What Is Web3? Web 3.0 Explained

Phillip Shoemaker
May 21, 2025

Table of Contents

This is Part 2 of our series on the evolution of the World Wide Web For further insights, check out Part 1 and Part 3.

Key Takeaways:

  • Web3, also known as Web 3.0, is the next generation of the internet, designed to create a decentralized, user-centric ecosystem.
  • Unlike Web2, which relies on centralized platforms and services, Web3 empowers users by giving them control over their data, identities, and assets.
  • A key feature of Web3 is interoperability, which enables seamless interaction between different platforms and decentralized applications. This connectivity allows users to easily access and transfer data or assets across various ecosystems, enhancing the overall Web3 experience.

 

The internet has come a long way, and Web3 is now a key player in shaping how we interact online. Unlike earlier versions, Web3 gives users more control over their data, privacy, and online experiences through decentralized technologies like blockchain. But how did we get to this point? To fully appreciate the power of Web3, it’s important to trace the internet’s journey—from its early, static days to the dynamic, interactive platform we use today.

What Is Web3?

Web3 represents the next evolution of the internet, where users—not corporations—are in control of their data, assets, and identities. Built on decentralized technologies like blockchain, Web3 addresses growing concerns over privacy and control that have emerged in the centralized world of Web 2.0, dominated by tech giants. We’ve seen how much power these companies hold over our personal data, and many believe it’s time for a change.

In contrast to Web 2.0, which revolves around platforms like Facebook and Google, Web3 puts us back in charge. While Web 3.0 lays out the broader vision for a more personalized, efficient, and smarter internet, Web3 is the actual framework that brings this vision to life. It uses decentralization to promote transparency, privacy, and security, ultimately empowering us as individuals in our online world.

Evolution of the Internet: From Web 1.0 to Web 3.0

The internet has transformed significantly since its creation, evolving through three key phases: Web 1.0, Web 2.0, and Web 3.0. Each stage represents a shift in how we interact with the web, from static pages to user-driven platforms and, ultimately, to a decentralized ecosystem. Let’s explore these stages:

1. Web 1.0 (The Static Web, 1990s)

In its early days, the internet was primarily made up of static web pages. These pages served as simple information repositories, where users could only consume content. Interaction was minimal, and websites were read-only, offering little engagement.

2. Web 2.0 (The Social Web, 2000s)

With the rise of platforms like Facebook, Twitter, and YouTube, the internet became more interactive. Web 2.0 introduced social media, blogs, and collaborative tools, allowing users to create, share, and interact with content. This era marked the beginning of user-generated content and online communities, but it was also centralized, with tech giants controlling most of the platforms and data.

3. Web 3.0 (The Decentralized Web, 2020s)

The shift to Web 3.0 is defined by decentralization, where control is moved away from a few centralized entities to users themselves. Leveraging blockchain technology, Web 3.0 enables secure, peer-to-peer interactions, greater data privacy, and user ownership. This is a more open, transparent, and user-controlled version of the internet that empowers individuals to control their own identities and assets online.

Web 2.0 vs. Web 3.0: A Table Comparison

To better understand how Web3 differs from Web2, here’s a quick comparison:

Criteria Web 2.0 Web 3.0
Servers/Storage Centralized databases and servers  Decentralized databases via peer-to-peer protocols
Data Ownership Platforms own data (sold for marketing) Users own data (control sharing)
Goal Seamless user interaction User empowerment (data control, monetization)
Payment Systems Fiat currencies (USSD, EUR, GBP)

Cryptocurrencies (Bitcoin, Ethereum, Solana)

Personalization
& Ownership
Cookies track users for personalized content NFTs provide proof of ownership and value for digital assets
Social Networks Social media platforms (Facebook, Twitter, Instagram) Metaverse (merges physical, virtual, augmented reality)
Technologies and Programming Languages HTML, CSS, JavaScript, Ajax AI, Decentralized Protocols, Machine Learning
Features Improved interactions, better acceptance on mobile devices, and the introduction of web applications. AI-powered experiences, smooth interaction
Backend Data Intelligence Relational databases (queries fetch data) Blockchain immutable ledger technology

What Are the Key Features of Web3?

Web3 brings several exciting features that are set to reshape the way we interact online. Here are the key aspects that define Web3:

1. Decentralization

Web3 moves away from the centralized control seen in Web 2.0, where a handful of tech giants control data and platforms. Instead, it leverages blockchain technology to distribute power and ownership across a network of users. This decentralized framework reduces the risks tied to centralized systems, such as data breaches, censorship, and biased decision-making.

2. Blockchain-Based

At the heart of Web3 is blockchain technology, which provides a tamper-proof, distributed ledger for data storage and management. Blockchains enable decentralized applications (DApps) to function without intermediaries, ensuring transparency, immutability, and security for both user data and transactions.

3. Permissionless Access

One of Web3’s core features is permissionless access, which allows users to engage with the web without needing approval from central authorities. This open-access model removes gatekeepers, fostering innovation and creativity by empowering individuals to freely participate in the digital ecosystem.

4. Cryptocurrency Payment System

Web3 introduces cryptocurrency-based payment systems, allowing users to pay with crypto coins or native tokens instead of traditional credit card systems. To facilitate these transactions, users need a blockchain wallet to securely store and manage their digital assets.

5. Trust Minimization

Web3 reduces the need for trust between participants through the use of cryptography and smart contracts. These self-executing contracts, built into the blockchain, automate transactions and eliminate intermediaries, enhancing security, transparency, and efficiency in online interactions.

6. Decentralized Autonomous Organization (DAO)

DAOs represent a new approach to governance in Web3, where decisions are made collectively by the community rather than a central authority. Using smart contracts, DAOs automate decision-making, giving users the ability to vote and participate in the governance of decentralized platforms.

7. Artificial Intelligence (AI)

Web3 also incorporates AI to enhance personalization and efficiency. AI algorithms analyze user data and preferences to provide tailored content, recommendations, and experiences, making the web more relevant and engaging for each individual. In the context of digital identity, AI can help streamline identity verification processes, improve security, and support privacy-preserving technologies, ensuring that users have more control and autonomy over their data in the decentralized Web3 environment.

What Are the Benefits of Web3?

Web3 offers a variety of advantages, including:

  • Transparency for All: With Web3, everything runs on a transparent, auditable blockchain. This means that every transaction and data interaction is visible and can’t be altered, ensuring full accountability.
  • Better Privacy: Unlike Web 2.0 platforms that often profit off your data, Web3 puts you in control. You decide how your personal information is shared and who can access it.
  • More Control Over Your Online Life: Web3 gives you the power to make your own decisions. You can choose which apps, websites, and services you want to use, and you can opt-out of unwanted data collection or tracking.
  • Tailored Experiences: Web3 apps adapt to your preferences. With the help of AI and machine learning, they offer personalized content, recommendations, and services, making your online experience more relevant and engaging.
  • Shared Decision-Making: Governance in Web3 is more democratic. Through Decentralized Autonomous Organizations (DAOs), users can vote on key decisions, shaping the direction of decentralized platforms.
  • Owning Your Digital Identity: In Web3, you control your digital identity. No more relying on centralized systems to manage your data and assets—you’re the one in charge, with the ability to prove ownership of your information.

What Are the Disadvantages of Web3?

While Web3 comes with a lot of exciting potential, there are also some challenges that need to be addressed:

  • Device Compatibility: Web3 apps often require a lot of computing power, especially because they rely on blockchain and AI. This can make it tough for people using older devices with less processing power to fully participate.
  • Learning Curve: Transitioning to Web3 means getting familiar with new ideas and technologies. For many people, understanding blockchain and decentralized systems can be a bit overwhelming at first.
  • Tough to Regulate: Since Web3 is all about decentralization, regulating it becomes tricky. Issues like misinformation, cybercrime, and privacy are harder to tackle without a central authority overseeing things.
  • Ownership Confusion: One of the key ideas of Web3 is user control, but there are still questions about who really owns the data. Even with decentralized systems, some people worry that centralized entities could still hold too much power. Jack Dorsey’s Web5 proposal is trying to address this, focusing on decentralized identifiers and better data storage.

Future of Web3

The future of Web3 is promising, with growing interest from businesses and individuals alike in the decentralized technologies it offers.

In 2023, the global Web3 market was valued at around $2.25 billion. However, it is expected to grow at a compound annual growth rate (CAGR) of 49.3% from 2024 to 2030, potentially reaching $33.53 billion by 2030. This rapid growth is driven by rising demand for decentralized solutions, enhanced data privacy, and continued advancements in blockchain and artificial intelligence technologies.

As Web3 continues to evolve, we can expect more sophisticated Decentralized Applications (DApps) to emerge, meeting a broader range of user needs. Additionally, as Web3 becomes more embedded in everyday life, regulatory frameworks are likely to adapt, striving for a balance between user protection and fostering innovation.

For businesses, the shift to Web3 presents exciting opportunities, particularly with new revenue models rooted in tokenization and decentralized finance (DeFi). Consumers will also benefit, experiencing more secure, inclusive digital spaces and gaining true ownership of their digital assets.

Conclusion

Web 2.0 has revolutionized the internet, making it more interactive and engaging. It has transformed industries like eCommerce, creating countless new opportunities, millionaires, and jobs across the globe.

As we transition into the Web3 era, this evolution promises to enhance our online interactions even further. However, it raises an important question: Is user privacy truly protected, or do concerns like those raised by Jack Dorsey hold merit? Since Web3 is still developing, these questions will likely be addressed as the technology matures. In the meantime, exploring the concept of Web5 may offer additional insights into the future direction of the internet.

Identity.com

Identity.com aligns with the central theme of Web3: decentralization. One of our pursuits is a user-centric internet, where users have control over their data. More reason why Identity.com doesn’t take the back seat in contributing to this future via identity management systems and protocols. In fact, we are a part of the World Wide Web Consortium (W3C), the standards body for the World Wide Web. 

Through our work, Identity.com is helping many businesses by giving their customers a hassle-free identity verification process. Our open-source ecosystem provides access to on-chain and secure identity verification solutions. These solutions improve the user experience and reduce onboarding friction through reusable and interoperable Gateway Passes.

Therefore, if you’re interested in learning more about how we can help you with identity verification and general KYC processes, please don’t hesitate to get in touch. 

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