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Everyone Talks About Web3 But What are Web2 & Web1 and How is Web3 Different?

Web3 is the next stage of internet that aims to democratize the whole industry.

Technology is ever-evolving. 

From fire to wheel to internet, humans have not stopped developing new technology to solve contemporary problems.

Currently, the world is witnessing the development of the next stage of internet.

Web2 is the most widely used internet today. But, an advanced form of internet is making its mark.

It is called Web3.

Web1, Web2, Web3 Defined

During the Web1 era of the 1990s, internet users could only consume the content published on websites. Websites did not have much functionality.

Web2 succeeded Web1 in the early 2000s and allowed consumers to create and publish content. It gave rise to dynamic websites. Further, the development of open-source technologies resulted in the smartphone revolution.

But up till Web2, massive corporations used to control internet. They act as gatekeepers of internet which resulted in arbitrary censorship and antitrust violations.

To circumvent such problems, Web3 was created. Rather than concentrating the power in a few hands, it aims to democratize the internet.

In Web2, corporations own the servers; their software is proprietary; they control the access to their products.

Web3 uses blockchain technology that uses distributed computing, as there is no single server. Numerous participants known as nodes and miners/validators keep the network alive.

Many people associate Web3 with cryptocurrencies. It is not limited to that. Web3 is about distributing the power among stakeholders, which is achieved through blockchain. A blockchain is a distributed network on which information is transferred through cryptocurrency.

Cryptocurrency can also be centralized as in the case of Central Bank Digital Currency (CBDC) which works on the Web2 principles of a centralized network.


Web3 has tweaked the old economic principles as well.

When it comes to a Decentralized Autonomous Organization (DAO), it has amalgamated the concepts of capitalism and socialism as all the stakeholders ‘own’ the produce. The creators are few, but the owners are many. DAOs have brought a new governance system for organizations.

The traditional Web2 corporations do not provide any ownership to all the stakeholders or content creators. Only handful of them has ownership rights.

Removing Human Flaws through DeFi

Humans are corruptible and selfish. In order to remove the ‘human flaws’ trustless and permissionless systems are created through smart contracts. Smart contracts are computer codes that execute upon the fulfilment of certain conditions.

The essence of Web3 is decentralization. Many investors lost faith in the contemporary financial system after the subprime mortgage crisis of 2008 gave away the ‘human flaws’ of the system.

With Bitcoin emerged Decentralized Finance (DeFi) which aims to remove the ‘human flaws’. This is an altogether new kind of financial market devoid of human intervention. In this space, everything is executed through code (smart contracts).

Data Privacy

Data privacy has been a contentious issue in Web2 for the past few years. Web2 companies misuse the data of users, whereas Web3 offers consumers data privacy controls. They can decide what and what not to share. On a blockchain, a user can see what is shared, but the identity of users is kept pseudonymous.

One advantage of Web2 here is that only the user and service provider have the data. On the other hand, on a blockchain, all the data is visible to everyone. That’s why blockchain is said to provide pseudonymity rather than anonymity.

Play to Earn

It is well known that if you don’t pay for the product, you are the product. Well, the Play to Earn space is changing that as users can now earn by just playing games. It is open for anyone rather than the selected few social media influencers in the Web2 space.


Artists today feel empowered due the arrival of Non-Fungible Tokens (NFT). NFTs help in authentication which can help artists protect their intellectual property.

Creators can even launch their own creator tokens and DAOs.


Further, Web3 uses open source technologies which enables anyone to audit any project, unlike Web2 whose internal workings can be accessed only by the selected few.

Web3 is in its nascent stages at the moment. It could take well over a decade to become mainstream. As of now, only El Salvador has embraced Web3 completely by adopting Bitcoin as a legal tender. Other countries may or may not regulate crypto in a similar way. For instance, Indian regulators do not recognize crypto as a currency but as an asset. However, a global framework for regulations may be needed as crypto can move freely around the globe.

News recommendation: Understanding Decentralised Governance Models

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