WWCode Talks Tech #8: The Web3 World: An Equitable Internet for All
Written by Sanaya Mirpuri
Sanaya Mirpuri, Software Engineer at Warby Parker
I've been working in the crypto blockchain ecosystem for the last five years. I want to discuss the world of Web3, the evolution of the web, and high-level information on what constitutes a decentralized protocol. A British scientist named Tim Berners-Lee invented the world wide web. When the web turned 30, Tim noted, "…this is not the web we wanted." To dig into what Tim was referencing and to understand what Web3 really means, we first have to take a look into the evolution of the web. Before the web, there was the internet. The internet was actually invented in the '70s during the peak of the Cold War between the USA and the USSR. The United States built a decentralized system of many computers distributed across the country solely to combat the fear of an attack that may happen on their existing centralized computer, controlling its nuclear weapons.
This is where the idea of decentralization dates back to. Fast forward to Web 1.0. Web 1.0 were the good old days. Absolutely terrible user experience, but it was the days when new browsers like Mosaic and Microsoft Internet Explorer brought the web to the mainstream audience. I'm talking about those dial-up connections, beep boo beep beep days when we would actually surf the internet. The beauty though of Web 1.0 was that it was decentralized, open source, and read-only, but it had the narrative there. All of this changed with the birth of Web 2.0. The rise of the web was largely driven by three core layers of innovation: Mobile, social, and cloud. With the launch of the iPhone in 2007, mobile internet access drastically broadened both the user base and the usage of the web. Social networks like Facebook, Twitter, and YouTube, began to really change the narrative. Cloud essentially commoditized the production and maintenance of these applications. As these applications grew, we started drifting away from the web's original decentralized vision.
The idea of Web 3.0 was born and in many ways, was the return to Tim's original web, where no permission is needed from a central authority to post anything. As told by the legend himself, it's a leap forward to open trust-less and permissionless networks. Open, in that they're built from open source software, built by an open and accessible community of developers. Trust-less, in that the network itself allows participants to interact publicly or privately without a trusted third party. Permissionless, in that both users and suppliers can participate without a governing body. All powered by the blockchain.
Decentralized networks, disrupting current centralized models, offer a very unique potential to support societal fairness, information accessibility, and security, combined with business innovation. Blockchain technology is a pillar and a leading concept within decentralized networks. They serve as a shared database across the network where information cannot be hampered once stored and verified. Before we delve into the blockchain though, we really need to understand the semantics of the notion of a ledger. Ledgers have been used for centuries to record transactions. A blockchain is a distributed ledger. This distributed ledger is formed by a number of blocks linked together to form a chain. Each block in the chain represents transaction data. Blocks are arranged in a linear sequence over time, forming the blockchain. There are three main properties of blockchain technology that have helped it gain widespread acclaim. The first is decentralization. Before Bitcoin came along, we were more used to centralized services. When you Google search for something, you send a query to the server who then gets back at you with the relevant information. This is a simple centralized system.
In a decentralized system, the information is not stored by one single entity. Everyone in the network owns the information. In a decentralized network, if you want to interact with your friend, then you can do so directly without going through a third party. The next pillar, transparency, is actually one of the most captivating and misinterpreted ideas in blockchain technology today. A person's identity is hidden via complex cryptography and represented only by their public address. So while the person's real identity is secure, you will still see all the transactions that were done by their public address. Truthfully, this element of straightforwardness has never occurred inside a financial context, which is what makes the technology just so beautiful. The transparency aspect makes it pretty much impossible to fake transactions or to engage in any sort of shady business. It forces a level of honesty we have never been required to participate in.
The third and final pillar of blockchain technology is immutability. This means that once something has been entered into the blockchain, it cannot be tampered with. The reason why the blockchain gets this property is because of the cryptographic hash function. In simple terms, hashing means taking an input string of any length and giving out an output of a fixed length. In the context you may be familiar with, of cryptocurrencies like Bitcoin, transactions are taken as input and run through a hashing algorithm. Bitcoin actually uses an algorithm called SHA-256. A unique hash is added to every block and each block is connected to the previous one. It also contains the hash from the block before it. It's just a chain of hashes. The beauty of this though is that if any information inside a block changes, the hash of the block changes too.
If a malicious user tries to falsify information, change information, or anything of that sort, the block's hash will no longer match the one reflected in the following block. This is what makes information inside the blockchain difficult to tamper with. Now you know the three pillars of blockchain technology. In order to really understand how this works, we must also understand how transactions on a blockchain are verified. In the ecosystem today, there are two main models that dictate how consensus is achieved on the blockchain. The first is proof of work and the second is proof of stake. The first block in a proof of work blockchain is hard coded into software, and it's named the Genesis block, also known as block zero. In proof of work, miners or their computers to be precise, try to solve hideously difficult puzzles, mathematical puzzles, in order to be the first to complete a block of transactions. The winning hash is subsequently broadcasted to the network for other miners to verify whether the solution is true or not.
If correct, the block gets added to the blockchain and the miner gets compensated with a block reward. On the flip side, let's talk about proof of stake. Proof of stake is a modification of the proof of work, but as a means to solve its perceived dependency on energy consumption. Rather than relying on computers racing to generate the appropriate hash, the idea behind proof of stake protocol is that participation is determined by ownership of the coin supply. Using a set of factors determined by the protocol, the proof of stake algorithm just pseudo-randomly selects a node, AKA computer, AKA anyone who owns the coin, to propose the next block to the blockchain. When a node gets elected, its role is to verify the validity of the transactions within the block, sign it, and propose the block to the network for validation. Similar to the proof of work algorithm, the staker then gets awarded in a payout in the native token.
Let's talk about why web 3.0 matters. The fourth coming wave of web 3.0 goes far beyond the initial use case of cryptocurrencies. Web 3.0 will fundamentally expand the scale and the scope of both human and machine interactions far beyond what we can imagine today. These interactions, ranging from seamless payments to richer information flows to trusted data transfers, will become possible with a vastly increased range of potential counterparties. Web 3.0 will also enable us to interact with any individual or machine in the world without having to pass through fee-charging middlemen. This shift is essentially going to enable a whole new wave of previously unimaginable businesses and business models: From global cooperatives to decentralized autonomous organizations. The potential and the use cases with this are absolutely endless.
We can also future-proof entrepreneurial and investment activities by virtually eradicating the platform dependency risks we observe today. We can own our own data and our own digital footprints by using a provable digital scarcity of data and potentially tokenized digital assets. Through the richness of interactions now possible, and the global scope of counterparties available, web 3.0 will cryptographically connect data from individuals, corporations, and machines with efficient machine learning algorithms. This will lead to the rise of fundamentally new markets and associated business models.