What is Web3?

Web3 is a term for an internet built on blockchains. The idea is that users would hold their own accounts, money and digital items directly, without depending on large companies to store them. It describes a goal and a loose collection of technologies more than a finished product.

What are Web1, Web2 and Web3?

Supporters describe the history of the internet in three stages:

• Web1 (roughly the 1990s to the early 2000s) was mostly static pages. People read what a small number of publishers posted.
• Web2 (from the mid-2000s) brought social media, video sharing and online marketplaces. Anyone could publish, but the platforms owned the accounts, set the rules and earned most of the money.
• Web3 is the proposal that users should also own things online, such as their identity, their followers, their purchases and a stake in the services they use.

The shorthand is read, then read and write, then read, write and own. The term Web3 was coined in 2014 by Gavin Wood, a co-founder of Ethereum.

How is Web3 supposed to work?

The foundation is the blockchain, a shared record kept by many computers with no single owner. Several pieces sit on top of it:

• Wallets as accounts. A crypto wallet holds the keys that prove who you are. You connect the same wallet to many services and do not create a separate login for each.
• Apps on public code. A dapp, or decentralized application, runs its core rules through programs on a blockchain that anyone can inspect.
• Tokens for ownership. Coins act as built-in money, and NFTs record ownership of unique items such as art or game objects.
• Shared governance. A DAO lets token holders vote on how a service is run.

In theory, a user could leave one app and take their assets and history to a competitor, because the records sit on a public network and not in one company's database.

What are the criticisms?

The sharpest criticism is that Web3 is less decentralized than advertised. Most people reach blockchains through a small number of exchanges, wallet apps and data providers, and those companies can block users or fail. The cryptographer Moxie Marlinspike, creator of the Signal messaging app, argued in a widely read 2022 essay that power was already gathering in a few such platforms. Others note that venture capital firms and insiders hold large shares of many tokens. The guide to what decentralized means explains how to judge such claims.

Usability is a second problem. Holding your own keys means no password reset and no customer support, and mistakes and scams are common.

Third, skeptics argue that speculation in tokens, more than useful products, has driven most activity so far. Supporters answer that the tools are young, and that payments in dollar-linked tokens and some finance apps already have regular users.