The journey from Web1 to Web3
Web1 (roughly 1990-2005) was about open protocols that were decentralized and community-governed. Most of the value accrued to the edges of the network — users and builders.
Web2 (roughly 2005-2020) was about siloed, centralized services run by corporations. Most of the value accrued to a handful of companies like Google, Apple, Amazon, and Facebook.
We are now at the beginning of the web3 era, which combines the decentralized, community-governed ethos of web1 with the advanced, modern functionality of web2.
Web3 is the internet owned by the builders and users, orchestrated with tokens.
Key applications under web3
Decentralized Autonomous Organizations (DAOs)
Decentralized Autonomous Organizations or DAOs are online member-owned communities governed by the consensus of their members instead of centralized leadership. DAOs represent exactly what they’re called, because they are:
- Decentralized—rules can’t be changed by a single individual or centralized party.
- Autonomous—votes are tallied and decisions implemented based on logic written into a smart contract, without human intervention.
- Organizations—entities that coordinate activity among a distributed community of stakeholders.
Decentralized Finance (DeFi)
Decentralized Finance or “DeFi” refers to decentralized applications for finance,
such as saving, lending, and exchange.
Decentralized applications or “dApps” are computer applications whose code is
written in a series of related smart contracts. These contracts are often referred to
collectively as “protocols.” What distinguishes dApps from regular applications is that
they are typically permanent—they will exist as long as the blockchain hosting the
protocol exists and cannot be changed or manipulated by malicious actors. They are
also open, meaning that any computer can participate in the network, and access is
not limited to a single or pre-defined group.
Payment blockchains enable peer-to-peer digital transactions. Prior to bitcoin,
digital payments had to rely on centralized record-keepers, like banks and credit
card companies. Even when you send money through a service like PayPal or
Venmo, what you’re actually sending is an “IOU” that depends on
Cryptocurrencies are like money—they can be considered as a unit of account, store
of value, and medium of exchange within the system—and can transfer actual value
digitally without a centralized third party.
Stablecoin and Central Bank Decentralized Currency (CBDC)
A stablecoin is a privately-issued cryptocurrency that maintains a stable
value relative to another asset, such as the U.S. dollar or Euro, over time. Fiatcollateralized stablecoins—such as those pegged to the U.S. dollar—maintain
fiat asset reserves to match the value of each token issued. Other projects are
collateralized by digital assets or algorithmically stabilized through the automatic
execution of smart contracts.
Central bank digital currencies (CBDCs) are digital currencies that are issued by
governments and that represent sovereign obligations.
Non-fungible Token (NFT)
A non-fungible token (NFT) is a digital asset that is non-fungible, therefore
attaining value due to its uniqueness. For example, an NFT might represent a piece
of unique digital artwork, a Mickey Mantle baseball card, or a share of physical
North Carolina real estate. NFTs can be exchanged in the same manner as any
other token, such as bitcoin.
Squads, an application that can be used to create DAOs on the Solana blockchain