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What Is Web3?

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If you’ve been perusing cryptocurrency forums or video-game news recently, you might have run into the term “Web3.” The term, obviously, refers to a third generation of the internet. But is it just a trending term or is Web3 something that those of us who thought we were still living on Web2 ought to know about? The answer to both is yes but you can find more answers to your questions below.

What, exactly, is Web3?

Web3 refers to a potential new iteration of the internet that runs on public blockchains. What makes Web3 different and interesting, is that it is decentralized, so that instead of users accessing the internet through services mediated by the likes of Google, Apple, or Facebook, it’s the individuals themselves who own and control pieces of the internet. Web3 does not require “permission,” or “supervisor” referring to the idea that an intermediary does not need to facilitate virtual transactions between two or more parties. Web3 theoretically protects everyone’s privacy better, because no authorities or intermediaries are doing the data collection. One element of Web3 that’s gaining a lot of traction is decentralized finance, also known as DeFi, which consists of conducting IRL financial transactions on the blockchain without assistance from banks or the government.

Is Web3 a crypto thing? ​

NFTs, digital currencies, and other blockchain projects are going to be essential to Web3. We can take Reddit as an example. They are currently making Web3 inroads by trying to devise a way to use cryptocurrency tokens to allow users to essentially own portions of the communities they participate in on the site. The idea would be that users would use tokens known as “community points,” which they earn by posting on a certain subreddit. The user then accrues points based on how many upvotes or downvotes that post gets from other users. (It’s basically Reddit Karma on the blockchain.) Those points can essentially function as voting shares, allowing users who have made valued contributions to have more of a say when it comes to making decisions that will affect the community. Because those points exist on the blockchain, their owners have more control over them; they can’t easily be taken away and they follow you around. To be sure, this is only one use case, a kind of corporate version of a Web3 concept known as Decentralized Autonomous Organizations, or DAOs, which use tokens to make ownership and decision-making powers more equitable.

Why is Web3 suddenly popular?

Most of the excitement seems to be coming from the cryptocurrency community, which would obviously benefit from an internet that’s more reliant on their technology. In October, CoinDesk reported that GameStop is trying to hire a “Head of Web3 Gaming” and software engineers for an unannounced NFT platform. There has been a lot of discussion about Web3 could augment video games by, for example, allowing players to more easily buy and sell in-game items or earn tokens that will give them more power to determine how the game is run. A very consequential recent development was the venture capital firm Andreessen Horowitz’s Web3 lobbying push in Washington, D.C., in October. The firm, which has invested heavily in cryptocurrency and other blockchain technologies, said it sent executives to Capitol Hill and the White House to promote Web3 as a solution to Silicon Valley consolidation and to propose regulations for the burgeoning virtual ecosystem.

Web3 and the metaverse

The metaverse refers to a future internet that consists of three-dimensional spaces in virtual reality where users can interact with one another (It’s the reason why Facebook recently changed its name to “Meta.”)

People hope that Web3 will incubate a metaverse that is built using blockchain systems and open standards, and that is run by a network of computers around the world, instead of a few big companies. NFTs would facilitate commerce involving items in virtual reality, and traditional gatekeepers wouldn’t be able to dictate what can and can’t go into the metaverse.

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