Building for Web3: Understanding the divergences with Web2

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With the growing popularity of digital assets like cryptocurrencies and venture capital investments in crypto and blockchain firms rising, an increasing number of entrepreneurs and developers are entering this burgeoning space.

However, unlike traditional internet-based or Web2 companies like Meta and YouTube, blockchain-based firms do not follow a specific or standard template.

These companies are trying to create the next generation of the internet known as Web3, where services run on blockchain and are decentralised, all with the aim of revolutionising how people transact online.

Representing a more intuitive, equitable, and connected ecosystem, Web3-focused companies are at the forefront of defining the future of the internet and a lot can be learned by understanding the tenets of building it.

Unlike Web2 behemoths that are largely blamed for being anti-competitive and preying on user-generated content, Web3 startups are opening up new areas of interaction by allowing people to take full control of the platform and decide its future course.

Building for Web3 requires companies and developers to create a network of interconnected computers that will facilitate closer and faster interaction among users rather than centralising content and processing by using huge servers that are completely under their control.

Moreover, these firms aren’t just ceding control but also redistributing profits generated from the business back to the users who have invested in them.

For all these unique aspects to be incorporated, there is a need for a completely new technology that can provide all functionalities of Web2 while eliminating the need for controls or third parties that oversee every aspect of the business.

When the internet transitioned from Web1 to the Web2 era, users could interact with many social media, microblogging, video-sharing, and other platforms, seemingly revolutionising how people communicated and consumed content.

This required Web2 companies to invest in not only developing custom software to power their unique applications but also acquiring processing power and storage space to provide for multi-user access.

Over the past decade or so, cloud computing has helped small businesses to scale up. They no longer needed to pour huge amounts of capital into procuring dedicated servers and instead started subscribing to services provided by Amazon Web Services, Microsoft Azure and IBM Cloud.

As a result of this transition, not only did these companies assume very large importance in the Web2 ecosystem, they also formed a hegemony that has distorted the dynamics of the internet.

For Web3-focused startups, there is a clear need to employ a technology that can facilitate a large number of transactions, mask the identities of users unless there is a need for verification, and rely on its community of users to process transactions native to the platform.

Additionally, since these new-age companies don’t rely on user data for revenue, the need to cut out existing tech giants gains even more relevance.

Introduced by the Bitcoin Whitepaper in 2008, blockchain technology has proved to be the most apt solution for developers of a Web3 future.

By employing cryptographic elements to sign contracts and execute them using a network of computers called nodes, this technology underpinned thousands of decentralised applications that introduced the world to new interpretations of traditional business applications.

Apart from a new asset class of cryptocurrencies, blockchain technology has helped companies to streamline operations and unlock efficiencies that were previously thought impossible.

Leading cloud service providers have also jumped on to the bandwagon and are providing blockchain-as-a-service (BaaS) to help businesses deploy this distributed ledger technology without undertaking costs or risks involved in setting up their own protocols.

Companies that are committed to innovating for Web3 can choose to set up their own scaling solutions by building upon existing protocols such as Ethereum instead of relying on BaaS providers.

Either way, entrepreneurs and developers have a clear answer to the decentralisation problem and will definitely need to build a peer-to-peer (P2P) network using blockchain technology to power their journey into the future of the internet.

While blockchain technology will undoubtedly form the core structure of any Web3 application or service, the role of interactive and immersive technologies such as artificial intelligence, augmented reality and virtual reality cannot be side-stepped.

By drawing inspiration from human behaviour, AI enables a higher degree of customisation and will allow Web3 users to personalise their experiences based on factors that are more important or relevant to them. Thus, users could have unique experiences through the same platform, thereby helping companies cater to a wider global audience.

Moreover, by using AI-enabled devices that are connected to the internet, people can interact with cars, gaming sets, manufacturing setups, and other previously isolated machines to enjoy a more connected experience through handheld devices or wearables like VR goggles.

To heighten the visual experience, AR and VR technologies will be critical for applications where people would be able to ‘touch and feel’ via the internet.

While there are an array of AI, VR, and AR products available, Web3 entrepreneurs will need to incorporate them into their platforms and deliver a future-ready experience that won't be constricted by geographical, cultural, or social boundaries.