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Web3 is a proposed iteration of the internet that would be decentralized and built upon the blockchain.


Web3 is a proposed iteration of the internet that would be built upon the blockchain, allowing for decentralized ownership and access to information online. In the theoretical Web3 framework, the internet would run on a blockchain (such as Ethereum), a network of computers that collectively hosts data that is accessible to any user. By being hosted on a blockchain, Web3 would allow users to earn tokens for participating on the internet, which could be used to vote on decisions and accrue real value while eliminating user reliance on third parties and tech companies for internet access, transactions, and communication. Web3 has garnered significant discussion in the early 2020s, along with the rise of Non-Fungible Tokens (NFTs)—digital online collectibles that can be bought and sold with cryptocurrencies.

Many proponents and experts of Web3 suggest the technology will provide increased data security, scalability, and privacy, through combating some of the influence and control of the large technology companies operating and controlling many of the Web 2.0 interactions. However, some of this control is believed to help moderate the web, and the decentralization of Web3 has worried that it will offer the potential for increased circulation of harmful content. Others are concerned that Web3 will offer a new centralization of wealth to a new group of investors and individuals. And there are other concerns that it could result in a greater loss of privacy than current web practices. Meanwhile, some suggest Web3 presents nothing more than a buzzword.


Web3 enthusiasts view it as the natural successor to Web1, defined as the earliest iteration of the internet from the 1990s to the mid-2000s, and Web2, the current iteration of the internet introduced around 2005. Web1 can be viewed as the early days of the internet, when information was democratized but difficult for everyday people to access. The introduction of social media websites and tech companies in the mid-2000s is generally thought to have been the starting point for Web2. In Web2, companies such as Apple, Google, Facebook, and Amazon have created methods that make accessing and conducting transactions on the internet easier for everyday users. Critics allege that during the Web2 era, these companies have amassed too much power and influence, as a majority of transactions and interactions on the internet must go through their platforms. Proponents of Web3 say that having the internet run on the blockchain will allow everyday users to access the internet and make transactions without having to rely on tech companies or third parties in order to do so.

The term "Web3" as it is used in a blockchain context was coined in 2014 by Polkadot founder and Ethereum cofounder Gavin Wood. In his coining, Web3 refers to a decentralized, online ecosystem based on a blockchain. The idea gained popularity in 2021, especially with interest spiking amongst the cryptocurrency enthusiasts and from investments from high-profile technologists and companies.

Web3 vs Web 3.0

This is sometimes considered to be separate from, or in contrast to, the description of Web 3.0 described by Tim Berners-Lee in 2006, of which the semantic web is a component. The concept for the semantic web, which is sometimes referred to as Web 3.0 in itself, describes the expansion of the internet to make it machine-readable. It also describes a set of standards set by the World Wide Web Consortium.

Many writers and commentators have used the words and concepts of Web3 and Web 3.0 interchangeably, which has led to confusion of the differences between the two concepts. Although some visions or ideas of Web3 have worked to incorporate ideas relating to the semantic web to bring the different concepts closer together.

Web3 architecture
Web 2.0 architecture.

Unlike Web 2.0 applications, Web3 works to decentralize and eliminate the middle man in the architecture. This means there is no centralized database where the application state is stored, nor is there a centralized web server where the back-end logic resides. Instead, Web3 is built on blockchain, where apps are built on a decentralized state machine maintained by anonymous nodes on the internet.

Unlike in Web 2.0, where a back end is controlled by a back-end server, in Web3 the back end is controlled by smart contracts, which define the logic of the applications and deploy them in a decentralized state machine. The smart contract then regulates each person who wants to build a blockchain application, and each of those projects deploys its code on the shared state machine. Meanwhile, on the front end, the interface for the user, for the most part, stays the same.

In this context, the state machine is responsible for maintaining the program state and stability through the validation of predefined rules. The state machine is spread between the participants of a blockchain network, and validation is archived through the consensus about the program's stability.

Web3 architecture example.

The blockchain that is part of the Web3 architecture has been also called a "world computer," as it is a globally accessible, deterministic state machine maintained by a peer-to-peer network of different nodes. Any state changes on this network are then governed by the rules of consensus that the peers in the network follow. In other words, it is designed to allow anyone in the world to access and write to, which is not a single machine but a collective network available to and owned by anyone. As well, the network does not allow existing data to be updated, which allows there to be a true and undiluted historical record on the blockchain.

Smart contracts

A smart contract is a program that runs on the blockchain and defines the logic behind the state changes happening on the blockchain. Often the smart contract is written in high-level languages, and because it is stored on the blockchain, anyone can inspect the application's logic of the smart contracts across a network.

Data architecture

Web3 architecture is also largely defined by the data storage architecture. The Web 2.0 architecture relies on an application-centric design where all data for users of an application are stored in a single database. While in Web3 applications, the data is user-centric and hosted on a decentralized network, stored with each individual user, and written to and queried by applications client-side.

Web3 takes a model-based approach to allow for simple data reuse and composability between applications. This model-based approach makes it easier to share individual data models with other applications than it is to force applications to share entire databases contaning all kinds of data between often different applications.

For example, in Web 2.0, a user has to sign in to an application, which captures personal information garnished with the user's data through their time using the application, and that sign-on process differs between various applications. While with Web3, a user could use the same cryptocurrency wallet to sign on to various applications, without sharing any personal information. And, thereby, any data collected about the user's activity could not readily be connected to that user's identity, protecting the user in many ways.

Front end

In Web3, the main front-end architecture is focused on communication with smart contracts, which differs from the Web 2.0 front-end/back-end communication. Through Web3 communication, the front has to communicate with one of the nodes of the blockchain network, which carries the smart contract. These nodes could be third-party nodes, or a node set up by a state machine.

The front end uses JSON-RPC specifications to communicate with the blockchain network. This response protocol defines the rules to allow the client to send the message to the remote machine to execute the function and retrieve the response. All of the communication in this goes through HTTP or web sockets.


The central idea of Web3 is that it would theoretically give everyday users property rights on the internet. This would be done through tokens, both non-fungible and fungible, which could be acquired with cryptocurrencies and validated by the blockchain. Non-fungible tokens are central to the idea of Web3, as they effectively allow users to own a piece of the internet. Non-fungible tokens come in a variety of forms, such as art, images, code, music, text, game objects, credentials, governance rights, access passes, and more. Additionally, these NFTs could be purchased and exchanged directly between users and would not have to go through any intermediaries.

This would enable different Web3 use cases, such as Decentralized Finance (DeFi) protocols that would allow users to lend and borrow money, with the service run by smart contracts, to eliminate the intermediaries and enable higher yields and returns, although with more risk. It would offer play-to-earn gaming, which allows users to earn an income from gaming. Some games have further spawned nonprofit organizations that have used gaming proceeds for combating climate change or funding scholarships for underprivileged youth.

Web3 benefits

Many of the proposed benefits of Web3 revolve around the concept of decentralization. Decentralization is intended to offer users ownership over their content, with the middleman removed from the operation of the internet. As well, rather than the middleman site benefiting from user content, the users can earn tokens for their participation and activity, giving those users further ownership of their projects.


Unlike current systems in which information can be copied or stolen without a user being aware of it, the technology underpinning Web3, specifically blockchain, is built to be secure and tamper-proof. This includes securing the data within the blockchain, meaning any interference or attempt to extract that data can be detected. However, as with Web 2.0, there are various Web3 applications that could be unsecured, and many proponents of Web3 suggest only using audited Web3 applications.


Web3, and the potential for decentralized identity systems, are intended to allow users to control their online identity and personal information. This could allow the users to have more fine-tuned control over what information is available and also who can access it. As well, this infrastructure offers users a more cryptographically secure way to prove whether the information is accurate.


Most, if not all, Web3 projects are open source, and anyone is able in that way to build on top of other projects. While Web 2.0 worked with API access, Web3 is built to work more like LEGO blocks, where parts can be interconnected and reused, a concept called "composability," which aims to allow users to leverage existing projects and create something new, which should further make it easier to generate new projects.


The use of decentralized autonomous organization (DAO) in Web3 offers a new management model without boards and executives. DAOs operate according to sets of rules written in code, allowing people to participate in the project without needing to be vetted by the moderators of the company. Some have estimated that many traditional companies are expected to change their operating model to DAOs as Web3 becomes adopted.

Practical comparisons

Web 2.0

A payment service may decide to not allow payments for certain types of work.

Payments in Web3 require no personal data and cannot prevent payments, especially if the payments are directly between wallets.

A social media company can censor any account or post.

Social media posts or accounts are uncensorable because control is decentralized, and there is no authority to censor the individual.

Servers for a gig-economy application can go down and affect worker income.

Web3 servers are built on a decentralized network of thousands of computers as their back end, meaning the servers cannot go down.

Web3 Limitations

There are various limitations associated with the use of Web3, such as the complications that could come with beginners learning how Web3 works or offering an incentive to move from popular, centralized applications to new Web3 applications. This includes the need for current websites to upgrade to Web3, which could force users of the internet already on the edges further out, as it could increase the cost of using the internet. The following are other limitations of Web3:

  • Limited scalability, as transactions on Web3 are slower because they are decentralized; any changes to state, like a payment, need to be processed by a miner and propagated through the network
  • Interacting with Web3 applications will likely require extra steps, software, and education, which can provide a significant hurdle to adoption; this could include users required to have more advanced devices
  • The lack of integration of Web3 with modern web browsers could make Web3 less accessible to many users
  • The cost of developing for Web3, especially for dApps, could slow development as the cost remains expensive
  • Concerns remain about the accessibility of a person's personal and public data, and how easy it may or may not be for anyone in Web3 to access that data
  • Some remain concerned about the difficulties in monitoring and regulating Web3, which could result in a rise in cybercrimes
Identity in Web3

Identity is expected to work differently in Web3 than how it works in Web 2.0, where the existing architecture uses authentication methods such as 0Auth or email and password combinations, which often require users to hand over personal information. Whereas in Web3, identities are tied to the wallet address of the user interacting with the application. And the wallet address can be anonymous, unless the user decides to tie their identity to it publicly. If a user also decides to use the same wallet across multiple applications, their identity can be transferable across apps, which further helps the user build their reputation over time.


While conversations about Web3 have increased in recent months, widespread adoption of Web3 is still quite a ways off. One such roadblock could be the U.S. Congress and other government figures who have expressed concern over the lack of regulatory framework with Web3 and cryptocurrencies. At a December 8, 2021 hearing with the chief executives of six cryptocurrencies, Congress asked extensive questions concerning the volatility of cryptocurrency, lack of regulations, and involvement with Big Tech. This comes after venture capital firm Andreessen Horowitz (a16z) made a significant Web3 lobbying push in Congress in October 2021, promoting the technology as a solution to Silicon Valley consolidation as well as proposing regulations for the burgeoning Web3 ecosystem.

However, part of the push for Web3 adoption and use is the possibility for a more democratic internet, as it can reduce the control of the big corporations and does not require a trusted intermediary while also being permissionless. This comes as these big internet corporations—such as Google, Amazon, Meta (previously Facebook), Netflix, Microsoft, and Apple who see, as of 2019, roughly 43 percent of the total internet traffic—have been criticized for the access to and control of large portions of user data and personal information, and the potential (and actual) abuse of that personal data.

The concept of Web3 continued to gain traction through 2021 as more users began interacting with blockchain technologies, and blockchain-based applications began to proliferate and gain more popularity, such as the expansion of NFT marketplaces and venture capital investments into Web3. This has further increased the average internet user's awareness of Web3 and its possible applications, further increasing the popularity of the concepts outside of the cryptocurrency and blockchain enthusiast communities.

Roadblocks to adoption

In some ways, Web3 is also considered to still be theoretical and requires a steep learning curve. As well, there remain issues of anonymity and censorship, especially as everything written on Web3 remains indelibly in the blockchain. This can be important for those who wish to remain anonymous for their safety. Further, if no one can be blocked from the internet, it provides a more egalitarian internet in theory, but could also increase the amount of hate speech and harmful content on the internet. Perhaps one of the largest roadblocks to the adoption of Web3 will be taking power away from tech giants like Amazon and Google.

Web3 and Blockchain Companies


April 11, 2022
Uniswap Labs launches venture unit to invest in Web3 projects
April 11, 2022
XYZZY partnering with Harmony to launch Next-Gen Web3 projects
April 11, 2022
Introducing Relation, a multi-chain social graph data explorer On Web3
April 11, 2022
Fabric Ventures looks to close two Web3 funds worth $245 million
April 11, 2022
Timbaland named NFT artist-in-residence at Web3 community TIMEPieces
April 8, 2022
Point Labs releases a full roadmap to Web3 functionality
April 7, 2022
Goldman Sachs joins other investors in $88M round for web3 and blockchain security firm CertiK
April 7, 2022
Pocket Network continues to exceed Web3 industry demand with a record number of protocol relays
April 4, 2022
Outside announces a new "Anti-Metaverse" Web3 initiative
March 29, 2022
Dapper Labs, Wealthsimple, and WonderFi are founding members of new Canadian Web3 Council

Further Resources


5 Main Benefits of Web3 - Infographic - Lasse Rouhiainen. Web3 is a new..


February 10, 2022

Building On The Promise Of Web3 To Deliver A Future Of Utility, Value And Empowerment That Benefits Everyone

Brian Solis


April 4, 2022

Is It Too Early To Get Excited About Web3?


March 8, 2022

Jack Dorsey says VCs really own Web3 (and Web3 boosters are mad)

Jacob Kastrenakes


December 21, 2021

Museums in the metaverse: How Web3 technology can help historical sites

Max Parasol


April 10, 2022



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