What Is Web 3? All You Need to Know About the Third-Generation Internet

Google Trends data indicates Web 3.0 is a hot topic, whose popularity peaked in late 2021. Although the number of searches on Google has plateaued since then, the trend line indicates there still exists substantial interest in the newest phenomenon in the internet age.

While the term ‘Web 3.0’ (or ‘web3’) appears all over the place, much of the world is still wrapping its head around it. This article explains Web 3 with a particular focus on the fundamental architecture, how it defers from the existing infrastructure, and why it matters.

Web 3 defined

Web 3 is the newest internet iteration built on decentralized ledger technology (DLT). Blockchain is the more commonplace term for DLT. The technology enables user data storage across a distributed network of devices. This architecture prevents monopolistic tendencies in internet management, meaning big corporations like Meta or Alphabet cannot thrive. In other words, Web 3 is an online ecosystem built on the blockchain.

The term ‘Web 3’ and other variations, such as Web3 or Web 3.0, originated with Gavin Wood in 2014, the co-developer of the Ethereum blockchain. It was coined to refer to the third generation of the internet. He later left the project to dedicate his time to Web3 Foundation, supporting blockchain-based decentralized projects.

So far, we know that Web 3 is the third generation of the internet, but one can barely wrap one’s head around the new phenomenon. To understand Web 3 better, one must review its precursors.

Precursors to Web 3

The worldwide web history harks back to 1990 when Tim Berners-Lee pioneered the hypertext document management system accessible via the internet. Browsers, such as Netscape, took the technology a notch higher by creating the means for less technical-minded users to wander the internet. This era when users could only read material on the internet refers to Web 1.0.

Web 1.0 was a game-changer, and users marveled at it, especially when they felt the power of computers in their hands. However, users could do nothing beyond reading static web pages and interacting on message boards.

The web evolved into the early 2000s, and web pages became dynamic. However, the highlight of the new internet era, also called Web 2.0, was content creation. Users were no longer passive spectators but active content creators. For instance, platforms like YouTube allowed users to record pieces of their daily lives and share them with strangers online.

Beyond user-generated content, there was a paradigm shift towards online interactivity. Social media platforms like Facebook and Twitter introduced social connectivity and interactivity that surpassed those seen in the previous era. The explosion of content transformed barely known companies into tech giants, incentivizing them to control their data pipelines tightly.

According to a World Economic Forum (WEF) analysis, the architecture of Web 2.0 enabled big corporations to build an insanely profitable business model. The current internet runs on centralized serves stored in vast data centers under the tech giants’ control. In the end, users have superficial control over their online identities.

How Web 3 differs from the current internet (Web 2)

The most defining characteristic of the current internet is the ad-based revenue model. Most tech giants offer services for next to nothing but then harvest user data for sale to advertisers. But according to knowledgeable observers, the newest internet generation shifts the web from the attention economy to the ownership economy.

However, Web 2 and Web 3 have many more fundamental differences. Let’s discuss a few:

Decentralization vs. centralization

The primary objective of the internet is to share information and social interactions – both Web 2 and Web 3 agree on this. However, the current internet is platform-centric, meaning the gatekeepers exert disproportionate control over user data. It means Meta or Twitter can use collected user data as they like.

The current internet relies on servers in specific locations to respond to requests for information. Contrariwise, Web 3 follows a decentralized architecture when storing content. The internet stores information on blockchains, which are more like decentralized databases. This technology enables information to be accessible in multiple locations simultaneously.

We can explain the difference better with an illustration. Twitter is a popular microblogging website where people worldwide air their takes on various topics. However, Twitter has policies to regulate the environment, and it actively censors accounts and tweets if they break community rules. But if Twitter were built on the blockchain, it would be impossible to carry out the punitive actions because no one has absolute control of the platform.

Peer-to-peer interactions

The rise of tech giants like Facebook accelerated the growth of the current internet. These sites enabled users to interact in ways they could not imagine before, which was painless. For example, Facebook’s monthly active users (MAUs) increased exponentially since its founding in 2004. In just four years, the company reported 100 million MAUs, and more than 2.3 billion in 2019.

One might argue that the centralized nature of Facebook enabled ideas to flow easily and decisions to be made quickly, hence contributing to the platform’s meteoric rise. However, one can also postulate that Facebook’s – and similar tech giants’ – chokehold on Web 2.0 has provided the fuel for the attractiveness of Web 3.0.

Specifically, Web 3 leverages the blockchain and other open-source software to implement a permissionless and trustless ecosystem. In other words, a platform like Facebook built on the blockchain would allow users to interact without relying on the benevolence of the platform’s parent company, in this case, Meta.

Ubiquity and connectivity

Each player stores information behind a firewall in a secure server on the current internet. Thus, users must open an account with specific platforms to enjoy their services. To a large extent, the fragmentation of databases in Web 2.0 is a primary reason for its declining attractiveness.

On the contrary, the fact that Web 3 applications are built on the distributed ledger technology (DLT implies more connectedness of content. Also, most developers create applications using open-source technology, which encourages openness.

Unlike the current web, the third-generation internet will not commoditize the personal computer. No company will have the power to create and control a data center. Instead, blockchain spreads the data center out to the edge and into the users’ hands.

AI integration

The open nature of Web 3 architecture enables technologies such as artificial intelligence (AI) and machine learning (ML) to flourish. However, there is overwhelming evidence that AI and ML are already in extensive use on the current internet. What, then, makes AI integration in Web 3 more significant?

In Web 2, companies tightly control the information on their servers. For example, the Google search engine collects user data to train the AI system that underlies its crawlers. However, no one outside of Google’s authorized staff can ascertain the integrity of the collected data, which makes the insights gleaned from it questionable.

The case of reviews on Trustpilot is an apt illustration of the challenge AI faces in Web 2. Trustpilot provides a platform for users to give their perspectives regarding particular products or services. Other users can then use the information to make better purchasing decisions. But Trustpilot can obtain cooked reviews to support the sales of given products/services.

Web 3 approaches AI integration differently. The new internet leverages openness and easy accessibility of objective data to train AI and ML models. The models’ accuracy is higher because there is no room for humans to rig the data.

For example, if Google were to operate in Web 3, the search engine would produce more relevant results instead of the current system where the results are used as an advertising platform. The search engine has to rig the search results in a certain way to ensure the ads are targeted enough.

Factors powering Web 3

The third-generation internet must outperform the current system in critical aspects if it wants to supplant Web 2. With its flaws, Web 2 is pervasive and has given rise to behemoths that the thought of their collapse appears to be a far-fetched fantasy. However, certain factors can empower Web 3 enough to surpass the current internet. They include:

Digital scarcity

The current web is built on the abundance of content, such that content creators cannot leverage the revenue potential. Contrarily, Web 3 leverages non-fungible tokens (NFTs) to give creators control over their content.

If the concept catches on, it will transform the next generation internet from an attention economy to an ownership economy. Given that NFTs have already taken off, the probability of more creators making the switch is high. If and when this happens, it would be a matter of time before a complete transition to Web 3 happens.

Patronage on steroids

Currently, users can support content creators by watching personalized ads. The creators will then rely on the platform’s benevolence and trust that they will be compensated fairly.

Web 3 takes the concept a notch higher by enabling creators to interact directly with their fans. In other words, the new internet proposes to transition from the donation model of the current internet to a value model – users are willing to pay for something not because they have to but because it benefits them. For example, users could buy tokens that give them a stake in an artist’s music album. The users can then partake in the album’s sales in proportion to the number of tokens purchased.

Community ownership

We know that the popular business model for businesses on the current internet gives outsized power to platform owners. For example, YouTube can delete a video from its server as long it violates community guidelines, however trivial.

Web 3 prevents such flagrant abuse of power by placing a platform’s governance under decentralized autonomous organizations or DAOs. Such an organization is represented by mutually accepted rules and is under the control of its members. Thus, the ecosystem lacks hierarchy hurdles and bureaucracy.

It means users will join DAOs based on how their objectives align with personal beliefs. Also, they’ll be able to effect changes, which is a pipe dream on the current internet.

Criticisms of Web 3

Web 3 has hurdles it must brave to fulfill its potential. Some of the limitations include:

Web 3 falls short of its ideals

Most Web 3 proponents posit that decentralization is the panacea for all of the current internet’s ills. But the reality is that ownership of blockchain networks and other critical infrastructure belongs to a few big players. 

A case in point is former Twitter Chief Executive Jack Dorsey’s rant on Twitter in late 2021, where he decried the trickery of those pushing the Web 3 agenda. He alleged that wealthy VCs like Andreessen Horowitz were hyping Web 3 because of vested interest. In the end, it is the few whales with outsized control of critical infrastructure that will harvest the bulk of Web 3’s potential, much like it is happening today with tech giants like Twitter, Google, Facebook, and more.


Much of the blockchain ecosystem is in the development stage, and many projects are coming up in closeted environments. For example, most of the current Web 3 applications are built on the Ethereum blockchain, but similar platforms, such as Polygon, have similar projects. The problem arises when users cannot seamlessly move from one platform to another.

Additionally, most current web browsers lack support for Web 3 technologies, without which regular internet users cannot access the ecosystem.

User experience

Still, the lack of integration in modern web browsers means users have to install additional software on their computers to access Web 3. The extra steps and complexity make for a poor user experience.


Most blockchain networks cannot match the transaction speeds we are used to on the current internet. The decentralized nature of the platforms implies that transactions jump through more hoops than usual before completion. The result is a slower network that might dissuade some from onboarding.


The new internet generation promises premium experiences for users, such as a customized browsing experience, speedy and more relevant search results, and an immersive social media experience. All this will happen with the individual being empowered to control their digital footprint and perhaps benefit from it financially. However, Web 3 has critical hurdles it must negotiate successfully to convince the skeptics because they are many.