What Exactly Is This Web 3.0? And Why Does It Matter?

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Amid the hype of non-fungible tokens (NFTs) and the continued adoption of smart contract platforms like Ethereum ETH/USD and Solana SOL/USD, the term web 3.0 has come into vogue. 

But, like most buzzwords and trendy nomenclature, the term might be poorly understood by many. Just what is web 3.0?

To date, web 3.0 has been largely associated with the metaverse, another term en vogue. Every company is creating its own metaverse, it seems. Nike Inc. NKE, Adidas AG ADDY, Meta Platforms Inc. FB and Walt Disney Co. DIS are just a few of the countless companies reportedly banking on consumers’ demands for a virtual world.

But these heavily branded digital environments are really a small part of what web 3.0 is and can be. And some argue that they are a poor way to gain a real understanding of web 3.0. So where to start?

To understand this latest iteration, it is important to understand web 1.0 and 2.0. The former is the name given to the birth of the internet, the World Wide Web. When the internet was created, it was primarily a peer-to-peer endeavor. People were both creators and consumers of content and technology. The back-end tech that supported it relied on enthusiasts and everyday individuals to run servers. 

This quickly became unsustainable. The cost of running servers that could support the rapidly growing internet soon became impossible at the individual level. Corporations stepped in and built dedicated infrastructure, spending billions to create the dominant version of the internet today — web 2.0.

This iteration is built on a centralized and corporate model. Companies like Amazon.com Inc. AMZN, Microsoft Corp. MSFT, and Alphabet Inc. GOOGL run server farms across the world. These farms provide the backbone of the modern internet. If you are reading this, there is a near-certain chance you are interacting with a server belonging to one of these three companies.

This model has some major advantages over web 1.0 in functionality, but some say that it has turned out to be a nearly Faustian bargain. The internet is a tool of immense power — one of the most significant in human history — and it is controlled by just a small handful of companies. And these companies collect dizzying amounts of personal data from their customers and sell it to the highest bidder. As the artist Richard Serra said, “If the product is free, you are the product.”

On top of the moral quandaries surrounding web 2.0, its centralized model means it is susceptible to single points of failure. An issue at a specific server farm or in a company’s code could bring down large swaths of the internet.

Web 3.0 is designed to address these issues. Founded on the principles of decentralization and democratization at the core of cryptocurrency, web 3.0 uses the blockchain to hope to set the internet free. In this model, centralized server farms are not needed. The information is transacted and secured in an immutable public ledger. Here the internet is arguably returned to the spirit of its early days with the technical abilities of the modern internet.

However, at the moment, much of web 3.0 must still interact with web 2.0. Many front ends of blockchain-based applications, or DApps, still use services like Amazon Web Services. But this may change, and numerous companies are looking into ways to innovate within this process.

Cudo Ventures is one example that has created Cudos to address this. The service, which recently successfully launched its mainnet, is a decentralized cloud computing platform. Through the power of the blockchain, the computing needs of applications can be performed by a decentralized network that is owned by individuals and is not susceptible to a single point of failure. With this and platforms like it, web 3.0 may be able to begin to deliver on its promise.

If you are interested in learning more, check out https://www.cudos.org/

This post contains sponsored advertising content. This content is for informational purposes only and is not intended to be investing advice.

Photo by Luca Bravo on Unsplash