized architecture underlying Web 3.0 will not support the greedy surveillance advertising model used by major Web 2.0 players.
This means that big companies that make a living selling our personal data are likely to find themselves starving in blockchain-based environments that prioritize privacy and data autonomy.
Money rules the world, and an inability to fully monetize Web 3.0 could result in companies either introducing paywalls on their decentralized applications (DApps) or finding a way to slow or control the adoption of blockchain technology in the broader market.
Whichever path companies take, they will inevitably make blockchains more expensive and less inclusive. We've already seen some tech giants reposition themselves as gatekeepers of Web 3.0 to develop and control potential revenue streams.
Progress has been slow
Decentralization is the most important aspect of Web 3.0 and blockchain and requires the development of shared protocols that are acceptable to all parties. This is a lengthy process that usually involves consensus among competing companies.
Because much of the Web 3.0 hardware and software is based on these accepted standards, it can be extremely difficult to change or extend protocols once they are established.
At some point, developers can create plug-ins, patches, extensions, and even newer versions of Web 3.0 DApps; These methods are often cumbersome and can lead to fragmentation problems.
Ironically, the more successful a blockchain is, the more nodes are needed to keep up with the changes, making it harder to modify. In essence, the eventual launch and success of Web 3.0 could inadvertently expose blockchain's underbelly.
Unable to store data
Contrary to popular belief, blockchains are not suited for storing common data. On average, a blockchain based on Web 3.0 applications may have a throughput of about 300,000 blocks per day, each using about the same amount of energy as a small apartment.
Every node on the network must store a snapshot of the entire transaction history of the blockchain. There is no room for data slicing or streaming pipes, making blockchain a very impractical way to store data.
This problem will only intensify with the launch of Web 3.0. How do you get such a large enough system to handle a vast network of data-intensive, decentralized applications?
The simplest solution is to let Web 3.0 applications continue to store their data on the Web server running the Apache instance. This means that blockchain as a way of storing data may not be good for Web 3.0, so the launch of Web 3.0 won't do much to encourage more people to use blockchain.
Final thoughts
The concept of Web 3.0 is based on the dream of greater scalability, privacy, transparency, decentralization, data control, and direct payment without mediation. While all of this can be done by leveraging blockchain in Web 3.0, the technology still has serious limitations that could make its use in semantic networks untenable.
Decentralized hardware and energy costs are quite high, scaling is a nightmare, and there aren't many ways to make money from people's personal data.
So, despite all the hype about Web 3.0, we need to lower our expectations about its impact on the adoption of blockchain technology.