web-3.0

Blockchain, Web 3.0, And The Decentralized Internet

In February 2009, about twenty years from the first version of the Hypertext project, Tim Berners-Lee stood on a TED stage in Long Beach, California. As he opened the speech he remarked how 20 years had passed since the inception of the project that would lead to the web, and yet for 18 months that project, back in 1989 stood on a desk at the CERN, without anyone doing anything about it. Until Tim Berners-Lee volunteered to do it as a side project! 

In that time span, Tim Berners-Lee had laid the foundation for HTML, and the idea of URLs that stood behind HTTP. As he remarked in 2009, he felt compelled to take that side project, as he worked in a large research lab and felt extremely frustrated by the fragmentation that existed at the time. There was no single protocol or framework that could connect all the various programs and make them talk. That is how the web was conceived, as a massive document that connected all other documents via hyperlinks. And yet by 2009, Tim Berners-Lee highlighted another frustration, that of connecting data. Up until that point, therefore, the web connected text and documents but failed to connect data.

Tim Berners-Lee explained that concept with these words: “so I want us now to think about not just two pieces of data being connected, or six like he did, but I want to think about a world where everybody has put data on the web and so virtually everything you can imagine is on the web and then calling that linked data.” 

This would give the rise to the Semantic Web, which has already become a reality. Indeed, if we look at Google itself a good chunk of queries that it serves to users are served from its Knowledge Graph, a massive database made (as of 2020) of more than 500 billion facts about five billion entities (an entity is anything that exists on the web, it can be a person, a place, an event and so forth). 

It’s important to understand that, because now Google (with the Knowledge Graph), Facebook (with the Social Graph) and all the other tech giants, in a form, have already converted their “databases” as the Graphs. Yet while these companies put together massive amounts of data about anything on the web, their algorithms are still siloed, walled and managed as “proprietary data.” 

Thus, while these semantic technologies did turn into advanced features for users at scale (think of how voice assistants can give answers to millions of questions) they do not talk to each other, and they might never talk to each other (why would Google, now Alphabet cooperate with Amazon? Or vice versa, when perhaps they are fighting against each other for the market of voice search? – which might also be relevant for the future digital marketing landscape). 

This is also where the Blockchain ecosystem becomes interesting. As the data sits on the Blockchain protocols, this is usually open and accessible. In this sense, the Web 3.0, as also intended by Ethereum’s co-founder Gavin Wilson would make sense:

“Web 3.0 is an inclusive set of protocols to provide building blocks for application makers. These building blocks take the place of traditional web technologies like HTTP, AJAX, and MySQL, but present a whole new way of creating applications. These technologies give the user strong and verifiable guarantees about the information they are receiving, what information they are giving away, and what they are paying and what they are receiving in return. By empowering users to act for themselves within low-barrier markets, we can ensure censorship and monopolization have fewer places to hide. Consider Web 3.0 to be an executable Magna Carta — ‘the foundation of the freedom of the individual against the arbitrary authority of the despot.’” 

The most significant creature from Web 2.0 has been the Platform Business Model, which promise stood in building up peer-to-peer networks where finally two or more parties could interact, or transact without the middleman. However, the platform business model of Web 2.0 also became a master in centralization.

Indeed, where the ecosystem was built in the form of marketplace (think of the Apple Store as a classic example) the company in charge of that remained the primary decision-maker, in determining the whole governance.

In short, the main argument of Web 3.0 is that once a business ecosystem is created, as a result of the investments made by a corporation, the governance model should be redefined. There shouldn’t be a single entity in charge to move a business ecosystem forward, with the logic of extracting revenues from the ecosystem.

Rather a decentralized/distributed entity (made of many organizations and users) that will determine the protocol rules and how it will evolve.

In short, Web 3.0 is looking into disintermediating the digital platforms that have become the protagonists of our daily lives.

Read Also: Platform Business Models, Super Gatekeepers.

Read Next: Proof-of-stakeProof-of-workBitcoinEthereumBlockchain.

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Related Blockchain Business Frameworks

Web3

web3
Web3 describes a version of the internet where data will be interconnected in a decentralized way. Web3 is an umbrella that comprises various fields like semantic web, AR/VR, AI at scale, blockchain technologies, and decentralization. The core idea of Web3 moves along the lines of enabling decentralized ownership on the web.

Blockchain Protocol

blockchain-protocol
A blockchain protocol is a set of underlying rules that define how a blockchain will work. Based on the underlying rules of the protocol it’s possible to build a business ecosystem. Usually, protocol’s rules comprise everything from how tokens can be issued, how value is created, and how interactions happen on top of the protocol.

Hard Fork

hard-fork
In software engineering, a fork consists of a “split” of a project, as developers take the source code to start independently developing on it. Software protocols (the set of rules underlying the software) usually fork as a group decision-making process. All developers have to agree on the new course and direction of the software protocol. A fork can be “soft” when an alteration to the software protocol keeps it backward compatible or “hard” where a divergence of the new chain is permanent. Forks are critical to the development and evolution of Blockchain protocols.

Merkle Tree

merkle-tree
A Merkle tree is a data structure encoding blockchain data more efficiently and securely. The Merkle tree is one of the foundational components of a Blockchain protocol.

Nothing-at-stake

nothing-at-stake-problem
The nothing-at-stake problem argues that validators on a blockchain with a financial incentive to mine on each fork are disruptive to consensus. Potentially, this makes the system more vulnerable to attack. This is a key problem that makes possible underlying blockchain protocols, based on core mechanisms like a proof-of-stake consensus, a key consensus system, that together the proof-of-work make up key protocols like Bitcoin and Ethereum.

51% Attack

51%-attack
A 51% Attack is an attack on the blockchain network by an entity or organization. The primary goal of such an attack is the exclusion or modification of blockchain transactions. A 51% attack is carried out by a miner or group of miners endeavoring to control more than half of a network’s mining power, hash rate, or computing power. For this reason, it is sometimes called a majority attack. This can corrupt a blockchain protocol that malicious attackers would take over.

Proof of Work

proof-of-work
A Proof of Work is a form of consensus algorithm used to achieve agreement across a distributed network. In a Proof of Work, miners compete to complete transactions on the network, by commuting hard mathematical problems (i.e. hashes functions) and as a result they get rewarded in coins.

Application Binary Interface

application-binary-interface
An Application Binary Interface (ABI) is the interface between two binary program modules that work together. An ABI is a contract between pieces of binary code defining the mechanisms by which functions are invoked and how parameters are passed between the caller and callee. ABIs have become critical in the development of applications leveraging smart contracts, on Blockchain protocols like Ethereum.

Proof of Stake

proof-of-stake
A Proof of Stake (PoS) is a form of consensus algorithm used to achieve agreement across a distributed network. As such it is, together with Proof of Work, among the key consensus algorithms for Blockchain protocols (like the Ethereum’s Casper protocol). Proof of Stake has the advantage of security, reduced risk of centralization, and energy efficiency.

Proof of Work vs. Proof of Stake

proof-of-work-vs-proof-of-stake

Proof of Activity

proof-of-activity
Proof-of-Activity (PoA) is a blockchain consensus algorithm that facilitates genuine transactions and consensus amongst miners. That is a consensus algorithm combining proof-of-work and proof-of-stake. This consensus algorithm is designed to prevent attacks on the underlying Blockchain.

Blockchain Economics

blockchain-economics
According to Joel Monegro, a former analyst at USV (a venture capital firm) the blockchain implies value creation in its protocols. Where the web has allowed the value to be captured at the applications layer (take Facebook, Twitter, Google, and many others). In a Blockchain Economy, this value might be captured by the protocols at the base of the blockchain (for instance Bitcoin and Ethereum).

Blockchain Business Model Framework

blockchain-business-models
A Blockchain Business Model is made of four main components: Value Model (Core Philosophy, Core Value and Value Propositions for the key stakeholders), Blockchain Model (Protocol Rules, Network Shape and Applications Layer/Ecosystem), Distribution Model (the key channels amplifying the protocol and its communities), and the Economic Model (the dynamics through which protocol players make money). Those elements coming together can serve as the basis to build and analyze a solid Blockchain Business Model.

Sharding

sharding
Blockchain companies use sharding to partition databases and increase scalability, allowing them to process more transactions per second. Sharding is a key mechanism underneath the Ethereum Blockchain and one of its critical components. Indeed, sharding enables Blockchain protocols to overcome the Scalability Trilemma (as a Blockchain grows, it stays scalable, secure, and decentralized).

DAO

decentralized-autonomous-organization
A decentralized autonomous organization (DAO) operates autonomously on blockchain protocol under rules governed by smart contracts. DAO is among the most important innovations that Blockchain has brought to the business world, which can create “super entities” or large entities that do not have a central authority but are instead managed in a decentralized manner.

Smart Contracts

smart-contracts
Smart contracts are protocols designed to facilitate, verify, or enforce digital contracts without the need for a credible third party. These contracts work on an “if/when-then” principle and have some similarities to modern escrow services but without a third party involved in guaranteeing the transaction. Instead, it uses blockchain technology to verify the information and increase trust between the transaction participants.

Non-Fungible Tokens

non-fungible-tokens
Non-fungible tokens (NFTs) are cryptographic tokens that represent something unique. Non-fungible assets are those that are not mutually interchangeable. Non-fungible tokens contain identifying information that makes them unique. Unlike Bitcoin – which has a supply of 21 million identical coins – they cannot be exchanged like for like.

Decentralized Finance

decentralized-finance-defi
Decentralized finance (DeFi) refers to an ecosystem of financial products that do not rely on traditional financial intermediaries such as banks and exchanges. Central to the success of decentralized finance is smart contracts, which are deployed on Ethereum (contracts that two parties can deploy without an intermediary). DeFi also gave rise to dApps (decentralized apps), giving developers the ability to build applications on top of the Ethereum blockchain.

History of Bitcoin

history-of-bitcoin
The history of Bitcoin starts before the 2008 White Paper by Satoshi Nakamoto. In 1989 first and 1991, David Chaum created DigiCash, and various cryptographers tried to solve the “double spending” problem. By 1998 Nick Szabo began working on a decentralized digital currency called “bit gold.” By 2008 the Bitcoin White Paper got published. And from there, by 2014, the Blockchain 2.0 (beyond the money use case) sprouted out.

Altcoins

altcoin
An altcoin is a general term describing any cryptocurrency other than Bitcoin. Indeed, as Bitcoin started to evolve since its inception, back in 2009, many other cryptocurrencies sprouted due to philosophical differences with the Bitcoin protocol but also to cover wider use cases that the Bitcoin protocol could enable.

Ethereum

ethereum-blockchain
Ethereum was launched in 2015 with its cryptocurrency, Ether, as an open-source, blockchain-based, decentralized platform software. Smart contracts are enabled, and Distributed Applications (dApps) get built without downtime or third-party disturbance. It also helps developers build and publish applications as it is also a programming language running on a blockchain.

Ethereum Flywheel

blockchain-flywheel
An imaginary flywheel of the development of a crypto ecosystem, and more, in particular, the Ethereum ecosystem. As developers join in and the community strengthens, more use cases are built, which attract more and more users. As users grow exponentially, businesses become interested in the underlying ecosystem, thus investing more in it. These resources are invested back in the protocol to make it more scalable, thus reducing gas fees for developers and users, facilitating the adoption of the whole business platform.

Solana

solana-blockchain
Solana is a blockchain network with a focus on high performance and rapid transactions. To boost speed, it employs a one-of-a-kind approach to transaction sequencing. Users can use SOL, the network’s native cryptocurrency, to cover transaction costs and engage with smart contracts.

Polkadot

polkadot-token
In essence, Polkadot is a cryptocurrency project created as an effort to transform and power a decentralized internet, Web 3.0, in the future. Polkadot is a decentralized platform, which makes it interoperable with other blockchains.

Filecoin

filecoin
Launched in October 2020, Filecoin protocol is based on a “useful work” consensus, where the miners are rewarded as they perform useful work for the network (provide storage and retrieve data). Filecoin (⨎) is an open-source, public cryptocurrency and digital payment system. Built on the InterPlanetary File System.

Brave

bat-token
BAT or Basic Attention Token is a utility token aiming to provide privacy-based web tools for advertisers and users to monetize attention on the web in a decentralized way via Blockchain-based technologies. Therefore, the BAT ecosystem moves around a browser (Brave), a privacy-based search engine (Brave Search), and a utility token (BAT). Users can opt-in to advertising, thus making money based on their attention to ads as they browse the web.

Decentralized Exchange

decentralized-exchange-platforms
Uniswap is a renowned decentralized crypto exchange created in 2018 and based on the Ethereum blockchain, to provide liquidity to the system. As a cryptocurrency exchange technology that operates on a decentralized basis. The Uniswap protocol inherited its namesake from the business that created it — Uniswap. Through smart contracts, the Uniswap protocol automates transactions between cryptocurrency tokens on the Ethereum blockchain.

Read Next: Proof-of-stakeProof-of-workBitcoinEthereumBlockchain.

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