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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?
 
The views expressed on this page by users and staff are their own, not those of NamePros.
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1,278
I created my own ENS type of website in the blockchain based on the Fantom network. The bad part is that Fantom network does not allow to use that address to receive payments

The good part is that it can be used to create a domain , add IPFS hosting.

Check it out at https://uncensorabledomains.com - site app to browse the domains is in pending in Chrome store, just submitted today.!
 

HotKey

Made in Canada
Impact
9,902
An impressive write-up Bob. You have a knack for tying various aspects of a subject in together nicely.

I am optimistic on Web3, particularly with the opportunities that come with domain names within that sphere for the end user like crypto payments, or TLD ownership with the ability to run your own registry. I'm also a bit of an early investor in blockchain domains for those reasons.

The progress being made is much like your example of the transition of Web1 to Web2, slowly, gradually, that it just came to be.. rather than a sudden event. Especially if traditional domains like dot-com are able to be "grandfathered" into the new cryptosphere. **see here:
https://cointelegraph.com/news/verisign-wins-us-patent-for-blockchain-powered-domain-names

If a registrant owns example.com, they may wish to be able to use it as their blockchain user address. This enables a human friendly way to interact with other blockchain participants by using domain names as addresses instead of numbers [...] it permits blockchain participants to utilize their web presence, e.g., example.com, as their blockchain presence.

Crazy eh? Written around the same time and pretty much what Unstoppable did with the .crypto extension a couple years ago, and now today with .blockchain.

It can't be denied we are heading into a Web3-centric online experience. the engineering feats that have come along to garner Web3 usage, in my eyes, are technology marvels. Handshake's Beacon browser, for example. It's backwards compatible with current ICANN domains, and perfect resolution of Handshake TLDs and second-level domains. I am very impressed with it.

The Opera browser, HUGE in terms of usage, already natively integrated Unstoppable's Web3 extensions over a year ago. They also announced late last year to have Handshake integration in 2022.

Of note which I haven't seen much ado about is the dot-luxe extension. This is an ICANN-based, traditional domain extension. These people came up with the ability to use domains as human-readable addresses for crypto-payments back in 2018! And blockchain/www interoperability! I think they deserve credit as being one of the earliest adopters of Web3.

I haven't invested in any dot-luxe for the simple reason I don't like to put on the table what I don't eat.

Of other note, web3.com was registered in the 90's.

***
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

🤝

That is some collection. That is also positive news on your TLD sales, well done. Personally I have been strict with my own TLDs. I get weekly offers between 500-1500 HNS but to me it's just too early, this fruit has a bit of ripening to do. That and I probably have less than 50 domains :P

My portfolio is at OutOfThisWorld/

The self-sovereign identity you mention is an interesting implementation- the only thing that kind of annoyed me about it is you have to start from scratch every time you clear cookies/history in the browser. Maybe I'm missing something on how to use it properly. I find it challenging keeping with constant changes behind Handshake tech, but from the very beginning the idea of an extensionless address to me has been at the core of my interest.
 

HotKey

Made in Canada
Impact
9,902
rug pull comes to mind... its hottest trend now
Sure bud. Hey, btw what made you invest in dot-one? Or did you forget your roots so quick? And to any other investor also nervous about the future, remember this: domain foundations begin with you and I, and a belief that there's something there beyond the present for us to speculate and prepare for.
 

alcy

Top Contributor
Impact
34,538
Sure bud. Hey, btw what made you invest in dot-one? Or did you forget your roots so quick? And to any other investor also nervous about the future, remember this: domain foundations begin with you and I, and a belief that there's something there beyond the present for us to speculate and prepare for.

true but we cant put every new invention in same boat... I mean web5... .one... a new apple tree type... new type of gun... etc its diff niches and there are also different levels of quality and potential... so we have to use common sense.. just look around how many scams around..rug pulls etc..for every newish idea that comes out there is 100 scams that come out.
 

Global Rebrander

Established Member
Impact
100
An impressive write-up Bob. You have a knack for tying various aspects of a subject in together nicely.

I am optimistic on Web3, particularly with the opportunities that come with domain names within that sphere for the end user like crypto payments, or TLD ownership with the ability to run your own registry. I'm also a bit of an early investor in blockchain domains for those reasons.

The progress being made is much like your example of the transition of Web1 to Web2, slowly, gradually, that it just came to be.. rather than a sudden event. Especially if traditional domains like dot-com are able to be "grandfathered" into the new cryptosphere. **see here:
https://cointelegraph.com/news/verisign-wins-us-patent-for-blockchain-powered-domain-names



Crazy eh? Written around the same time and pretty much what Unstoppable did with the .crypto extension a couple years ago, and now today with .blockchain.

It can't be denied we are heading into a Web3-centric online experience. the engineering feats that have come along to garner Web3 usage, in my eyes, are technology marvels. Handshake's Beacon browser, for example. It's backwards compatible with current ICANN domains, and perfect resolution of Handshake TLDs and second-level domains. I am very impressed with it.

The Opera browser, HUGE in terms of usage, already natively integrated Unstoppable's Web3 extensions over a year ago. They also announced late last year to have Handshake integration in 2022.

Of note which I haven't seen much ado about is the dot-luxe extension. This is an ICANN-based, traditional domain extension. These people came up with the ability to use domains as human-readable addresses for crypto-payments back in 2018! And blockchain/www interoperability! I think they deserve credit as being one of the earliest adopters of Web3.

I haven't invested in any dot-luxe for the simple reason I don't like to put on the table what I don't eat.

Of other note, web3.com was registered in the 90's.

***

🤝

That is some collection. That is also positive news on your TLD sales, well done. Personally I have been strict with my own TLDs. I get weekly offers between 500-1500 HNS but to me it's just too early, this fruit has a bit of ripening to do. That and I probably have less than 50 domains :P

My portfolio is at OutOfThisWorld/

The self-sovereign identity you mention is an interesting implementation- the only thing that kind of annoyed me about it is you have to start from scratch every time you clear cookies/history in the browser. Maybe I'm missing something on how to use it properly. I find it challenging keeping with constant changes behind Handshake tech, but from the very beginning the idea of an extensionless address to me has been at the core of my interest.
Yeah many cool things on hns and it’s way too early … although small seems you have quality names … let’s see what’s in for the future … no matter who the skeptics are we have michael cyger, andrew rosener and many influential domainers who are open minded about what can disrupt the future
 

Rammbo

Blockchain Domains
Impact
1,185
Uhive is a decentralized social platform tht pays you just for using it. So it’s like being on here, Twitter, Instagram,Snapchat,Facebook or whatever u use and liking of posting ,etc.. u get paid to do what u do anyway. Also the spaces are equivalent to digital real estate. They will be 3d and customizable. Space names can be bought and sold too. Everything is tokenized on the platform . In beta they already have 1 million users. It’s like when Facebook came out ppl were slow to transition because they were use to MySpace .
 

Juspako

New Member
Impact
-1
Actually web1, web2, web3 , web ...xxx , are centralized, they need a data center , single / multi server , etc, to operate as a online services.
One of the defining features of web3 is that there aren't any centralized servers. Data is stored on a decentralized network of nodes.

I think this highlights one of the tangible benefits of web3 - you can store information on a distributed network that can't be taken down. Couple that with the fact that there aren't any renewals needed on the domain names and you get a system where you could store information indefinitely for free.

Consider the archival use cases...legal records, genealogy, etc.
 

Surya Giri Kurniawan

Established Member
Impact
104
Thanks Bob..

The most important word in Metaverse is "The Virtual World"

In virtual world, there are activities the same as in the real world.

There are tradings
There are buildings
There are markets
There are money
There are people
There are transportations
There are even : clubs, church, stores, libraries, schools, universities

In real world, all things we have are called as asset, and currency are called as money. In Metaverse assets are called as NFT, and currency are called as Cryptocurrency

People almost miss understood NFT as picture. NFT are assets on Metaverse.

In virtual world, a man is represented as avatar.

Avatar has assets :

Money are called as Cryptocurrencies
Wearable (clothes, hat, shoes, etc. ) are as Wearable NFT
Furnitures, building materials, are NFTs. A building can be build with alot of parts, each parts are NFTs. You can buy windows, walls, lifts, furnitures, all as NFTs
In Metaverse there are lands, which we can buy. Land is another form of NFT.
There paintings for your house decorations, called as Picture NFTs
There are NFTs to represent people, called as Avatar..

Every virtual world stands on blockchain. Every virtual world have their own currency for trading

- Decentraland on Ethereum, using MANA
- Upland on EOS, using upx
- Sandbox on Ethereum, using SAND
- Sonmium on Ethereum, using CUBE

The question is, which virtual worlds will be the most active virtual worlds? For now, Decentraland, Sandbox are the leaders. Who knows later if Facebook Metaverse can compete them, or not...

I am afraid Domain Name will not been used in Metaverse...

In Metaverse we need avatar, money, land, building, and we can open a store, club, church, school, or everything
 
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