A Beginner’s Guide to Web3
Web3 Musings: Edition 1
In this edition:
What is Web3?
How to access Web3.
Interesting content I’ve found this week.
What is Web3?
Web3 is the third major advancement of web technology. To understand Web3, it is useful to also understand the previous generations of the internet, explained below.
Web1:
The first mainstream stage of the internet. Newspapers, magazines, and other publications are able to share digitised versions of their work online. Web pages were static and the knowledge required to publish online was a huge barrier to entry. Websites were mostly skeuomorphic. Think of this as the reading stage—most people were only able to consume content, with creation limited to a select few.
Web2:
This is where the internet becomes less of a platform for consumption, and more of a canvas for creation and socialising. Early social media sites such as Facebook and MySpace allow anyone to create and share almost anything to the web and interact with friends—all they need is a username and password. Consider this the publishing stage of the internet.
These sites are free to use, so how do they profit and stay afloat?
Approximately 240 million websites existed in 2009. This number almost tripled three years later. The growth of the internet is hardly disputed. Facebook reaches a billion users by 2012, becoming more than just a social media platform. It is also an advertising channel. Close to 98% of their yearly revenue comes from companies utilising the masses of data that Facebook collects from its users to display highly-targeted ads to users. This business model is not limited to Facebook. Google, Twitter, and many other tech companies make over 80% of their annual revenues from paid advertisements selling their users’ data. There’s a common saying—if the service is free, you are the product. Content shared online is owned by the platforms to which they are shared, and the data collected is sold to high-paying advertisers.
Web2 is hugely centralised, with most of the internet controlled by a few large corporations. While centralisation is good in some cases for security (if you trust the company in charge) and for cost-effectiveness, there are many drawbacks of this model. A whole network can be dependent on a single point of failure, opening up the possibility for exploits and data breaches. These breaches can be serious, such as the Equifax Data Breach of 2017, in which the private financial records of more than 150 million people were compromised over a one-month period, costing the company $1.4 billion in cleanup costs. The exploit stemmed from a single vulnerability discovered in the consumer complaints portal. Many more exploits happen regularly, although not as often with consequences so severe. This interesting website can be used to check whether your email address has appeared in data breaches and shows just how common they are.
Web3:
The new, emerging age. If Web1 was the reading stage, Web2 the publishing stage, Web3 is the ownership and freedom stage of the internet.
Web3 is built on decentralised protocols. Rather than existing only on a collection of servers run by a single company, decentralised applications (dApps) running on blockchains and peer-to-peer (P2P) networks enable new ways to transact and interact with the internet.
A definition of blockchains is also useful for this explanation, so I’ll use this one from Preethi Kasireddy’s blog:
A blockchain is a “cryptographically secure transactional singleton machine with shared-state.” That’s a mouthful, isn’t it? Let’s break it down.
“Cryptographically secure” means that the creation of digital currency is secured by complex mathematical algorithms that are obscenely hard to break. Think of a firewall of sorts. They make it nearly impossible to cheat the system (e.g. create fake transactions, erase transactions, etc.)
“Transactional singleton machine” means that there’s a single canonical instance of the machine responsible for all the transactions being created in the system. In other words, there’s a single global truth that everyone believes in.
“With shared-state” means that the state stored on this machine is shared and open to everyone.
A few core benefits of Web3 are: Agency, Interoperability, Reliability, and Security. I’ll explain each of those below.
Agency: The users own their own data. Their data and identity is linked to their wallet, and they control what is kept there. It does not live in Google’s or Facebook’s servers, and they can take their data with them to any platform and can easily see what data there is.
Interoperability: Applications can interact with each other and implement features of other dApps. Similar to today’s APIs which enable third-party sleep trackers to access Apple’s Health app, for example, interoperability allows developers to seamless adopt features of other dApps and continuously build upon current applications.
Reliability: Being decentralised means running synchronously across multiple computers all over the world. If one or many of these computers fail, the network still remains stable. In theory, decentralised networks run forever, as long as at least one computer exists to keep the network up and running.
Security: Brute force attacks on decentralised networks and dApps are nearly impossible due to the advanced cryptography protecting the network. Data is anonymised and difficult to trace back to individuals.
How do I access Web3 now?
The most widely used Web3 platform today is Ethereum. Ethereum works by hosting a blockchain across ~5600 nodes (computers) around the world. Its blockchain is Turing-complete, meaning it can theoretically be programmed to solve any computational problems—limited only by physical constraints like memory and power consumption. The native currency of Ethereum, Ether, can be used to transact by anyone, from anywhere in the world.
The easiest way to interact with dApps is to use a browser (must be either Chrome, Firefox, Brave, or Edge) with a wallet extension installed, like Metamask (or others). Explore sites like OpenSea for buying and selling NFTs or SushiSwap for token trading. If you want to get more technical, Etherscan has all the necessary live statistics relating to the Ethereum network and is a great place to study the overall state of the network, including transaction difficulty, gas prices, and market cap.
I will be going into more depth on topics such as those mentioned above, digital wallets, decentralised finance (DeFi), NFTs, and many more Web3-related topics in future editions of Web3 Musings. Click here to subscribe so you don’t miss those.
Interesting content from this week:
This breakdown on the growth and future of Metamask, the most popular crypto wallet extension.
Key takeaways:
A Metamask token is in the works—a matter of when, not if.
Metamask grew from just 545K users at the beginning of 2020 to over 11M users today.
The platform made $0 in revenue until the release of a feature called ‘Metamask Swaps’, which allows swapping of tokens for a small fee based on market quotations.
‘Metamask Snaps’ are a way for developers to make custom apps that work on top of the Metamask wallet itself.
On becoming financially free in crypto:
Key takeaways:
Being early in industries that shock the world will make you rich.
Level 1—Before money: If you have a normal job and spare time, explore different markets. See if anyone has a need for your skills. Only enter markets you believe in. Don’t go all-in.
Level 2—Starting to make money: Set goals. Don’t get greedy—this is the fastest way to lose everything.
Level 3—While making money: Being a genius in one area doesn’t make you a genius in another. Know the limits of your abilities. Take profits to improve your life.
On getting a job in Web3:
Key takeaways:
Why do people want to work in crypto? Higher average salaries, fast-paced learning, likely a remote environment. Web3 offers a wide variety of business structures, most not even needing degrees.
Use a portfolio to show off your work.
Jobs aren’t limited to developers—roles include copywriting, marketing, designing, and more.
Do your research before talking to founders/interviewers. Know the company and the crypto concepts behind it.
Stay persistent.
That’s all for this edition of Web3 Musings, I hope you’ve enjoyed reading.