Web3 – Current State of Affairs

The term Web 2.0 was coined in the late 1990s. It describes various socio-technical phenomena that had developed organically on the Web (1.0) - such as personalized, dynamic web experiences and user-generated content - under a collective term. It's still how the web is used by people today.

Now, a movement of startups and blockchain activists, backed by large amounts of venture capital, is setting the stage for what they think is the next level of the web. Web3 should not only represent an incremental update of the existing Web, but also solve fundamental problems of the Web as it is today. Note that Web3 is not promoted by the World Wide Web Consortium (W3C) which oversees technical developments and gives recommendations for standards.

Web 2.0

While the technical protocols of the Internet such as TCP/IP not only enable decentralization, but also actively implement this in the standards and implementations, Web 2.0 has emerged as concentration of a few dominating closed platforms. Facebook owns the social graph, Amazon the shopping graph, Spotify the musical interest graph. These monopolies are also concentrations of power that enable these companies controlling individual aspects of digital life and its expression: Facebook decides for the mainstream what "acceptable expressions of opinion" are. YouTube decides unilaterally whether a video remains on the platform or is banned from the Internet due to copyright claims. Futhermore, the crucial aspect of moneytarization is also controlled by these few platforms: nothing is more problematic for content creators than being blocked from these platforms.

While the web today offers countless alterntive platforms for artists and writers to make their content available to the public, generating a decent, fair income from it is still fiction for most and depend on few platforms. It is difficult to meet the demands and rules of the platforms that organize distribution: This means that the individual cultural workers are platform-dependent with a massive power imbalance. Then there is the topic of content censorship: if all relevant publication takes place on the platforms of the big companies, it is quite easy for states to suppress certain unwanted communication.

Motivations for Web3

The Web3 movement is not a homogeneous community, but rather a loose association of people and groups with very different motivations and beliefs. Nevertheless, there are certain overlaps that form the basis of the technical architecture and implementation. At the core of the Web3 movement you'll find these principles:

1. Digital property. Each digital artefact can be assigned an identity and that the person(s) controlling this identity can exercise control over the artefact. A key form of control here is the ability to transfer an artifact, with or without payment. Equally important, the artifacts cannot be modified or deleted by others.
2. Decentralization. It is entended that monopolies do not develop – as is the case on the current web. But above all there is the guarantee that nobody is excluded or restricted in their expression, for example due to state intervention.
3. Transparency. The basis for digital coexistence on Web3 is transparency. All relevant information about artefact transactions must be transparent and controllable for all participants in order to enable trust in the overall system: Fraud should also be impossible because it cannot be hidden.
4. Freedom from restrictions. There should be no restrictions for individuals in from of censorship or control by others, in particular states or, for example, platform operators.

Due to the heterogeneity of the Web3 movement, not all of these values ​​are equally important to everyone in the field. Nevertheless, they describe quite well the mental framework of Web3 enthusiasts and their view on the current problems of the Web. But most importantly, they define the technical blueprint for Web3.

A new infrastructure layer

Web3, is sometimes called the "distributed web" or the "decentralized web". As such it uses a primarily blockchain-based backend and infrastructure layer that builds on existing network technologies. It aims to transform the Internet in a radically decentralized and ownership-individualized way. The processes and structures that are required for individuals to be able to act within this new infrastructure are typically implemented by decentralized smart contracts and persited decentralized storage systems such as the Interplanetary File System (IPFS).

Content in Web3 is linked to digital identities, which are intended to guarantee the enforcement of property rights to data and content. The digital identity of a person on the Web3 is fundamentally designed as a collection of diverse, potentially unconnected identities: everyone should maintain any number of identities independently of one another and manage and use them autonomously. The digital identity on Web3 is not awarded by a state institution or is expressed through an account with a private provider, but should ideally be created by yourself: it is simply the creation of an or several that is, arbitrary identities.

A decentralized architecture

With all the complexity that modern web applications exhibit today, many are still fundamentally based on a classic three-layer architecture. There is a data layer with a a database, a backend layer that queries the database content, processes it further for the application and the front-end layer running in the user's browser.

The Web3 architecture is much more complex. However, since there are hardly any best practices even standards, there is no definitive archicture, let alone apps. Overall, Web3 is still in a very early, experimental phase, so there are still major changes to a future reference architectures. In principle, however, certain tendencies can still be outlined.

In Web3 there is still a front end, which is displayed in the browser. However, the assets required for this no longer come entirely from a single company's web server, but from a decentralized storage layer such as IPFS (if at all possible).

The IPFS is a peer-to-peer static content storage network. When storing a document in IPFS, the document is given a hash that identifies it and allows it to be downloaded from the network. If you now ask an IPFS node for a file, it first looks in its own cache. If the file isn't there, it queries the other IPFS nodes, which in turn query other nodes until someone can provide the file. The originally requested node saves the file and delivers it. Each IPFS node decides for itself which files it keeps in its own cache and periodically clears its cache. As long as a node can provide a file, it exists on the network. So in order to guarantee the storage of your files in IPFS, you have to run your own node or pay one of the IPFS providers to guarantee this availability.

Unlike most other technologies in the context of Web3, the IPFS is not blockchain-based. It is more like the BitTorrent "network" in which content is also provided decentrally as long as there is at least one "seeder". A BitTorrent seeder is someone who "seeds" by uploading a file, rather than just downloading it (leechers).

All in all, IPFS is not a replacemnt for what traditional web servers do. Because of its structure it does not allow hosting dynamic content for example. IPFS acts more like a kind of Content Delivery Network (CDN), less optimized for speed and scaling, but more for decentralization.

Blockchains

While IPFS is an important building block of Web3, the real "thing" most people talk about in the content of Web3 are blockchains or blockchain-based services. For Web3, these central blockchains are Ethereum or 2nd-layer blockchains based on Ethereum such as Polygon, alongside a few other, smaller blockchains such as Solana.

From a technological point of view, blockchains are linked lists of data blocks that are linked together via their cryptographic hashes, so-called hash chains or hash trees. Public blockchains - as used in Web 3 - are special hash chains because, in addition to the simple data structure, they also implement methods to generate a consensus on what the next block of data should look like in a decentralized network in which the participants neither know nor trust each other. To create trust, a process is known as "mining" is executed. Blockchains therefore primarily guarantee a common database state, a "truth", within the entire network that cannot be doubted or falsified. However, since consensus building only affects the next block in each case, operations such as deleting a block or making a change cannot be carried out. Public blockchains are append-only, meaning you can only add data to them, never change or delete them.

Blockchain participants are rewarded with cryptocurrency for mining a block or including transactions. As a side effect, operations on the blockchain are unusually expensive. For example, on the Ethereum blockchain, a simple transfer of ether from one account to another account in a phase of moderate use of the chain can incur fees worth three-digit Euro amounts.

Smart contracts

In the Web3, blockchains - as in the original blockchain Bitcoin - are not only used for arbitrary data, but primarily as so-called "ledgers". Everything on Web3 is based on the idea of ​​accounts and transactions, because within this model ownership and trading of the digital artefacts can be mapped fairly easily. But even if Web3 uses the native cryptocurrencies of the widespread blockchains - above all Ethereum's ether - as a currency, it's about much more than just digital money.

Much of the hope for a better web rests on "smart contracts". Smart contracts were popularized by the Ethereum blockchain, but can now be found in all modern blockchains. The idea is that a program can be written directly into a blockchain, which will then be executed under certain conditions - similar to a database triggers in databases.

Basically, all blockchains come with a built-in smart contract. For example, you could use smart contracts to implement a type of transfer that only works if both the sender and the recipient agree. But Web3 goes much further than that.

Smart contracts can create their own digital artifacts, known as "tokens". A contract is then responsible for managing the tokens that it generates and, for example, defines the rules according to which the tokens can be transferred. For example, a typical scenario is that the person running the smart contract not only earns on the first sale of a token, but collects a percentage of each resale. This rule is then firmly stored in the code and cannot be changed by an agreement between the trading partners: The associated mantra is "Code is law". This means that the rules of the contract are final and incontestable. There should be no corrective measures such as a jurisdiction that can declare clauses or entire contracts invalid.

NFT

The most popular topic in the content of Web3 today are NFTs. NFT stands for "non-fungible token" - a token that is unique and cannot be copied. However, the uniqueness does not refer to the content of the NFT, but to the digital object itself. If a smart contract generates say 100 NFTs, then the token with ID 29 can only exist once in exactly one account - completely independent of what the contents of the tokens are.

NFTs are mostly associated with digital images. The "Bored Ape Yacht Club" is perhaps the best known of these digital image series. In most cases, the images themselves are stored as static assets in the IPFS – or sometimes even on classic web servers – and the NFT then only contains a link to the image. Because data storage in blockchains is disproportionately expensive due to the limited block sizes and the fees incurred for operations on the chain, NFTs usually only really contain one link. Theoretically, however, it would also be possible to write the referenced object into the NFT yourself - however, this is only doable with small assets such as SVG graphics.

NFTs are intended to map any kind of scarce resource to a blockchain. There are groups that model their membership cards as NFTs and only those who hold such an NFT in their wallet have access to a closed event. A very popular type of NFT in the Web3 context are the ENS tokens. ENS stands for Ethereum Name Service and allows to buy a name like "mama.eth". This name can be used for very different objects: some wallet providers allow direct transfers to an ENS token, so users no longer have to send the long hexadecimal wallet IDs back and forth. However, if you want to host a website under your .eth name, you must either use a special browser for access or integrate an external DNS service provider in your own network, because ICANN has not certified .eth as an official top-level domain.

Distributed Organizations

Smart contracts can not only generate tokens, but even organizations, so-called DAOs. DAO stands for "Digital Autonomous Organization" and describes a form of organization that does not require traditional structures such as a company or an association. The organization and all its processes exist as readable code of the smart contract in a blockchain.

DAOs are used, for example, as an association of investors who deposit amounts of money into the DAO using cryptocurrency, which then invests them fully automatically based on stored rules. A DAO could, among other things, speculate fully automatically with NFTs. However, DAOs should also map governance processes in Web3: In this way, essential infrastructures for the entire Web3 could be placed in the hands of people from the community, who would make decisions within the processes of the DAOs that are transparent and understandable for everyone. This is expected to bring democratization - in contrast to the rule of a few companies, which characterizes the web today.

Nevertheless, there are some large companies that play a central role in Web3. Metamask, for example, is increasingly becoming the standard wallet for many Web3 users, which hides the complexity of dealing with blockchain systems behind a pleasant UI. Opensea has become a large, central marketplace for NFTs. And to even get the cryptocurrency you need to participate in Web3, there are few exchanges like Coinbase or Kraken. And access to the blockchains themselves is often implemented through the APIs of companies such as Infura or Alchemy instead of working directly with the chain.

When it comes to deal with the complex technologies of Web3 and making them accessible to end users and developers, there is a clearly visible tendency to fall back on centralized services.

Conclusion

The Web3 is an attempt to build a new backend for the web. It aims to solve the some of the problems of today's web by using blockchains and peer-to-peer technologies. This is based on the assumption that all relevant processes on the web can be mapped to actions with and on digital tokens.

While blockchains have been known for a long time, the Web3 movement is still relatively young. Therefore, the architecture of Web3 and best practices are still very much in flux and there are no good, practical solutions for quite trivial problems. And also the large costs that arise, especially when interacting with the Ethereum blockchain, are a problem that still has to be solved.

For newcomers, the technical language and the documentation is often difficult to understand. This is a major hurdle for seriously dealing with the technologies of Web3. The high complexity of the technologies and their dependencies mean that many increasingly rely on central service providers who encapsulate this complexity and make it manageable. Whether the Web3 will be able to resist this trend towards centralization remains to be seen.

Source: heise.de