Web 3.0 has become something of a buzzword lately, in the wake of blockchain and metaverse. Yet, everyone has their own idea of what exactly Web 3.0 is. In this post, I want to explain what the three main developments are. How they will fundamentally change the Internet forever. And whether Web 3.0 will be able to fix the shortcomings of Web 2.0.

Something is not right. The ongoing digitalisation, the polarisation of our society fuelled by social media, the widening social gap, the shift of power towards oligopolistic companies at the expense of our society. The way the internet has developed casts a dark shadow upon the future. An analogue world that is simpler and less data-driven seems desirable. A world where big tech doesn’t quantify our online behaviour and tracks our every move and everything we do in order to monetise our data. The liberalization that the Internet promised yesterday seems utopian today.NFTs and the digital representation of all assets

Everything can be a digital asset. In Web 3.0, we have a decentralized validation process that enables digital representation of all assets. That’s not just dollars, euros, gold or bitcoin. Ownership of real estate, for example, could be represented as an NFT. Your university degree, an insurance policy, a piece of art, a song. These assets can now be subdivided, and they can have governance rights attached to them. They could be used as collateral for a loan on a DeFi protocol.

The opportunities are endless. Assets on the blockchain are highly superior to others, if only because of global liquidity.

Today’s gold price, for example, may have a market value. However, it is doubtful that a gold bar can be sold anywhere on earth without great effort and without a third party. An NFT or BTC (as an alternative to gold), on the other hand, can be sold in a matter of seconds, around the clock, and to a global market. While a house in the south of France or 10 Nigerian Naira will hardly find a buyer in Taiwan, digital assets can access enormous liquidity at any time and can therefore be sold at any time and without any effort.

We live in a world depending on large institutions with which we have all signed agreements. In the event of a breach of contract, we have to turn to an opaque legal system that is very costly and inefficient, especially to the detriment of the most vulnerable.

Web 3.0 will enable digital agreements. When a certain event occurs, a follow-up action takes place. Automatically. No one can stop this from happening because the smart contract written beforehand and the consensus mechanism of the smart contract platform (like Ethereum) will take care of it. We don’t have to rely on a cumbersome system and the good will of an organization.

Why is this such a big deal?

When Germany was hit by a catastrophic flood last summer, thousands of people lost their homes. Although they had taken out insurance, many of them have still not received their claims, more than 6 months after they had to leave their homes. The reason? At best, the insurance administrators are simply overwhelmed.

With smart contracts, we can create insurance policies that say if X insurance premiums have been paid and event Y occurs, the policy will automatically pay out to the beneficiary. Web 3.0 will enable these next-generation legal agreements, stored on decentralized databases, i.e. blockchains.

For us, it has become a matter of course to sign up for all kinds of platforms. The product of these platforms is actually ourselves. We are the producing consumers of Uber, Airbnb, Google, Facebook.

These platforms offer a reputation system. Your café has received 5-star reviews, your average response time is 7 minutes, and your Airbnb guests were very satisfied with your cleanliness. Wonderful.

The product you create is data held hostage by these platforms. This also applies to the reputation you have earned on each platform. It is not transferable to another platform. And Airbnb can deny you access to its service at any time, whether your salary depends on it or not, whether it is justified or not. The reputation you have earned does not belong to you, it belongs to Airbnb.

In the future, your digital identity could be your browser. Simply secured by your biometric data. And with that identity, your reputation will also be yours, transferable to any Web 3.0 service. There is no longer a platform that will drain you.

This enables true peer-to-peer transactions. You want to rent my apartment for the weekend? Good! I, not Airbnb, can now decide whether to let you stay with me for the weekend, based on your own identity. And we save 25% for the middleman who previously resold us the data that really should be ours.

Our society has undergone a massive transformation to a digital society. And while we enjoy the benefits, the shortcomings are obvious.

A small handful of people and institutions have full control over the internet, your data, your finances. This power allows them to extract as much value as possible from you.

In Web 2.0, the winner took it all, power got concentrated to an extent that is frightening. The rich got richer, while we depend on their goodwill. And even we made the experience that these opaque institutions are not trustworthy, we as a society have gotten used to these institutions subjectively providing us trust. They are the ones who judge whether we are trustworthy enough to use their platforms to get credit to access our data. The data we create for them is like a honeypot held hostage.

Blockchains & smart contracts have created a next generation databases, that provide a fair playing field for everyone. We should to move from institutional subjective trust to mathematics, objectively revealing trust. We should distribute power by relying on open source, transparent, software rather than institutions trying to extract as much value as possible from us. Web 2.0 belongs to a handful of people; Web 3.0 will belong to everyone. It will crack that honeypot open.