Most people look at Web3 and the metaverse as an unknown domain at best or even a scam that swindles millions out of their hard-earned money.
What’s the first thing that comes to mind when someone mentions Web3? Is it the wild swings of cryptocurrency? Or perhaps the millions of dollars spent on the most basic JPEGs sold as NFTs?
The reality is most people look at Web3 and the metaverse as an unknown domain at best or even a scam that swindles millions out of their hard-earned money. Perhaps if those advocates, evangelists and experts did a better job educating the public on what Web3 is and what are its benefits, misconceptions would lessen. I call these misconceptions because no trusted source would tell you that Web3 is not the future of the internet, that ship has sailed. The only remaining question is how long before Web3 becomes the default state of every experience.
Before we start discussing Web3 successes and failures, I will level set what Web3 is, and more importantly, what it is not.
Internet Evolution: Web1 vs. Web2 vs. Web3
When the internet started to swim more in the mainstream in the 90s, most websites and experiences were static and consumable only. That meant users were able to enjoy the web by viewing content only (web pages, images and videos). This is a period that is widely known as Web1, read-only.
Web1 lasted about a decade, until the mid 2000s, when the concept of user generated content led the way to create Web2. To date, Web2 is still the most dominant type of user experience, where ordinary users publish the content we consume like images, videos and text. Sites like Facebook, Twitter, YouTube, TikTok and Reddit became the most visited locations on the net.
Just as Web2 swept the internet off its collective feet and took over as the default type of user experience, Web3 is starting to show similar signs of maturity. In addition to the read/write norms of Web2, Web3 adds an element of ownership. Now users can own their experiences in an authenticated way that cannot be imitated. With the emergence of Blockchain technologies, Web3 enables a new wave rooted in cryptocurrencies, NFTs and DAOs.
What Is Blockchain?
Blockchain is an algorithm that has unlocked the world of Web3. Think of it as a distributed database that can record transactions in a way that makes it nearly impossible to corrupt or hack.
The simplest way to understand how it works is to think of every transaction as a collection of data that includes a code linked to the transaction before it in the chain. This way if any record is manipulated or deleted, the chain would be broken, and the ledger is exposed as fraudulent.
A critical characteristic of this algorithm is that it is completely distributed not centralized. This means no one source can be accessed to manipulate, the chain is stored and verified in a wide network of nodes making it near impossible to hack. This feature of blockchain has proven very useful where security is paramount, like cryptocurrency.
What Is Cryptocurrency?
Cryptocurrency is digital currency built on blockchain technology. The biggest difference between cryptocurrency and physical currency is the former is maintained by a decentralized system using blockchain and the latter is managed by a central entity like a bank or a government.
Cryptocurrency has become essential when dealing with transactions in the metaverse so much so that some metaverses have created their own currency for digital transactions. The most common and popular cryptocurrency is Bitcoin, but it is hardly the only one. There are thousands of cryptocurrencies in existence, making them a pretty popular way to purchase tokens like NFTs.
What Are NFTs?
NFTs stand for non-fungible tokens, but it is nothing more than a record on a blockchain representing authenticity and ownership of “something.” Almost anything can be minted as an NFT because what the item is doesn’t matter; what matters is how to verify its authenticity.
The most common form of NFTs is JPEG images minted as collectables. These NFTs have garnered much hype for the obscene sums of money that was being spent on them.
Another common form of NFTs that is becoming very popular is POAPs (Proof of Attendance Protocol). These NFTs can be used as tickets to events, proof of event attendance, bragging tokens or even access passes for exclusive experiences.
The most common problem voiced with regard to NFTs is for an image to cost anything, let alone millions, where anyone can take a screenshot of it for free. This is a prime example of Web2 thinking. You are not buying the image, you are buying verifiable ownership of that image. The best way I can relate this concept to other arenas most would understand is thinking about the difference between buying the original La Joconde versus a good copy. Surely the price difference will be astronomical even though only a handful of experts in the world will be able to tell the difference between the two.
What Is the Metaverse?
To begin defining what the metaverse is, we must first understand that the term is not accurate. In fact, there is no one metaverse but a collection of virtual worlds each considered their own metaverse.
Moreover, a metaverse doesn’t have to be rooted in Web3 or blockchain technologies because frankly, metaverses existed way before those technologies were realized with games like “The Sims” and “Second Life” in the early 2000s.