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The Fundamental Concepts of Web3
Web3 is the next generation of the internet. It proposes to solve the problems of Web2 by leveraging decentralized technologies that enable users to interact directly with each other without intermediaries, own their data and digital assets, and participate in new forms of value creation.
Web3 is an idea for a new generation of the internet, which aims to give users more control over their data and content, and create new ways of interacting online. To accomplish this, it uses decentralized technologies like blockchain and cryptocurrencies, which can operate without reliance on a centralized authority.
Web3 is all about putting power back into your hands. Self-custody is a cornerstone value of this new era of the internet, and it means taking personal responsibility for your data and assets.
One way to think of self-custody is like having your own house with a safe. You keep all of your valuables in the safe, and you're the only one who has the combination. This means you don't have to worry about a bank or other intermediary keeping your valuables safe for you. You're in control, and no one can access your valuables without your permission.
- Censorship Resistance: Governments and other central authorities can't seize or freeze your assets, since they don’t have access to them in the first place. That means your assets are truly yours, and you have the freedom to use them as you wish.
- Reduced Counterparty Risk: It eliminates the need for a third party to hold onto your assets or data. This avoids issues with your assets where a custodial service, such as a bank or online platform, goes bankrupt, gets hacked, or engages in fraudulent activity.
Understanding digital ownership is becoming increasingly important as we move towards a more decentralized and digital world. In the era of the internet and smartphones, ownership is no longer just about tangible assets like land or cars; we now live in a world where digital assets can hold just as much value, if not more.
Currently, when you purchase a song or book digitally, you don’t really own it; you’re simply purchasing a license to access it, or rather its contents, on a platform. You have no control over how you use it. With Web3 however, we now have the technology to create unique, verifiable records of digital ownership, and transfer ownership with ease.
For example, you can buy a song or book directly from the creator or another owner digitally, and truly own it. Play a song or read a book on any platform, sell it on a secondary market, or pass it along to a friend - it’s all yours with no vendor lock-in! It's a revolutionary concept that is changing the way we think about ownership and control in the digital age.
In the context of Web3, the term “decentralized” is commonly used. Generally speaking, this term goes hand-in-hand with another term: “blockchain” - a technology we’ll soon formally introduce - which typically operate on decentralized systems; so let’s take a moment to properly define it, and outline its advantages compared to “centralized” systems.
A decentralized system consists of a network of participants that operate and make decisions collaboratively without relying on a central authority or control. In such a system, each participant has equal rights and responsibilities, and the consensus of the network determines the outcome of any decision or action.
In the above definition, participants can either be real people, or computers (or nodes) as is more relevant to this article. Each node is owned and maintained by different, independent parties that are geographically diverse.
- Increased security, as there is no single point of failure or control that can be targeted or exploited by malicious actors
- Increased transparency, since these systems are publicly visible
- Resistance to censorship and corruption, since the network operates with multiple participants on a global scale, and no single entity can shut it down
- Borderless operation, again due to the globally dispersed network
- Promotes democracy, since all participants in the network can access and influence the network