Over the last few years we’ve seen countless issues come up with the current cartel of internet monopolies. From the Cambridge Analytica scandal and WhatsApp’s recent outages, through to Twitter’s de-platforming efforts (for better or worse) and Google’s antitrust violations , it has become increasingly apparent that the old model of how the internet operates is unravelling at the seams. Even the collective acronym FAANG (Facebook [~Meta], Apple, Alphabet, Netflix, Google) conjures up predatory images of snakes, bats and ugly things. A far cry from the free and idyllic dreams that the original architects of the world wide web so deeply believed in.
In the recent past, creators have been the key drivers of core product value, but they haven’t been compensated in line with their influence. In this emerging world however, it looks like those very same creators will in fact be rewarded for their creativity, individuality, persistence and their brilliance. Without sounding overly optimistic, it feels like water will find its level.
That said, it can take a minute or two to get your head around all the goings on in this new space. So in this entry we’re going to start with a light exploration of three waves of the internet, which are respectively termed Web 1.0, Web 2.0 and Web 3.0. By doing this light exploration, we can start to build increasing layers of understanding and context around the world we are living in, and proceed from there to ask questions about how we can create this new world.
Sound cool ?
Nice. Let’s get into it.
What is Web 1 ?
Web 1 refers to the earliest stages of the internet, as it was configured from the 1980s through to the early 2000s. In that era, there were only a few creators on the internet. Most users on the web were simply consumers of content. The most common form of content was typically personal web pages, which were mostly static and hosted on free web hosting services. This configuration of the internet was decentralised. It was built upon a series of open protocols that anyone could create directly on top of. For example, there was the HTTP protocol to create websites, the SMS protocol to create messages, the FTP protocol for file transfers and the SMTP protocol to send emails. These protocols essentially acted as a sediment layer. They were agreed upon, not subject to change, and as a result people could build websites on top of these protocols without fearing whether some intermediary would “change the rules of the game”.
This was all good. People had a sense of security, privacy and excitement about building projects online. There was a direct relationship with the consumer. But the technology was clunky in a few pretty important ways.
Stateless: Web 1 protocols were stateless. What this means is that websites essentially had no “memory”. They did not capture user data. This meant that website owners had no idea if a user had visited a site before, and so they couldn’t tailor experiences accordingly. This led to a pretty rubbish user experience for most websites - with a lot of useless information of people.
Too technical: To build a presence on Web 1, users had to be technical. They had to understand how SMTP, SMS, HTTP etc. all worked in order to build out services we take for granted now such as emails, messaging and building websites. This barrier to entry meant that every day people weren’t able to really participate in the internet as creators, and this wasn’t great.
Limited protocols: Web 1 didn’t have standard protocols for many the things that power the internet today, like payments, search, apps, social media, commerce, credit and more. This meant that the use case of the internet was pretty limited, and did not touch the needs of every day people.
No advertising / monetisation: In Web 1, websites were not able to show adverts while "surfing on the web”. There really was no real monetisation mechanism that would help builders capture the value they generated. Protocols had no means of monetisation. If they did, then Tim Berners Lee would have made a lot more money.
In summary, Web 1 showed a lot of promise. But it had some serious gaps which needed to be filled. Some of these limitations ushered in the era that we have collectively grown up in, which is referred to as Web 2.
What is Web 2 ?
Web 2 refers to the version of the internet that we know and see today. It’s the internet of Facebook, of YouTube, of Google. It’s an internet dominated by companies that provide services in exchange for user’s personal data. This was the era when software developers recognised the limitations of web 1, built products to fill them in, and made sure the capture the value in the process. Once the technology required to capture State (cookies) was invented, companies set out to aggregate it by building buckets too attract mountains of user data. Companies like Facebook made it so that anyone could participate and build a presence on the platform, and they wrapped existing products in frictionless user interfaces that created products where no protocols existed or were too technical.
This was really a great period of time. It democratised the ability for many people to participate on the internet. For example rather than my needing to understand SMTP to create my own email client, I could use services like Gmail or MailChimp. Rather than needing to understand the fundamentals of SMS to create instant messaging, I could use services like Twitter to communicate, and also to be discovered. These are all desirable and valuable outputs.
As a general outline of the typical web 2 model, a company would rely on user participation to create fresh content, and profile data to be sold to third parties for marketing purposes. The internet in this configuration is essentially a giant app store, dominated by centralised apps from Google, Facebook and Amazon, where everyone is trying to build an audience, collect data, and subsequently monetise that data through targeted advertising. The centralisation of this data, and and use of this data without the user’s meaningful consent, is therefore built into that web 2 business model.
The flip side of that economic model is SAAS or subscription based. In this model there is a strong polarisation between the consumer and the producer, where the exchange is such that the producer creates the service and the consumer receives it in exchange for a fee. While this avoided some of the privacy challenges implicit in the advertising model, it does not allow for the participatory and open source nature that the internet is so naturally suited to empower.
And still, more challenges remain. For instance Twitter could shut down a user’s account whenever it wants to. And that user’s followers would be scrubbed out with it, as we’ve seen on a few occasions already. In another example, Facebook allowed brands and publishers to build up audiences on a seemingly free platform, and then they changed the rules and forced them to pay to reach their own audiences. All of these issues point towards a different solution, which we call web 3.
So what is Web 3?
As we mentioned a little further up, the early internet thrived because of native internet protocols that we use daily. This includes things like https, ftp, tcp and ssh. One of the main reasons that these protocols have been so successful is that they were widely adopted and not subject to change. The rules of the game could not change at the will of any specific CEO or group of investors.
Until recently, there were two pieces of functionality that made web 2 stand out from web 1, even with those decentralised protocols. The first is payments, and the second is state. Blockchain technology enables both of these things because it opens up the path to programmable money and state (memory) without the need of a centralised server, bank or any intermediary at all !
The result is that Web 3 and blockchains are able to bring about entirely new business models only made possible by tokenisation and crypto-economic protocols. To see early examples of this check out PartyDAO and Compound. In this model, creators monetise through the issuance of social tokens or NFTs, rather than through advertising.
What this means is that money and influence will shift from the people who aggregate state, to the people who create and consume. It will cut out the middle man in a disruptive manner, and it will attach each user’s data and money directly to them. It will be underpinned by a public record that they own, which they can take with them and profit off wherever they go on the web.
Still, while all of this makes sense and is exciting on paper. Web 3 is still a long way from mass adoption. Interfaces are often still clunky and unapproachable to those who aren’t technical. This is why companies like CoinBase and OpenSea have become so valuable so quickly, and have managed to do so without any paid advertising. We need more projects with simple interfaces. We need more projects that enable people to engage with crypto in an intuitive way. We need more projects that empower people to take their fates into their own hands.
It’s time to build them !