If you’ve been on Twitter or following any tech newsletters recently, you’ve likely heard of Web3 and how it’s the future of the web. So what is Web3?
First, a little history on the web itself. Web3, or the third phase of the internet, is preceded by Web1 and Web2. There is no governing authority pushing this forward, but roughly every ten years, the internet naturally shifts into a new phase. Web1, for those who remember being online in the 90s, was characterized by static web pages, similar to the experience of viewing a PDF or slides onscreen but over a slow dial-up connection.
Web2, the current dominant phase, is characterized by dynamic pages and interactions. Social media, online communities, and web-based marketplace business models came of age during this phase, where users could now go from a “read-only” experience to “writing” information to the web. This meant not only commenting and sharing photos but also sharing payment data, PII, and other various data that can be mishandled by companies and siphoned off by hackers.
Web3 aims to solve some of the existing challenges encountered through allowing users to contribute to the web. Web3 envisions a decentralized internet rather than having major centralized entities control various platforms. Web3 would focus on creating a better back-end to the internet by using “dApps” or decentralized apps. These dApps are typically blockchain-based and utilize smart contracts to record transactions.
So with that background, what does Web3 mean for commerce? First, let’s start with trust. While consumers are unlikely to look at eCommerce on Web3 differently, Web3 can enable higher levels of trust when executing online transactions since the interactions are immutable over blockchain. This could lead to reduction in fraud, returns, and identity theft. Further, Web3 could drastically reduce the need for middlemen and third-parties on the web since the underlying network is permission-less and decentralized.
At Silicon Road, we are already seeing a proliferation of supply chain & logistics startups build on decentralized ledgers, the backbone of cryptocurrencies. Some of these solutions are to help manage and track shipment of everything from large containers on ships to medicine in remote medical facilities around the world. This is still very early days, but we are bullish on these bleeding edge solutions being built on the Web3 framework.
Despite the numerous applications of Web3, change is still hard and slow. The transition from Web1 to Web2 didn’t happen overnight and it is impossible to pinpoint a specific date where the new phase became dominant. Further, Web2 opened the door to a large number of companies including Google, Facebook, and others that have changed the way we live in a way that no Web1 application ever did. This means that transition to the third phase of the internet will likely be slower and more drawn out than to the second phase since Web2 applications are so dominant in our day to day lives. So while some aspects of Web3 can already be seen such as the wider acceptance of crypto as a payment method or increased funding into blockchain and metaverse-based startups, the wider application of Web3 is still far off.
What do you think? How fast will we transition to Web3? If you’re a founder or investor interested in this new phase of the internet, reach out at email@example.com or comment below.