Web3 — What is it and how is it revolutionizing the internet?

When people talk about the decentralized internet, they often mean Web3 — the third generation of web technologies that fundamentally change our understanding of online interactions. Web3 relies on blockchain infrastructure, enabling developers to create decentralized applications (dApps) where users have full control over their data, avoiding the need to trust large tech corporations. This represents a paradigm shift in how online services are built and how people interact in the digital space.

Unlike the current centralized internet, where a few tech giants own user data and monetize it, Web3 offers an alternative based on transparency, openness, and security. The concept was formulated in 2014 by Gavin Wood, co-founder of Ethereum and initiator of the Polkadot project, as a way to shift power back from corporations to ordinary network users.

From Readability to Ownership: The Evolution of the Internet Through Generations

To understand what Web3 is, it’s important to consider its development in the context of internet evolution. The history of network technologies is divided into three clearly distinguishable stages, each bringing new capabilities and challenges.

First Generation of the Internet (Web1.0: 1989-2004) was characterized by static content. The World Wide Web functioned as a mass media tool — users could only read content hosted on corporate and organizational websites. Interactivity was minimal; users were passive consumers of information. This was the “read-only” era, where the internet mainly served static web pages.

Second Generation (Web2.0: from 2004 to present) brought a revolution with social platforms. Facebook, Instagram, Twitter, and other services allowed users not just to consume content but to create it, share thoughts, and interact globally. This was the “read-write” era, making the internet a two-way communication channel. However, a serious problem emerged: major platforms began to centrally collect, store, and monetize user data without explicit consent. Today, this practice raises growing concerns about privacy and security.

Third Generation (Web3.0) promises to move to a level of “read, write, and own.” Introduced in 2014 as a conceptual solution to Web2.0 issues, Web3 envisions users not only creating content and interacting but also owning their data, assets, and even critical platform components they operate on. Key elements of Web3 include blockchain technology, cryptocurrencies, and non-fungible tokens (NFTs), designed specifically to enable decentralized, transparent, and secure operations.

How Web3 Addresses Web2 Centralization Issues

The fundamental difference between Web3 and its predecessor lies in how power and control are distributed. Let’s consider the key advantages that make Web3 an attractive solution.

Data Decentralization — a core principle of Web3. Applications built on public blockchain networks like Ethereum do not allow centralized entities to accumulate or control user information. Instead, data remains under the control of users themselves, minimizing the risk of unauthorized tracking or misuse of personal information.

Democratized Access. In Web2.0, centralized platforms set rules and determine who can participate, create content, and monetize efforts. Web3 breaks down these barriers — here, users, developers, and organizations are on equal footing, with the same rights to create, use, develop, and profit from decentralized applications.

Trustless Verification. Instead of relying on a tech company managing a service in Web2, decentralized Web3 platforms operate on transparent, trustless interactions. Cryptographic mechanisms and smart contracts ensure the integrity of all operations without the need for a central arbitrator. Tokens serve as economic incentives, encouraging network participants to perform their roles honestly.

Cryptographic Security and Verifiability. Blockchain technology underpins Web3, providing cryptographic protection and immutability of data. Smart contracts used to program decentralized applications offer not only functionality but also high transparency of code, allowing users to verify exactly how these applications work. This contrasts with Web2 black boxes, where algorithms and business logic remain hidden.

Borderless Financial Accessibility. Web3 uses cryptocurrencies as a means of economic exchange, simplifying and speeding up payments. This is especially significant for billions worldwide without access to banking services. With Web3, such individuals can participate in financial transactions, trading, and other operations directly, without intermediaries.

Scalability and Compatibility. Web3 is developed with seamless integration across various systems and platforms in mind. This flexibility simplifies migration from outdated technologies and enables different applications to interact more efficiently.

Integration with Cutting-Edge Technologies. Web3 evolves alongside artificial intelligence (AI), machine learning (ML), and natural language processing (NLP). This means decentralized applications can provide intuitive and responsive user interfaces from the outset, while adapting Web2 solutions to these technologies requires complex reengineering.

Decentralized Applications: From DeFi to the Metaverse

Web3 surrounds us with diverse applications and ecosystems, each representing specific use cases of decentralized architecture.

Decentralized Finance (DeFi) has become one of the most attractive and developed areas of Web3. Protocols like Uniswap and Aave enable users to conduct financial operations without traditional intermediaries. On these platforms, people can trade crypto assets, provide loans, borrow funds, and make profitable peer-to-peer investments. For unbanked populations, DeFi opens access to financial tools previously unavailable.

NFTs (Non-Fungible Tokens) are experiencing a period of active growth despite market cycles. While the NFT boom of 2021 was largely speculative, real-world applications extend far beyond digital art. Tokenization of real assets, increased transparency, and fair compensation for content creators are just some prospects. As the ecosystem develops, new use cases emerge that could bring Web3 into mass adoption.

GameFi and Play-to-Earn (P2E) have attracted millions, especially in developing countries. Blockchain games built on Web3’s decentralized infrastructure reward players for their time and effort, while developers can earn higher revenues. Popular games like Axie Infinity and STEPN demonstrate the viability of this approach, though it requires critical analysis regarding economic sustainability.

Metaverse — virtual worlds built on blockchain, such as The Sandbox and Decentraland. These platforms offer revolutionary ways to interact in virtual environments, combining gaming, trading, social interaction, and virtual events. Supported by augmented reality (AR) and virtual reality (VR), metaverses promise to transform our understanding of digital interaction.

Decentralized Social Networks emerge as alternatives to Web2 giants like Facebook, Instagram, and Twitter. Projects like Audius (for music), Mastodon, and Steem offer platforms where user data is protected, and content creators receive fair rewards without additional monetization through targeted advertising.

Decentralized Data Storage addresses the issue of centralized cloud services like AWS. Networks based on IPFS (InterPlanetary File System) provide secure, encrypted cloud storage at minimal cost. Projects like Filecoin and Storj demonstrate how decentralized storage can be scalable and reliable.

Decentralized Identifiers will play a key role in the Web3 ecosystem. Instead of creating separate accounts for each service, a single Web3 wallet like MetaMask or Halo Wallet can serve as a universal identifier for hundreds of decentralized applications, giving users greater control over their personal information.

Why Web3 Matters for Crypto Investors and Users

The blockchain underlying Web3 is the same infrastructure supporting cryptocurrencies. Crypto assets are used to incentivize user activity within the Web3 ecosystem, providing economic rewards for content creation and participation in network operations.

But crypto assets serve not only as economic incentives. They are also tools for decentralization of governance. Token holders gain voting rights in decentralized autonomous organizations (DAOs) and can influence how certain decentralized applications evolve. This distributed consensus makes decision-making much more transparent and democratic compared to centralized Web2 services.

Cryptocurrencies democratize not only decision-making but also ownership models. In Web2, centralized organizations belong to corporations, and users remain employees or consumers. In Web3, decentralized protocols are owned by their users, who interact with and develop them. This is a fundamental shift in the relationship between platforms and communities.

Web3 and the Future of the Digital Economy

The next generation of the internet will focus on how content is created, distributed, and valued. In this context, blockchain and cryptocurrencies offer the most promising solutions. Web3 creates an ecosystem where companies and users not only interact but also co-create value and receive fair rewards for their contributions.

Unlike Web1 and Web2, Web3’s potential lies in stimulating active participation through economic incentives, decentralized ownership, and transparent governance. This can make decentralized applications more responsible, inclusive, and capable of sustainable long-term growth.

Trust in the current internet model is eroding daily. Users realize that their data, content, and activity are monetized without their direct consent and fair compensation. With the advent of Web3, consumers and content creators can regain control, shifting from centralized platforms to open, transparent protocols. Although Web3 is still in early development stages, its potential to revolutionize the digital economy is becoming increasingly clear. The question now is not whether Web3 will be the future of the internet, but rather when and how it will happen.