Decentralization, DAOs and the current Web3 concerns

What we call Web3 will be centered on an ecosystem of technology products that are decentralized, based on blockchain networks, interoperable, and without a traditional trusted validator (such as corporations, institutions and government bodies). But exactly what does this mean?

What is Web3?

Web3, a term coined by Gavin Wood, Web3 Foundation president, is the next phase of the internet and, perhaps, of organizing society as a whole. Web1 was the era of open, decentralized protocols, where most online activity involved browsing individual static pages. Web2, which we are now experiencing, is the era of centralization, in which a large part of communication and commerce occurs on captive (closed) platforms and is owned by a handful of technology corporations, subject to centralized control by regulators and government agencies.

In contrast, Web3 aims to solve all the problems that have arisen in Web2 by giving data ownership and power over digital identity, which now belongs to large technology companies, to individual users.

Put another way, Web3 refers to a decentralized online ecosystem based on blockchain. To better understand this, see the figure below for a comparison of the architecture of a Web2 application versus that of a Web3 application.

This means that platforms and applications created on Web3 will not be owned by a central gatekeeper, but by the true owner of the data: the human being. In short, human beings will be the main focus of Web3.

Decentralization and trust on the Web3

Instead of relying on a single, centralized server, Web3 is being built on top of blockchain networks, powered by cryptography that makes it possible to store data across distributed devices (also known as “nodes”) around the world.

And such distributed devices can be anything — computers, laptops or even more robust servers. These devices serve as the framework of blockchain networks, communicating with each other to enable the storage, dissemination and preservation of data transactions without the need for a trusted third-party validator (such as an institution, corporation or government).

In other words, thanks to nodes running blockchain software, a decentralized record of property transfer is now possible, which is unlike anything we have seen before. Now, the way Web2 was built, we had no choice but to hand over our data to technology companies, governments, and their respective centralized storage servers.

So, we needed to trust that these traditional third party validators would use our data in an ethical and secure way. And we were taken by surprise when scandals, such as the Facebook-Cambridge Analytica data scandal, came to light.

In the current structure of the web, it is very easy for our data to be transacted on “behavioural futures markets” without us having any idea this is happening and what impact it has on our lives. Not surprisingly, ownership of our data and decentralized identity, also known as self-sovereign identity, are considered prerequisites to Web3.

The automation of trust with Web3 interoperability

In Web3, self-sovereign identity and data ownership are managed by the indvidual users themselves via digital wallets such as MetaMask (compatible with Ethereum blockchain) or Phantom (compatible with Solana blockchain). These digital wallets work more or less like a wallet in the real world. Thus, a digital wallet serves as proof of your Web3 identity, securely holding both your currency and your data.

This wallet is interoperable, meaning that it can easily be created on the internet and work with various products and systems, allowing the user to choose which decentralized applications have access to their data and identity. Also, all transactions and interactions on the blockchain network are permissionless; they do not need the approval of a trusted third-party validator to be completed. But how important is this?

Today, individuals…