Originally posted on Twitter, you can view the full thread on Twitter here
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What is Web3?
Everything you need to know about Web3 in a single thread (with examples!)
Over the last year, you've probably heard the term "Web3" come up in conversation.
This thread will explain the differences between Web1, Web2, & Web3 for you.
By the time you finish this thread you will understand why Web3 will change the world as you know it.
1/ At its most simple form:
Web1 is Read
Web2 is Read > Write
Web3 is Read > Write > Own
But what does that mean, and why is Web3 so exciting...?
Let’s dig in...
2/ Think back to the early internet days. The vast majority of the websites you knew were probably Read-Only.
Read-Only meaning that the webpage’s capability was strictly informational. There would be little to no interaction with the website itself beyond navigation links.
3/ Creating user pages like a profile wasn’t a thing.
Comment sections weren’t a thing either. It was considered a Static site.
This was Web1.
4/ You didn’t have a good search engine to find whatever site you needed. You needed a directory to find the page, and then you typed in the exact URL to get to it.
Your whole school maybe had a couple computers if you’re lucky.
This was the period up until 2005 ish.
5/ After that, a big shift started the period of Web2. This can mainly be attributed to the formation of social media sites and search engines (aka Facebook, MySpace, & Google).
Not only would you Read as a user of a site, but now Read & Write.
6/ Web2 allowed you to add content to the site you were on.
That’s content like user profile pages, comment & blog sections, and uploading files like videos and pictures.
This was a tremendous shift from the previous Web1 times, enabled by advancements in Web1 technologies.
7/ But here’s the BIG ISSUE
For how much value that has been created in Web2, almost none of it is captured by the users.
On top of it, these giant Web2 sites are abusing their powers over the users. Google, FB, etc. own all of the data and content that you’re creating online.
8/ These companies & platforms would be worthless if it weren’t for the users.
Yet the users see no financial gain even though their data & content are the stuff being exploited. Everything you create on those sites is actually rented from those companies & not your property
9/ “But Pat, you & I own the username/handle on those sites. Once I have it, nobody else can take it.”
Yes and no.
Yes, that no other users can take it.
But no, because really it’s like you’re renting the digital real estate on their platform.
10/ Because at their discretion, they can remove your posts, they can shadow ban you so you’re harder to find and the algorithm works against you, or worst of all they can delete your account.
No questions asked, they are the judge, jury, and executioner. (More in quote tweet here)
11/ In Web1 & Web2 the only thing that can really be “owned” digitally is a domain name.
Web3 will be built around the premise that users are both the shareholders and owners instead of the platform itself.
12/ Ownership and Control are both decentralized in Web3.
This will be achieved with tokenization. (More in quote tweet here)
13/ How will that work?
Decentralized Control meaning open protocols or rules (code) that are clearly laid out for everyone to see and cannot be enforced or changed by one centralized authority’s decision.
14/ What would this look like?
An example is if Robinhood says you can trade freely, they can’t go back on their word and freeze trading all of the sudden because it hurts their investors’ bottom lines. (More in quote tweet here)
15/ Instead, the rules of Web3 platforms are governed by decentralized protocols. No changing of the rules because of the preference of the centralized few like Robinhood.
Everything is determined by the protocol rules the community has voted on. This is Decentralized Control.
16/ Decentralized Ownership looks like this:
I launch my Web3 version of Twitter called Patter. Instead of just me and the couple other founders of Patter getting all of the profits, this new structure would compensate all of the users of the platform.
17/ The Patter example protocol might say the profits will be distributed to users based on the % of followers on the platform you have.
So if the platform has 1 million followers, and you have 100k, you would get 10% of any ad revenue Patter makes.
18/ Now you're rewarded for bringing a lot of valuable content to the site, AND you’re directly incentivized to bring more users to grow the site.
Every user becomes part of the platform’s marketing team because they each are financially incentivized to spread the word.
19/ This is an example of Decentralized Ownership.
And the way the ownership is issued and verified is through digital tokens.
20/ Digital Tokens achieve the holy trifecta of Ownership, Liquidity, & Transactability:
Ownership because you can verify who rightfully owns a token.
Liquidity because there are exchanges to cash out if needed.
Transactability because tokens can pay for goods and services.
21/ Chris Dixon @cdixon gives some great context here on the ownership aspect.
Patter has Patcoin. So if we go back to the earlier example, let’s say the platform has made $1 million in profit from the ad revenue. (More in quote tweet here)
22/ Instead of paying your 10% in USD, you get paid in Patcoin. Right now the exchange has a $1 USD to $1 Patcoin rate. So $100k of Patcoin.
23/ But here’s the important part: Patter is still relatively early at only 1 million users. You believe in Patter growing in the future.
By holding onto your Patcoin and not selling, you will ride the rocket up with any growing success.
This rewards early adopters accordingly.
24/ So let’s say the next year the number of users has doubled, now your Patcoin has appreciated to a $2 USD to $1 Patcoin rate.
It’s taboo to say for some reason, but this use-case works just like a stock with the added benefit of fractionalization and instant liquidity.
25/ Tokenization has many great benefits like solving for liquidity problems and others (more detail below).
If you can’t tell yet, this is a @cdixon stan account... (More in quote tweet here)
26/ What happens is these Web2 sites do everything they can to promote users and enable functionality at their start.
But then once they become “too big to fail” they change all of their rules for their best interest, instead of their users.
Web3 fixes this with accountability.
27/ So what happens moving forward? Will Web3 sites wipe Web2 like Google & FB off the map?
I say most likely no, BUT at least it now will hold Web2 sites more accountable to treat their users much better.
And if they still don’t, then goodbye Web2 giants, hello Web3.
28/ If you're interested in more Web3 stuff, these are the best follows out there:
@cdixon
@balajis
@naval
@gregisenberg
@twobitidiot
@punk6529
@MilkRoadDaily by @ShaanVP & @benmlevy
Follow for more plain easy analysis.
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