Web 3.0

Web 3.0 has become an increasingly popular topic as blockchain technology and financial trading products like cryptos and NFTs gain momentum. In light of this hype, our user guide gives an overview of Web 3.0, explaining all the basics including what Web 3.0 is, how it works, its key features and applications, plus considerations for trading. Along the way, we’ll compare Web 3.0 to Web 2.0 and explore the history and future of Web 3.0.

Use our list of top crypto trading brokers below to start speculating on Web 3.0 assets.

What is Web 3.0?

Web 3.0 is the third generation of the web. The web is the foundational layer which determines how the internet operates by providing website and application services. The current version of the web is known as Web 2.0, and Web 3.0 will be its next phase.

While Web 3.0 is evolving no universally accepted definition exists. However, Web 3.0 has core concepts which demonstrate its defining principles. These include decentralisation via blockchain technologies, token-based economics, and smart technologies like artificial intelligence (AI).

Web 3.0 centres on creating a more open and permission-less platform with increased user utility and aims to change how we interact and function online.

History of Web 3.0

Web 3.0 was coined by reporter John Markoff of The New York Times in 2006 and later developed by Ethereum co-founder Gavin Wood in 2014. Wood described Web 3.0 as a ‘decentralised online ecosystem based on blockchain’ generating interest from cryptocurrency enthusiasts, large technology companies, and venture capital firms. Today £22.4 billion is already staked on Web 3.0.

Elements of Web 3.0 were introduced by internet pioneer Tim Berners-Lee in his 2001 research paper that conceptualised the semantic web, a system where computers could understand word meaning. However, while Web 3.0 incorporates the Semantic Web technologies and principles, today it’s only a component of Web 3.0 software.

The web began in 1990 with Web 1.0, shifted to Web 2.0 in 2001 and from 2011 has entered the Web 3.0 era.

How Does Web 3.0 Work?

Web 3.0 possesses similarities to its predecessors but will use and store information in new ways. For example, Web 3.0 will use HTML,(Hypertext Markup Language) a programming language that determines website layout and delivery, like Web 1.0 and Web 2.0. However, Web 3.0 will connect the HTML to data sources through a different decentralised system.

Web 3.0 works through a decentralised blockchain where data is encrypted and can flow directly between peers, removing all central authorities. To self-regulate Web 3.0, Decentralised Autonomous Organisations (DAOs) will operate in the blockchain and govern all functions.

Web 3.0 is highly compatible with cryptocurrency and other DeFi (Decentralised Finance) trading protocols. By design, these decentralised payment methods and currencies are expected to integrate seamlessly into Web 3.0’s equally decentralised system. We can expect to see a strong convergence and symbiotic relationship between crypto, blockchain and Web 3.0 in the future.

Web 2.0 vs Web 3.0

As explained, Web 3.0 is the follow-up to two previous iterations of the web: Web 1.0 and Web 2.0. Below we’ve compared the current generation of the web, Web 2.0 with Web 3.0 to help you learn what may change when trading online in this new era of the web.

Community vs Individual

Web 3.0 has opposite focuses; Web 2.0 is centred on the community while Web 3.0 is geared towards individuals. Web 2.0 was built to make connections easier online. Tim O’Reilly, Web 2.0 innovator described it as a chance to create the ‘web as a platform’. It facilitates greater user input through XML and RSS programming as well as content sharing. As a result, Web 2.0 reviews, group discussions, and forums like Reddit emerged online. Most notably, Web 2.0 gave rise to social media platforms like Instagram. All websites capitalised on Web 2.0’s interactive technology.

Alternatively, Web 3.0 shifts the focus to the individual, empowering them to become active contributors to the web through making curated content and experimenting with different codes. Zhihu, a Chinese question and answers website operates using these Web 3.0 principles as questions are created, answered, edited and organised by its users.

Also, the peer-to-peer networks of Web 3.0 make individuals autonomous, increasing their control over the data and platforms they use. For trading, this also means investors have greater authority over how they trade online and how their data is stored.

Central vs Decentralised

Web 2.0 operates on a largely centralised infrastructure where tech giants like Google, Meta, and Twitter reign over data online. In contrast, Web 3.0 operates on a decentralised network where blockchain technology allows the data to veer away from companies and become an asset for users to trade themselves. The Web 3.0 world will see more decentralised applications (dApps) and products like cryptocurrency and DeFi (decentralised finance) become mainstream. For trading, this means that transactions with no central authority will become commonplace.

Cloud vs AI and ML

Web 2.0 and Web 3.0 use different technologies. Web 2.0’s most prominent technologies Javascript, AJAS, mobile computing, and Cloud facilitate interaction between sites and browsers. Whereas, the cornerstone of Web 3.0 is smart technology. Web 3.0 applies artificial intelligence (AI) and machine learning (ML) to create a more intelligent server that can better understand and accommodate user needs.

Key Features

Below we’ve listed and further explained the defining key features of Web 3.0…

Decentralisation

Decentralisation is the central pillar of Web 3.0 (no pun intended!). With Web 3.0, information is stored in multiple locations simultaneously, placing applications and services on an open-source system. Essentially, this means that data exists on a peer-to-peer network with no third-party involvement, so users maintain data ownership and can log in securely over the internet without being tracked by internet giants like Google.

Semantic Web

The Semantic Web improves web technologies for generating, sharing and connecting content through search and analysis. So Web 3.0’s software can understand word meaning by real language rather than by numbers, tags or basic keywords.

3D Graphics

Web 3.0 trading enables three-dimensional design in websites and applications to create more interactive platforms. 3D graphics on Web 3.0 includes computer games, geospatial contexts, e-commerce galleries, museum tours, plus more. Web 3.0 3D graphics will benefit the architecture industry but also everyday users. Investors and content creators could access enhanced trading tools like 3D graphs, avatars, virtual reality (VR) and augmented reality (AR).

Artificial Intelligence & Machine Learning

On Web 3.0, computers will become more like humans. Through the semantic capabilities and natural language processing on Web 3.0, computers will identify, interpret and analyse information in a more human fashion. Web 3.0 uses ML, a branch of AI, that takes data and algorithms to imitate how humans learn to improve accuracy.

Combined AI and ML will create a faster and more intelligent search engine to improve the overall user experience on Web 3.0.

Connectivity & Ubiquity

With Web 3.0, information is more connected and ubiquitous. Data is accessible everywhere 24/7 across several applications through different devices. Semantic metadata accommodates a new level of connectivity on Web 3.0, allowing more and more devices to connect worldwide like the Internet of Things (IoT). It’s predicted by 2025 there will be 152,200 IoT devices connecting to the internet per minute.

Trust-Less & Permission-Less

The absence of third parties on Web 3.0 make it trust-less and permission-less as users can interact directly without external authorisation. As a result, Web 3.0 applications will operate on blockchains or decentralised peer-to-peer networks to maintain an accurate, secure and decentralised record of transactions, as is seen in the crypto space today.

Regulatory Considerations

Despite all Web 3.0’s innovations, it has regulatory challenges which need fine-tuning and careful consideration to prevent illegal activity.
Many believe the lack of monitoring on Web 3.0 will cause more cyber crimes and online abuse as there are fewer regulations for websites and users. Trading-wise, this could see more fraudulent behaviour and reduce investor protections.

Web 3.0 decentralisation also causes difficulty with government regulations and legal action. For instance, confusion may arise over which countries’ laws apply to websites that host sites in various nations. Likewise, on Web 3.0 individuals are liable as they own their data. This authority has the potential to be misused and allow criminals to be more elusive online and evade charges.

The rules and requirements for Web 3.0 are still developing. Greater restrictions may hinder Web 3.0’s progress, however, regulators must find a balance to avoid results like increased criminal activity.

Web 3.0 Applications & Trading Products

Web 3.0’s advanced features will allow for equally innovative applications, services, trading products and tools to materialise and become more available online, including:

NFTs

Non-fungible tokens (NFTs) are a form of distributed ledger technology (DLT) that enables the trading of digital files like photos, videos and audio. The owned tokens are recorded in a blockchain and sold via popular platforms and exchanges listed below.

Top NFT Trading Platforms

Review

OpenSea is a popular NFT trading platform offering a range of tokens with multiple payment options.

OpenSea is a popular NFT trading platform offering a range of tokens with multiple payment options.

Review

Buy and sell an extensive collection of digital tokens secured using crypto blockchain technology.

Buy and sell an extensive collection of digital tokens secured using crypto blockchain technology.

Review

Nifty Gateway is a leading online marketplace for NFT trading, offering a range of tokens with low fees.

Nifty Gateway is a leading online marketplace for NFT trading, offering a range of tokens with low fees.

Smart Contracts

Using decentralised finance (DeFi) smart contracts allows users to control their funds outside the traditional banking infrastructure by being written in lines of code on a blockchain. Smart contracts are more affordable, impartial and cannot be manipulated once activated.

Cryptocurrency

Cryptocurrencies will become more mainstream with Web 3.0, increasing the availability of crypto trading. They represent an evolution of currency that detaches from the traditional fiat currency with coins like Bitcoin and Ethereum.

DAOs

Decentralised Autonomous Organisations (DAOs) will become the service for governance and structure under Web 3.0. These organisations are computer programs encoded with rules controlled by members rather than a central government.

dApps

Decentralised applications (dApps) are apps built on top of the blockchain to deliver cloud-based services to users without controlling or accessing their data.

Cross-chain Bridges

Cross-chain bridges are the domains which allows interoperability between the multiple blockchains in the Web 3.0 world. This facilitates instantaneous trading and more intuitive online software.

ICOs

Initial Coin Offerings (ICOs) are new cryptocurrency inventions which begin at zero value. They involve trading coins like shares and are popular for startups seeking alternative investment options. Be aware anyone can launch an ICO and under Web 3.0 they are not regulated like traditional IPOs (Initial Public Offering).

Intelligent Search

Machine learning capabilities of Web 3.0 will see more intelligent search tools and browsers similar to Amazon Alexa and Apple Siri. This means Web 3.0 trading online could be as simple as having a conversation, ideal for beginners and even trading dummies!

What Web 3.0 Means for Traders

There are a lot of new features on Web 3.0. But as a trader, you may be thinking, what does Web 3.0 mean for me?

Firstly, as cryptocurrency is at the heart of Web 3.0 finance, traders need to become crypto literate. Crypto exchanges often have several educational resources, such as CoinBase Learn and demo accounts where newbie crypto traders can practise crypto trading.

Moreover, it could be lucrative for traders to invest in cryptocurrency projects to place them in favourable positions when Web 3.0 comes to fruition. For example, cryptos Uniswap, Filecoin, and Polkadot are all contributing to the building of Web 3.0. Traders may also want to diversify their investments to hedge their risks and increase the chances of profits once Web 3.0 becomes mainstream.

As mentioned above, Web 3.0’s features provide a more seamless online trading experience, with faster transactions enabled by its decentralisation and blockchain technology. Equally, Web 3.0 technologies will be accessible on trading platforms so there could come a time when you use avatars, VR, AR and AI when trading.
Most importantly, the blockchains on Web 3.0 means trading could provide more opportunities for profits while also being encrypted and secure. Web 3.0 technology will only encourage greater use of DeFi in online financial markets, potentially leaving banks and other external authorities behind.

Advantages & Disadvantages of Web 3.0 Trading

Like anything, Web 3.0 presents several advantages and disadvantages to trading but also general internet use…

Advantages

• Facilities new technologies and products – Web 3.0 software facilitates pioneering technologies like smart contracts, NFTs and AI.
• Intuitive trading – Web 3.0 features will enhance user interaction on trading platforms, enabling faster transactions and creating a more intuitive investing experience.
• Increased data control – Web 3.0 returns personal data control to individual users, increasing security and diminishing the influence of big tech companies like Google and Meta. Trading under Web 3.0 means investors become the sovereign rather than online brokerages and trading platforms.

Disadvantages

• Privacy concerns – Web 3.0 tolerates a more expansive data collection leading to user privacy concerns.
• Centralisation of wealth – Web 3.0 trading sceptics warn that the new network could result in a centralisation of wealth to a small group of investors and individuals.
• Rise in harmful content and cybercrime – The absence of a central authority will lessen the obstructions for malignant content on Web 3.0, and give way to new manipulation and cybercrime.
• Environmental Issues – Web 3.0’s decentralised methods and blockchain projects use a huge amount of energy unacceptable for the web’s future sustainability. Specifically, this energy is used by the consensus layer of Web 3.0 which ensures security and validation like Bitcoin’s mining process. To put this in perspective, in 2020 alone, 2.5 quintillion bytes of data were generated daily, with 40% being machine-generated.

What’s Next for Web 3.0?

In 2022 Paul Momtaz of the University of California named Web 3.0 as ‘a technological infrastructure that could help [construct] the Metaverse.’ Similar indications like Mark Zuckerberg’s decision to change Facebook to ‘Meta’ suggest the next steps for Web 3.0 will focus on the Metaverse.

The Metaverse is a digital reality that combines aspects of social media, online gaming, AR, VR, and cryptocurrencies, allowing users to interact virtually. By leveraging technologies like blockchain, AI, AR/VR, and IoT, the Metaverse will offer an immersive digital experience combining virtual and digital spaces.

Nevertheless, there are some Web 3.0 sceptics. In 2021 SpaceX and Tesla CEO Elon Musk tweeted that Web 3.0 has become a ‘more marketing buzzword than reality’. Similarly, software engineer Stephen Diehl described Web 3.0 in a blog post as a ‘vapid marketing campaign that attempts to reframe the public’s negative associations of crypto assets’.

American Internet entrepreneur and former Twitter CEO Jack Dorsey, went one step further in discrediting Web 3.0 by launching a rival, Web 5.0. His alternative also relies on blockchain technology but uses Bitcoin as the singular base. Who knows maybe this competition will generate more alternatives like Web 4.0, Web 6.0 or Web 8.0?

Final Thoughts on Web 3.0

Web 3.0 symbolises the next online evolution. Moving from an online resource to a connected cloud-based social network, this next phase of the web pushes the boundaries of technology. It explores immersive experiences in the Metaverse and applies cutting-edge AI and ML to make Web 3.0 the most intelligent machine server yet. It will also likely lead to increased investment and trading opportunities in digital assets. See our list of supporting brokers and exchanges to get started today.

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