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It seems everyone is talking about Web3. But beyond the buzzword, what exactly is Web3?

Many define Web3 in terms of components: cryptocurrencies, NFTs, blockchain, decentralized domains, DAOs, etc. But to my mind, that does not explain in a clear way what makes Web3 fundamentally different from the web of the present and past. Nor does it fully answer what new opportunities Web3 may bring, or new risks it may pose.

So I set out to find answers to questions like the following. How will our online experiences be fundamentally different under Web3? What new things does it make possible? Will Web3 be good or bad for domain name investors?

Web1

Let’s first look at earlier iterations of the web. Web1, usually written as Web 1.0, covers the period from the early web of the mid-1980’s up until about 2004.

The structure of Web1 was influenced by pioneering Internet work at DARPA and key work by the acknowledged inventor of the web, Sir Timothy John Berners-Lee. The basic idea was that different computers could communicate with one another using open protocols, such as HTTP and FTP.

That early web was decentralized, no one owned the protocols, the hardware was in many physical locations, and the content was determined by those who operated the various servers as opposed to a few central authorities.

Commerce under Web1 was in some ways similar to individual physical storefronts, but now serving a global market.

Web1 included the dot com bubble. Accelerating after 1995, funding poured into online businesses, culminating in a peak during 1998-2000, followed by a dramatic collapse, the so-called dot-com bubble. Read more at Investopedia on the dot-com bubble and collapse.

While the early web had some level of interactivity, such as bulletin boards, Web1 was more about reading content, or making purchases, rather than contributing content as an active participant.

Media and interactivity were both limited due to the technologies of the time.

Connections were largely through hyperlinks.

This was an era where type-in traffic was important, and product and service domain names were in hot demand.

While there were numerous search engines in Web1, some of us remember products like AltaVista, they were far different from current search products. Search engines did not drive web traffic to the extent they do today.

In many ways Web1 was a golden era for domain name investment.

Web 2

While the transition to Web2 happened gradually over many years, starting in the early 2000’s, a number of aspects characterized the shift.
  • Online media gradually became richer as bandwidths improved, and devices had color support and better resolutions.
  • Users interacted and created content, from online reviews and comments to blogs, along with image and video sharing.
  • While many of the tech giants have roots in Web1, or even earlier, their dominant positions emerged in Web2. For example, Amazon, although started in 1994, gradually emerged in Web2 as the diverse dominant marketplace that it is today.
  • Google, founded in 1998, quickly rose from startup in to become the world’s most used search engine prior to 2004, and also a dominant player in web advertising. Google has fundamentally changed how people use the web, and which sites get visited.
  • The era of user creation of video content was encouraged by the arrival of YouTube in 2005.
  • Probably no single service signalled the Web1 to Web2 transition more than Facebook, founded in 2004. The era of social interaction was very different from the Web1 internet.
While Web2 stretched from about 2004 to the present, the current Web2 shows more central control and domination of tech giants than was the case in the early years.

Personal data was recognized as having great value for online advertising. Recent years have seen increasing concern over both the misuse of personal data and the regulation of social media. Some have argued that platforms like Facebook and Twitter are over-regulated, while others feel they are not regulated enough.

A small number of tech giants have grown to dominate the stock markets during the second half of Web2. Before the recent pullback, much of the returns in the total stock market in recent years were through valuation increases in less than a dozen tech companies.

The control of the tech giants posed a hazard to those using their services in commerce. It was possible to lose audience and access overnight due to one misstep. This should have been a major push for the need for independent websites on business-owned domain names, to be in control of your business destiny.

Over almost two decades of Web2, it gradually became a rather centrally controlled place, with a handful of tech giants in charge of proprietary protocols, servers, devices, search, and the software that most of us use in our online activity every day. The decentralized world of Web1 became a much more centralized and controlled Web2.

The Roots and Nature of Web3

The roots for Web3 were in blockchain technologies and the cryptocurrency movement. First use of the term Web3 is often attributed to Ethereum co-founder, computer scientist Gavin Wood. In 2014 he said
(Web3 is a) decentralized online ecosystem based on blockchain.

One definition of Web3 is:
A blockchain-integrated internet or an internet where cryptocurrencies and NFTs are built into the platforms you use.

Another way to define Web3 is more tied to some of its elements:
One way to think about Web3 is an internet owned by users. That's the dream of crypto boosters, who say the integration of blockchain technology will lead to an egalitarian internet.

Concern over the power wielded by the tech giants, and support for decentralization ideas in general, set the stage for Web3.

Defining Features Of Web3

To get a bit deeper into understanding Web3, let’s look at its defining characteristics. In writing this section, I found the NFTnow Comprehensive Guide To Web3 really helpful.

Decentralization:
Probably the key characteristic of Web3 is that it is decentralized. Under Web3 there are not centralized servers controlling the traffic and data, but rather blockchain will be used across distributed devices. In a sense, Web3 moves us back to the decentralized nature of Web1, but now with the advances of modern technology.

Individual Ownership:
If not a handful of tech giants owning the hardware, software, protocols, data and more, then who does have ownership? A key idea of Web3 is that individuals own their data and content, and the protocols are open and not proprietary.

I found this description in the article by Randy Ginsburg helpful:
By replacing third parties with the blockchain, Web3 unlocks entirely new business models and value chains, ones where centralized intermediaries are no longer favored. Ultimately, Web3 takes power from the intermediaries and gives it back to individuals.

The Wallet:
As you move around Web3 you need a seamless way to be paid and to pay in Web, the wallet, whether for providing a tip for a contribution, buying or selling a creative work, or something else.

Right now it appears that Ethereum is on track to fill that role in Web3, but whether Ethereum or something else, your wallet is a key part of Web3.

The wallet is uniquely and directly associated with you, and it works seamlessly with all or most of the services on Web3. The wallet holds your cryptocurrency, but also your data and digital content.

One graphic to explain Web3 vs Web 2 illustrates it as attaching your Ethereum wallet, instead of signing into an account at one of the tech giants in Web2.

Permissionless:
Right now when you do commerce on Web2 a large entity, in fact several typically, decide whether to permit that transaction. In Web3
all transactions and interactions on the blockchain are permissionless, meaning they don’t require approval from a trusted third party to be completed.

Truly International
Currently the tech and financial giants constrain possible activity for some. We do not live in a truly equitable digital world. Where you reside will not influence what you can do on Web3, unless governments figure out a way to overcome the aim of Web3.

Decentralized Domain Names

Decentralized naming systems outside the ICANN system have existed for a few years. The main contenders are probably Handshake HNS and Ethereum Name System ENS. This is a helpful comparison of HNS and ENS. Unstoppable Domains is another option outside the centralized ICANN system.

Will Web3 use mainly decentralized domain names? That is not clear. The ENS system allows you to link your Ethereum wallet and ENS name. XYZ was the first ICANN TLD to work with ENS, starting in 2018, but now a number of other extensions, including .com, .net, .app and many others, can be used with ENS. The TLD needs to be DNSSEC enabled – read details here.

While being free from the regulations and control of ICANN is desired by many, without that centralized control there is also potential for various forms of abuse.

Is Web3 The Metaverse?

While the metaverse and Web3 are both being talked about a lot these days, they are not the same thing.

Web3 could support a metaverse experience, but so could a centralized Web2 system. Companies like Meta are banking on playing a big role in the metaverse, while certainly remaining in the centralized Web2 world.

I provided an introduction to the metaverse last year on the NamePros Blog.

Smart Contracts

If you are operating in Web3, the way many things are done will be different. For example, centralized advertising, how you get paid, how you find clients, etc. will all be different.

Fortunately, smart contracts offer the possibility of far more robust, transparent and efficient ways to achieve the same thing.

Smart contracts will play an essential role in Web3, and be particularly advantageous for creatives. As the NFTNow article explains,
Smart contracts are predetermined agreements programmed into a blockchain that automatically executes once specified terms are met. Specifically, with NFTs, smart contracts allow for secondary royalty structures, meaning creators get paid out every time their work switches hands on the open marketplace.

If we applied this to the domain world, it is possible to have a smart contract that would pay someone for name expertise, or to compensate traffic flow akin to parking contracts today. It would also make it easy for a name expert to compensate individuals on Web3 who participated in the equivalent of focus groups or affiliate activity.

Some domain name sellers entertain the idea of being partly compensated for a high-value domain name through some interest in the business that will be built on the name. Smart contracts may make it easier to do this with Web3 businesses in a transparent and secure fashion.

Another way that smart contracts might positively impact the domain aftermarket world is through a transparent, efficient way to fractionally share a basket of high-quality domain names. The NamePros Blog recently covered fractional ownership and domain names as an asset class.

DAOs

The key idea of a decentralized autonomous organization (DAO) is simple: a group of people agree to work on some task, all coordinated with transparent progress through a blockchain.

The blockchain contains the rules, steps, funding, and authentication. Smart contracts can check when certain things have happened, and when they are verified, take some action, such as make payments.

Crowd funding of new ventures, even though not Web3 per se, paved the way for DAOs. They typically involve many people from diverse locations, contributing to a central goal, and often indicate intermediary steps that will happen when a certain level of funding is achieved.

Web3 Storm Clouds

Lack of centralized control and permissions is not necessarily a positive, however. Already in the NFT and cryptocurrency worlds we have seen various forms of abuse. In the decentralized name systems some have purchased domain names that seem in conflict with intellectual property rights of third parties. While UDRP is not applicable in the decentralized naming system, all of the other legal protections still apply.

Web3 will need to worry about issues such as prevention of illegal activity, protection of minors, and much more.

Will Web3 Be Good For Domain Investing?

To me it is far from clear whether Web3 will be good or bad for domain investing.

On the positive side, the return to a less centralized web, absent of domination by a handful of tech giants, can definitely drive the need for domain names.

Also, if the Google stranglehold on search and online advertising is lessened, that could herald increased demand for quality domain names.

Smart contracts can be creatively used in a number of ways that might help compensate domain name owners.

Certainly early-stage Web3 startups have helped drive new interest in .xyz domain names of late. See the NamePros Blog article Past 12 Months of XYZ for an analysis.

On the other hand, will Web3 evolve in ways that, outside a name connected to a wallet, will lessen the importance of domain names?

Will decentralized name systems lessen interest in the centralized domain names held by most investors? Will they lead to confusion that will harm the domain name aftermarket?

Recommended Reading

Here are some resources that I found particularly helpful in researching this article. Share your thoughts on Web3, whether you view it positively or negatively. Do you think it is just a buzzword and will have little true impact, or will it fundamentally change the web?
 
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The views expressed on this page by users and staff are their own, not those of NamePros.

bmugford

www.DataCube.comTop Contributor
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Well written article.

Components of Web3 could have a strong future, but the term itself is basically just some overused startup buzz word, essentially the new version of "game changer", "disrupt", "paradigm shift", etc.

Brad
 

equity78

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TheDomains Staff
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NickB

it's a mysteryTop Contributor
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It's interesting that Web1 was decentralised then shifted to a centralised format and now the next phase is looking to decentralise.......

Give it 20 years or so and another monopoly will have been created within web3 creating a new centralisation and the next generation will begin working on web4 to decentralise it......even though that will probably be a symbiotic web experience - so not to sure how decentralised that will be.....

What goes around comes around I guess.....
 

iTesla

Established Member
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What is the problem?
ICANN can go decentralized at any time and update to web3 then web4 then web5 etc, by providing the same tech.
 

jim h

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Many domains of Web3 is on sale now, and some investors have yet made profits.
Thank you for your article, Sir.
 

topdom

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Great post. Not finished yet, but learned a lot already. Also wondering whether these things have anything to do with new financial/medical/media/energy/.. systems, aliens, great awakening etc.

Having unique wallet is not necessarily a good thing. Sometimes you need fake or temporary accounts, for testing etc.

Blockchain is not necessarily a good thing, whoever controls half of it, controls all. Some say a group in China controls bitcoin, others say NSA controls it. You can mine half of remaining BTCs in one year... So in 1 year they could mine half already while noone knew about btc.
 
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Global Rebrander

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Thanks bob for another great article . Here’s my experience :
I started with handshake about 3/4 months ago. Since it’s still early, many good domains are up for grabs … I have been selling handshake domains on an average $10 dollars per domain. I currently have accumulated 3800+domains with 7373hns which is roughly $500+ And back when I started it we had 4000hns with initial investment of $1000. My biggest sale was like 500hns at that time it was $80. It was wellnessspa/ but I m not in a hurry to sale herbalspa yet. We will see where it goes . But so far the journey has been very very rewarding … by the way I go by the name Trueweb3/🤝
For me web3 is about censorship resistant, Trustless security, self sovereign identity and interoperability
 

owntype

DomainName.comTop Contributor
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Great article, as a traditional .com guy, I learned a lot from the post. Thank you Bob!
 
Web2 or "Web 2.0" as I remember it being called, was also a wave a new and useful technology. Web1 was mostly static web pages or maybe comet cursors hijacking your mouse art. Midi music playing in the background. Web 2.0 was AJAX instead of basic Javascript which mean things like Google being able to autocomplete your search. Businesses were able to stalk you with retargetting ads as you continued across the web.

Web3 needs to be more than just domains on the blockchain. They aren't really offering anything new or maybe I'm just not seeing it yet or properly understanding it. We already have more domain extensions than we could ever use, adding more on the blockchain is just another gimmick. They aren't really offering any new abilities for visitors.

Being decentralized is supposed to help protect the owners from censorship but these domains are still being regulated. If you're paying a company to register and then renew domains, you're still at someone's mercy. Want proof? Unstoppable domains says if you are infringing on someone's trademark then they'll cancel the registration. If your domain can be taken for that then your domain can be taken for other reasons as well.

Edit: I'm not trying to hold back the future. I am looking forward to what Web3 is going to be. I just don't think we're seeing it yet. I may end up grabbing some NFT domains though.
 
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eyedomainous

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Web3 does not exist without the web, so its not really "Decentralized".

Web3 promises new functions in cyberspace. But, decentralized services on a channel do not decentralize that channel, anymore than Channel 5.3 is decentralized from Channel 5. Same dial. Different tuner.
 

Bob Hawkes

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Thanks to all who have contributed to the discussion.

If you are specifically interested in decentralized domain names, rather than web3 more broadly, the link that @equity78 gave above has superb information explained in a clear manner.
https://cointelegraph.com/explained/the-concept-and-future-of-decentralized-web3-domain-names

Personally, I am not sure if decentralized domain names will become mainstream or not, but in any case I think their role in web3 will not be critical. I think that the key features of web3 are possible with traditional names, even though I totally understanding many excited about names outside the ICANN control.

As some have pointed out, even decentralized domain names are centralized to some degree, and I would add that even centralized ICANN-administered domain names are decentralized in many ways.

I am still somewhat on the fence on how critical web3 will be. I think at least some aspects of web3 will become firmly embedded in the next decade in our online experience.

Rightly or wrongly right now many people invest a considerable amount of their time across some combination of FB/Meta, Instagram, Twitter, YouTube, TikTok, LinkedIn, etc. Those companies benefit from the advertising and data essentially on content created by individuals. I think there will continue to be a backlash against that. If in a decentralized world, rather than posting on FB or Twitter or YouTube, the norm became that individuals each had their own personal 'site' (yes on some sort of domain name), they controlled who could interact, and seamless payment, and rich and easy interactions, in control of their own destiny, it would be online presence life changing.

Just as Web3 is in a decentralized sense back to Web1, perhaps the era of the hyperlink as key will return. An open source product that is secure, super easy to use, versatile and widely adopted is what is needed. It should be like I obtain a domain name, I link it to my wallet, I start my content, I reach out to others and they to me, and we each create our own online world, unique to our interests, not under the control of any major company.

Just my Sunday morning musing.

Thanks for all the comments, everyone.

Bob
 
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Web 2.0 also saw the emergence of Web standards.
 
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I am just wondering how Web3 will gain acceptance when people still don't understand blockchain, cryptocurrency, smart contracts, etc.
 

D Haynes

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Having read all that (well written as it was) I still dont really see how web3 is an improvment on web2. I also think that if anyone thinks web3 would'nt eventually become "centralised" or controlled in some way by service providers in the same way web2 is they're either incredibly naive, easily led or plain dumb.
 

buydomainnames

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Actually web1, web2, web3 , web ...xxx , are centralized, they need a data center , single / multi server , etc, to operate as a online services.

Web1 = you have total control for your data , but you should protect it with high cost

Web2 = your data go to big company ( monopoly ), they sell the data to offer advertising , retargetting , etc

Web3 = your data go to trust community , you have same opportunity to use all data based term and services or culture in your community

Web4, web5 , web6, ... etc, = might be we have died , so we can't add a new comment again.
 
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The success of the Web is purely capitalist. Creating a level playing ground for everyone. And the size of the population consuming it. Companies like Amazon, Google, Twitter and Facebook are only successful because they created a product that people like using. Nothing to do with Web1 or Web2. Although Web tech has improved and they are benefiting from it. The bottom line is the people using their services. Whether they use them responsibly or not is another topic. If you don't want to trust a provider with imposing their terms of service on you, like a hosting company, you can go the colocation route which is available now. But the government will always be able to shut you down if they believe you are a problem. And if you have a hypothetical scenario where many users are participating in promulgating data with potential legal repercussions then they all become a target potentially rather than a single entity, like a hosting company or one of their customers. Also, the so-called Dark Web is already doing what Web3 is proposing to do. The question we need to be asking is WHY. Why is this necessary? If we take the capitalist angle away, then what is Web3? In order for the Web to be successful it needs people. If people are not on it, or only a few, it becomes a novelty or a tool for the few. It loses it's commercial incentives. You need startups to have the prospect of becoming corporations or selling to them. People do not care about technology, buzz words, fancy explanations. They care about the experience, the products and services. Web3 may get traction, but I don't see it replacing Web2. At best I see it co-existing with Web2 like the Dark Web. Yet another option for sharing data and transactions.
 
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i miss Web 1.0 honestly
Web 1.0 had some pretty creative and innovative Web design companies like 2Advanced, Kioken, Media Temple, and others, that built some amazing stuff on Flash. But Steve Jobs killed Flash when he returned as CEO and rebooted Apple.
 

bmugford

www.DataCube.comTop Contributor
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i miss Web 1.0 honestly
I miss the internet before social media turned it into the toxic hellhole it is in many ways today. "Web 3.0" is likely going to be a worse experience for the average person.

Brad
 
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I miss the internet before social media turned it into the toxic hellhole it is in many ways today. "Web 3.0" is likely going to be a worse experience for the average person.

Brad
Agree Not everyone deserves platform to publish and spew their garbage. Twitter being the worst. Facebook going to Faceplant on META - Google has become GoTo.com whole homepage is ads and sponsored map placement - puke