Web 3.0 is the new emerging phase of the internet. It’s fully decentralized and operates publicly on the blockchain. There are no tech giants monitoring Web 3.0 or gathering user data. The benefits of Web 3.0, like data privacy and open accessibility, could prove helpful to startups in the future.
Web 3.0 is an emerging concept representing the next phase of the internet’s evolution. The foundation of Web 3.0 focuses on decentralization, artificial intelligence, openness, and user utility. It’s seen as the future of the internet.
Startups benefit from Web 3.0 in several ways. However, it’s crucial to understand the concept and realize how it can help businesses like yours. Here is what you need to know to get started.
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Web 3.0 is the decentralized, people-owned version of the internet. Web 3.0 can be run by decentralized autonomous organizations (DAOs). Therefore, no CEO or executive board makes decisions. Meanwhile, the concept differs significantly from its predecessors, Web 1.0 and Web 2.0.
Web 1.0 was prominent between 1990 and 2005, in the early days of the world wide web. Web 1.0’s primary purpose was to share information and be accessible to users worldwide. However, in the days of Web 1.0, web pages were static. They weren’t regularly updated, and there weren’t any interactive features like comment sections.
Fast-forward to the early 2000s, and Web 2.0 emerges. This version was all about online interaction and gathering personal data. Thus, user-generated content is vital. Users freely interact in the comment sections and share information they find on various web pages or social media. Web 2.0 is the current state of the internet, with Web 3.0 the newest enhancement.
In Web 3.0, users have total control over their data. They access information through a secure blockchain using smart contracts. However, blockchain involves four layers of technological innovation to help support internet enhancements. Those layers are as follows:
- Edge computing
- AI and machine learning
Let’s look closer at each one.
Edge computing is a form of computing that can be done on-site or very close to the data source. It eliminates the need for data to be processed in remote data centers. Edge computing is also a big part of Web 3.0’s decentralization. The enhancement can offer businesses and startups a faster, more efficient way to manage their data.
A key feature of Web 3.0 is that it’s decentralized. Operating on a decentralized data network enables growth in the data economy by allowing data generators to sell or trade information without losing ownership, risking privacy, or relying on outside sources.
For example, you log into an app or website with your email and password. Perhaps you also like or comment on photos and videos online. Your activity is tracked and monitored by massive tech conglomerates like Google, Apple, and Facebook. These giant tech companies typically use that data to improve their targeted advertising.
However, since Web 3.0 is decentralized, users own their data exclusively. Large tech companies won’t be able to track or gather it with the new algorithms.
Artificial intelligence, or AI, and machine learning are crucial to the further development of Web 3.0. AI can be used to determine whether data is genuine or fraudulent. This allows online platforms to sift through records more effectively and personalize them to users’ individual preferences.
Blockchain helps redefine the data structure on the back end of the semantic web, another broad term used to describe the future of the internet. Blockchain acts as the foundation of Web 3.0 and deploys smart contracts that define applications.
Quick, easy efficiency is the hallmark of Web 3.0. In the 2.0 applications, users interact with the front end, which communicates to the backend, which then communicates to the database. The entire code is hosted on centralized servers sent to users via their internet browser.
However, Web 3.0 eliminates centralized databases and web servers. Instead, everything happens in the blockchain. The blockchain can be used to build apps on a decentralized state machine, maintained by anonymous nodes on the internet and defined by smart contracts.
Smart contracts are like contracts in real life. They’re an agreement in the form of a computer code that self-executes predetermined conditions. Operating on the blockchain makes the data flow more transparent. Plus, all the information on the blockchain is public. This helps prevent misuse and fraud.
Along with smart contracts and blockchain, the third component is decentralized applications or dApps. dApps are similar to regular applications, except they operate on the blockchain instead of a centralized system. They can also have an internal token economy that acts as a governance system.
DID YOU KNOW: Tokens can be distributed to users for voting rights regarding proposed changes on an application.
Web 3.0 promises a transparent, decentralized flow of digital data. While the new phase of the internet is still developing, startups are making strides. Many offer alternatives to big tech and provide a smooth transition into the future of the web.
Rising concerns about data privacy have increased public awareness and prompted the internet’s movement to restructure. With its decentralized blockchain and smart-contract-powered operation, Web 3.0 could be the answer to those rising data concerns.
It aims to cut big tech’s influence altogether at its core by offering a fully decentralized network, from social platforms to data storage and web browsers. The goal is for everything that happens on the internet to be decentralized and transparent. Also, data must remain in the user’s possession.
Because a lot of the data privacy concerns are directed at big tech companies, startups have an opportunity to tap into Web 3.0’s potential. Web 3.0 has already transformed industry startups in the finance, media, and technology sectors. It revolutionized markers by providing more transparency and a personalized experience with decentralized operations and data usage.
Token holders can vote, govern and contribute to the project or startup. This means you could present your startup idea on the blockchain and release a certain number of tokens for stakeholders to purchase. This tokenization method allows angel investors who believe in your project to become early builders and developers.
This is significantly different from buying equity in private or centralized businesses, where most dealings are secret. Several startups, apps, and other projects have already successfully leveraged Web 3.0 and the token concept, including:
DAOs, or decentralized autonomous organizations, are also key to Web 3.0. DAOs are entities with no central leadership. They are governed by a community organized around specific rules outlined and enforced by smart contracts on the blockchain.
DAOs emerged to help manage Web 3.0 while maintaining its decentralization. DAOs act as management and governance tools and offer tokens. Still, their lack of central leadership and a traditional hierarchy keeps them in line with Web 3.0’s themes of decentralization and openness.
Friends with Benefits is an example of a DAO with a clear Web 3.0 connection. It’s a group of builders and artists who use W3 tools to build community and foster creativity. The group also has its token, $FWB, which helps stakeholders govern group endeavors.
Web 3.0 isn’t necessarily a new concept, but it’s still emerging and gaining traction with larger audiences. With the help of AI and machine learning, Web 3.0 is positioned to make the web more intelligent and secure, and blockchain technology and smart contracts make it more transparent.
- Data privacy
- Improved service
- Open accessibility
- No restrictions
- Enhanced data processing
On Web 3.0, users can encrypt their data to protect their sensitive information. This encryption is unbreakable and prevents larger companies like Google, Apple, and Facebook from gathering data.
Because the data storage is decentralized, it is accessible to users in any circumstance. There’s also no larger entity controlling, censoring, or stopping services or websites. This results in a much smoother, more improved experience.
The blockchain is public and open-source, allowing users to see everything across the platform. This means all transactions and any changes are available for everyone to see. Transparency can be helpful if you’re trying to engage people in your startup. It also allows potential stakeholders to see how your operation functions and determine whether they want to get involved or not.
Accessibility is yet another pillar. Web 3.0 data is accessible from anywhere, at all times, and from any device. The goal is for data to be available worldwide regardless of the device or platform.
The blockchain network is accessible to anyone. There are no restrictions, personal, geographical, or otherwise. This is an advantage because assets, data, and even money can be transferred anywhere.
It also means that your startup isn’t limited by factors like your geographic region or income. Once you launch your startup with Web 3.0, anyone interested can join, no matter where they are.
Since Web 3.0 uses AI and machine learning, it’s efficient at quick problem-solving and filtering information. This enhanced data processing can also perform client demand forecasting and provide personalized customer service experiences essential to businesses and startups.
While Web 3.0 promises some significant benefits for users, there are still challenges to address in implementing the new phase of the internet. Some disadvantages to Web 3.0 include:
- Requires advanced devices
- Web 1.0 won’t be usable anymore
- Not yet ready for widespread adoption
- Functionality is complicated
Web 3.0 and the blockchain are open to everyone with no restrictions. However, only advanced computers will be able to run Web 3.0 technology and truly harness its benefits and abilities. This limits audiences to those with sophisticated computers.
If Web 3.0 fully launches on the internet, any websites still based on Web 1.0 technology will be antiquated and unusable. The old Web 1.0 technology cannot be updated to coordinate with advanced technologies. At the same time, there may not be too many websites still running on old technology. Still, any stragglers will become obsolete and lose their competitive edge over newer sites.
While Web 3.0 isn’t a new concept, it’s still not ready for widespread adoption. For example, there is still much work regarding privacy laws and technology advancements.
This could mean that because Web 3.0 isn’t a widespread concept, your startup may not reach as many people. It depends primarily on the industry you’re trying to enter.
There are many ins and outs of Web 3.0, and it’s a complex concept to understand. This can make people hesitant to use it. Because it’s so complicated, some startups may struggle to adapt or integrate, especially globally.
Web 3.0 is an emerging concept representing the next phase of the internet. The foundation focuses on decentralization, openness, and user utility and is seen as the future of the internet. Upgrading to Web 3.0 could be a wise investment of your startup’s time and resources.
It’s also helpful for businesses trying to position or reposition themselves for future markets. While still a complex concept, getting involved with Web 3.0 can have countless benefits. Think transparency, data privacy, and open access. Then remember how crucial it is to stay ahead of the curve.
About the Author
Jonathan Hung is one of the most active angel investors in Southern California; his mission is to drive value creation within each portfolio company. In support of this mission, he serves as Co-Managing Partner at – Unicorn Venture Partners.
He and his team target investments in US companies with global market potential, focusing on long-term growth expansion to East Asian markets.
As a Managing Member for his family office fund, J Heart Ventures, Jonathan developed his investing prowess, making investments in start-up companies such as Gyft, ChowNow, Miso Robotics, Clover Health, and Bitmain, to name a few startups he funded.
Jonathan has various degrees from the University of Southern California, London School of Economics, Massachusetts Institute of Technology, and The Wharton School at the University of Pennsylvania.