Discussions on Web2 and Web3 have been running rampant.
But if you are like us, you might ask: What is this all about?
In this guide we’ll look at both Web2 and Web3 and highlight how these two concepts differ.
What Is Web2?
Web2 is the version of the internet we know today.
Compared to the original form of the internet, which only allowed for static websites, Web2 introduced new forms of interactivity.
One of the most defining developments of Web2 was the introduction of CSS (Cascading Style Sheets).
CSS allowed developers to create complex design layouts that changed the way websites looked.
With that, we saw the rise of social media platforms such as Facebook, Instagram, Twitter and LinkedIn.
All these platforms have one thing in common: a user profile with login details (mostly username and password) which is setup via email registration.
These platforms also allow for user-generated content that other users can interact with.
Having said that, platforms such as Facebook, Instagram, Twitter and LinkedIn are governed and operated by centralised authorities i.e. corporations.
These corporations use your personal data, activity and content to generate income — mostly through advertising services they offer to companies or individuals that want to run ads.
Your personal data, activity and content are the product these platforms monetise.
Moreover, you don't have a say about the use of your data or an entitlement to the financial returns gained in this sale.
And that’s the main issue people have with Web2.
Centralised corporations get bigger and richer, all off the backs of their users who don't receive anything in return.
What is Web3?
Web3 represents an evolution from Web2.
At its core, Web3 is built on blockchains.
Blockchains such as Ethereum and Solana allow for permissionless and peer-to-peer activities by means of decentralised applications.
In their ideal form, these applications are owned and operated by their users through a decentralised autonomous organisation (DAO).
To interact with decentralised applications, users need non-custodial wallets, making login details obsolete.
Importantly, non-custodial wallets ensure that everything you do and own in Web3 is truly yours.
If someone wants to use your data, activity and content, they’d need to pay you — a stark contrast to Web2.
Both cryptocurrencies and NFTs are the most prominent examples of Web3.
Having said that, Web3 is still in its infancy.
As such, we have only scratched the surface and have yet to see the full potential blockchains have to offer.
Web2 vs. Web3
Both Web2 and Web3 have their strengths and weaknesses.
Let’s take a look at some of these.
Web2 is defined by layout technologies such as CSS and Ajax to provide more dynamic products and services running on relational databases. Web3 still uses common layout technologies, however, the products and services run on blockchains such as Ethereum or Solana.
In Web2, applications, cloud services and platforms are governed and operated by centralised authorities. In Web3, the aim is to manage products and services through peer-to-peer and distributed consensus.
The centralised corporations that run products and services in Web2 need to abide by the law of the jurisdiction they operate in. A consequence of this is that their terms and conditions encompass strict censorship regulations. This makes deplatforming a daily occurrence. As Web3 is decentralised, censorship is not really applicable.
- Ownership & Sovereignty
As mentioned previously, Web2 platforms use your personal data, activity and content to generate a profit. In Web3, however, you own all your personal data, activity and content as a sovereign and can use it to generate a profit for yourself.
- Privacy & Security
Most Web2 products and services require some sort of personal data before you can use them. Naturally, this leads to a lack of privacy. In Web3, you do not need to give up your personal data. However, when criminals hack a decentralised application or your non-custodial wallet, you don’t have any place to turn to though. That’s because no single party is responsible for a truly decentralised application run by a DAO.
- Payments & Transactions
In Web2, payments and transactions occur with government-issued fiat currencies such as $USD which have to settle in a centralised bank. Contrastingly, Web3 relies on cryptocurrencies such as Ether, USDC and Solana for payments and transactions which can be done anonymously and openly.
Conventional Bank vs. Non-Custodial Wallet
Let us apply the above and look at a concrete use case: A conventional bank such as JPMorgan Chase versus a non-custodial wallet such as Glow.
JPMorgan Chase is generally considered to be part of Web2 and more specifically part of centralised finance (CeFi).
Glow is generally considered to be part of Web3 and more specifically part of decentralised finance (DeFi).
Head over to our What is DeFi guide for more details.
If you like to know more about non-custodial wallets, our upcoming Best Solana Wallet guide might be something for you.
Now, let us compare JPMorgan Chase and Glow.
All assets that you have at JPMorgan Chase are under the bank's custody. This means you do not have complete control over your own assets. If JPMorgan Chase chooses to e.g. freeze your assets, they are entitled to do so. Glow, on the other hand, is a non-custodial wallet that stores all your digital assets — meaning you have complete authority over your digital assets at all times.
Conventional banks such as JPMorgan Chase have opening times (9am - 5pm) and are mostly closed on Saturday/Sunday. This means that you are restricted by the bank's opening times when you want to get things done. As Glow is a non-custodial wallet, you are free to interact with any decentralised application (dApp) whenever you want to.
We have all experienced it: Opening a bank account at a conventional bank such as JPMorgan Chase can be strenuous. And when you use services such as transactions, they can be slow — sometimes even taking days to complete. Non-custodial wallets such as Glow complete transactions in seconds, allowing you to rest easy even when you need to undertake cross-border transactions to family and friends.
In many regions people from specific socioeconomic backgrounds cannot open a bank account at conventional banks such as JPMorgan Chase. And even when you have a bank account, you might just have the one on the lowest service tier, meaning you cannot take advantage of all financial services offered. Non-custodial wallets such as Glow are accessible to anyone who has a smartphone and an internet connection. With this comes an accessibility to all DeFi services.
- Informal Settings
Conventional banks such as JPMorgan Chase are known not to work well in informal settings. Non-custodial wallets such as Glow offer a real benefit here:
- (Small) transactions can be handled quickly and inexpensively.
- Expensive cross-border transactions can be bypassed.
- In countries with hyperinflation, such as Turkey, Venezuela or Zimbabwe, access to stablecoins like USDC or USDT can be enormously helpful.
- In countries where groups are oppressed, non-custodial wallets sometimes offer the last possibility of financial freedom.
We hope our guide helped you in understanding the differences between Web2 and Web3.
Disclaimer: This guide is strictly for educational purposes only and doesn’t constitute financial or legal advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.
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