Let us understand this from web2.
For starters, web2 is server-client oriented, meaning centralized private corporations manage and own data. This implies that all power is monopolized by the corporations thus restricting the entry of viable competitors. Centralized corporations including the financial and banking systems control applications in web2.
Web3 then came in, and through the utilization of distributed ledgers, Blockchain being the major, web3 is set to break the monopoly of power created by the centralized server-client system. Now data will be dispersed to a decentralized computer network and the centralized bodies which acted as intermediaries will be eliminated.
Web2
One of the most common web2 applications is the centralized banks which require one to give out their personal information or data as a requirement so as to execute a transaction that is involved between two banks or two individuals. Here the banks act as intermediaries. Therefore the user relies on the banks to effectuate the transactions and the banks end up charging a fee for this service.
Web3
Through web3 users are in charge of their own transactions. No intermediaries are required here. Users can transact through a decentralized Blockchain such as Binance Smart Chain to verify transactions. Users do not have to share their data and transactions are done at a lower cost.
Web 3 application.
Decentralized applications constitute a peer-to-peer (p2p) network based on Blockchain technology meaning they do not need central banks. Applications such as decentralized financial applications (DeFi) run on Blockchain. Smart contracts have replaced central intermediaries like banks and are creating a network where trust is assured, thus creating a more efficient and cheaper value chain.
NFTs are also a web3 application. Non-fungible tokens act as a guarantee of ownership to special identifiable assets like artwork, domain, or graphics. Due to their distinctiveness, they offer transparency which is a key element in the web3 application.
Traditional corporate hierarchies with centralized ownership could be replaced with Decentralized Autonomous Organizations (DAO) through web3. DAO is characterized by a governance mechanism that is based on tokens. Decisions are democratically made through voting and the voting right is based on the number of tokens one owns. DAO use tokens to compensate their employees. The employees are compensated according to their contribution to the common mission of the DAO with ownership rights in the DAO, in turn creating additional incentives.
Token-based governance organism could be used instead of representative democracy, where representatives are elected to make centralized decisions. Direct democracy could experience revivification in web3.
If all these applications could come together in metaverse, where people trade, learn, play and communicate through virtual reality, then web3 users could be owners of the web3 products unlike in web2, where the users are the products.
So much innovative work needs to be done to realize the web3 vision. Decentralized protocols are most likely to work incorporative with the centralized platforms as the decentralized protocols continue to gain traction in the markets. In web3, early investors are likely to reap big, as compared to web1 and web2, which only benefited the ventures and founders. Web3 benefits everyone making it the next reasonable evolution
