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April 18, 2022

#001: Web 3.0 and the New World


Did you know that there's a new, a more open version of the Internet which was quietly building up behind the shadows and is now finally starting to come up in the forefront?

Some people know it as Web 3.0, some call it the world of crypto, and others might know it as the metaverse. But none of these terms seem to give it a complete picture.

So In this episode let's take a step towards understanding Web 3.0. From its humble beginnings to its ease of use and finally living up to its original ethos, we're going to paint a complete picture of what the internet was, what it has turned into and where are we going ahead in the future. Let's dive into this weird wide world of the World Wide Web.

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Transcript

Episode 1: Web 3.0 and the New World

 

What’s up everybody, this is your friend Roy welcoming you to The MetaRoy Podcast. Every week on this show, we are going to make crypto simple by delving deep into one aspect of the world of crypto. Today we’re going to take a step towards understanding Web 3.0.

 

Before we dive into the mad world of crypto through this podcast, I want all of us to build something. You build your knowledge and you get one friend too. It’s a total win-win. I know, I know, I might be talking to millions of people through this but trust me, everything I say here I am saying directly to you. Which is why I have a request. I want you to extend this friendship and follow me on Apple Podcasts, Spotify, or whichever platform you’re listening to me on. In return I promise you to have your back in anything and everything Web3 has to offer. 

 

Before we start though, just a quick disclaimer. I am not a financial advisor and none of the following content is financial advice. Please do your own due diligence before making any moves in the crypto space.

 

With that out of the way let's get started.

 

What comes to your mind when you hear the word - Internet. Do you see it as a way to get access to information? Learn a new skill? Staying in touch with your near and dear ones? Watching something on YouTube? Online Shopping? Memes?

 

For most of the world out there, the Internet has become synonymous with communication. Social media is the way they get their information, talk to other people, watch videos, and interact with their peers in their daily lives. While others may use the internet for work, meetings, shopping, payments…and many more uses. The internet has truly penetrated each and every aspect of our daily lives.

 

But do you know about the new open Internet that was quietly building up behind the shadows and is now finally starting to come up in the forefront? Some people know it as Web 3.0, some call it the world of crypto, and others might know it as the metaverse. But none of these terms seem to give us the complete picture.

 

In this episode I want to try and give you a complete picture - of what the internet was, what it has turned into and where are we going ahead in the future. Let's dive into this weird wide world of the World Wide Web.

 

The Internet has evolved a lot over the last three decades or so. But let me give you an overall picture first. First there was the Web 1.0 which was more of static web pages with no interactivity. Then around 2004 or so, we got a more interactive version of the internet. And now we are slowly moving towards Web 3.0 - an immersive new world. If I had to give you a high level analogy, I would use an example of the movies. If Web 1.0 represented the black-and-white movie era, Web 2.0 would be the age of color/basic 3D, while Web 3.0 would be CGI and IMAX and immersive experiences such as Virtual Reality. 

 

But before we jump into something that looks straight out of Steven Spielberg’s movie - Ready Player One - which I would definitely recommend for you to watch and understand what the future of the metaverse might look like, let’s take a little stroll down the memory lane to understand where it all started. In 1989, Tim Berners-Lee, a British scientist, had the idea to merge computers, networks and hypertext (which is basically any text with a link) into a powerful and easy to use global information system. With that came the first application built on the internet - the World Wide Web (WWW).

 

You may recall the earliest days of the Internet. I surely do. Connecting to the internet was a complicated process in itself. I remember the modem used to make funny noises while connecting (and I used to imitate that as a kid, *haha*). These were the good old surfing days. You'd dial in. Wait for eternity and even after that, downloading a picture took years. The Google nemesis then was Altavista as the default search engine. Web design wasn’t even the sperm of thought. 

 

For all its shortcomings, Web 1.0 was actually considered decentralized because it was powered by users like you and me who hosted their own content. It was designed to be this giant library of data sourced together on a screen from computers all across the network for users to browse by clicking around linked text and images. And since the code was made freely available, anyone could build their own websites and host them on the web. Web 1.0's decentralized infrastructure was the reason anyone could share information of any kind, to anyone in the world, without the permission of central gatekeepers.

 

Putting stuff online was still difficult, you needed certain technical skills to build your own website. Back in 2003, I remember how I struggled with creating my school website on HTML. Let’s just say, it was not for everyone. 

 

But in just 10 years, we transitioned to the shiny new Web 2.0. And with that the users of the Web had become grouped around winners like YouTube, Facebook and Twitter, pulling in huge numbers of users and talent like how a black-hole pulls everything into it leaving nothing behind. Web 2.0 made it easy for anyone to publish content online. When these barriers came down, users and usage surged. The Internet had something for everyone.



Social media helped us show our faces and emerge from anonymity. We went from sharing photos to online dating pretty soon. Mobile users overtook desktop as we became glued to the screens for the most part of our day. Ecommerce made it easy to buy stuff online without stepping off your couch.

 

Behind all of this, The Internet became centralized. As we suddenly gained access to more people, ideas and technologies than our brains knew what to do with, the central platforms blew up like mushroom clouds, consolidating network effects into monopoly power. 

 

Google, Apple, Facebook, Amazon etc. now control our conversations, searches, content, media and data. They have built entire ecosystems designed to track you, trap you, and extract value out of you. You are the product. The open forum of the Internet has now become a walled garden. Today's Internet is an oligarchy.

 

Locked in, we pay the price not in dollars but in personal data and content. To be mined, sold and fed back into secret algorithms that hijack our attention so we'd give more. All under the veil of "free" and "improving user experience."

 

I’ll explain this with an example of an app we use everyday - WhatsApp. Now networks become exponentially more valuable as they gain more users. You join WhatsApp to talk to your friends. Mom joins WhatsApp to talk to you. Dad joins WhatsApp to talk to mom. Before you know it, the whole world uses WhatsApp. If you want to continue talking to people you can't leave. This is the network effect in short.

 

In February 2021, WhatsApp changed its privacy rules in a take-it-or-leave-it announcement: it would harvest more user data for profit. Millions swore they would ditch the app for more private alternatives — including yours truly. Not enough to escape the network's gravitational pull, it turns out. While many chat on Signal and Telegram these days, few managed to get off WhatsApp completely. You still want to talk to Mom and Mom still wants to talk to Dad.

In this digital era, customer value is a direct function of network size. Users can't leave. Startups can't compete. Media, developers and creators have no choice but to play ball. The network's pull is too strong.

 

We need a new web because the current one is broken. Starting out, the web didn't have a way for exchanging value. People weren't keen on pulling out credit cards online. So the default business model became to attract users with free stuff and sell access to their eyeballs: advertising.

 

Attention became the Internet's native currency. Sites compete for it with algorithmically generated content loops you can't stop scrolling and headlines you can't stop clicking.

 

We are each fed a personalized diet of content that triggers us most. Different opinions have become different facts. And as your alternative reality clashes with mine, Facebook's stock price goes up. The bigger the fire, the higher the profits. Social media brings the world together to tear it apart. Because it's good for business.

 

Platforms own everything you create online. That includes the profile data you fill out, the behavioral data you generate, and the images, videos, songs, status updates and comments you upload. Quite literally so -  whenever you upload anything to an internet platform, the file is copied onto its servers and ownership is passed to the company. It becomes the raw material algorithms mine to generate the attention advertisers pull out their wallets for. 

 

Close to 90% of the web is stored with four hosting providers, the biggest of which is Amazon Web Services (AWS). Their data centers run the sites and apps we use everyday: Facebook, Twitter, Airbnb, Uber, Reddit, Netflix and so on. These companies control the gates to the global marketplace of ideas. And they can censor your accounts, your apps, your websites before you can bat your eye.

 

As if that was not enough, your internet can be censored by your government if you don't play according to their rules. Censorship is now the way to exert control over the population when your government cannot control you. And all it takes is blocking a handful central servers, as governments know all too well to do.

 

To top it all, with all of these billions of devices uploading their data to a handful of giant data centers, it is becoming easier for hackers to steal sensitive information. It means someone  could potentially steal my bank credentials by hacking my smart fridge. It means Russian cyberterrorists can freeze ATMs, shut down railroads and paralyze hospitals in Ukraine by taking control of outdated Windows computers. 

 

If that’s not scary, I don’t know what is. A centralized Internet is a permanent risk.

 

But how did such a beautiful thing turn so dark? How did we get to this point?

 

The founders of the Internet never meant it to be centralized. However they kind of overlooked the core principle of human society - Trust. When you trust someone, you're sure they'll behave along the lines you expect them to.

 

In the early days of human civilization you’d hardly find people dealing outside friends and family. As we started to settle down and move towards agriculture, staying in one place for extended periods of time gave rise to private property and valuable possessions (or stored agricultural output). This also led to an increase in theft and violence. Hence we placed our faith in institutions, like governments, banks, courts, religious places of worship etc. because they gave us a standard narrative of sorts - a story to believe in. By dealing with institutions in between, we could expand the circle of trust in our societies. Because as a civilization we needed to keep records of transactions be it land record, or taxes or anything of that sort.

 

And it seems the online economy could not flourish without these institutions as well. The early web too leaned into the old habit of centralized trust management shortly after its decentralized beginnings.

 

Today's internet institutions have unlocked global business avenues by letting software take care of trust. You get into a stranger’s car to reach somewhere else because Uber’s software assures you that the stranger has been vetted by them as a verified driver. By using Uber’s networked software, two strangers can collaborate and transact at scale in a peer-to-peer manner. The catch however, is that Uber still owns this global network of drivers and even though it does not own the asset which is the cab in this case, it still takes away most of the winnings from this collaboration between you and the driver.

 

But as history repeats itself, every institution that distributes power, money or status eventually falls to bias and corruption. Centralized internet platforms are no exception. We can't trust banks, Facebook and Uber to take care of trust because we can't ultimately trust the individuals that constitute them. Especially when they have become so big that they can bend laws and use their network effects to kill their competition and escape regulatory frameworks.

 

The problem therefore is twofold. Record-keeping helps scale society by constructing a centralized version of the truth large groups of people can agree on. But society can't trust the record keeper because the record keeper is human and humans are naturally selected to be self-interested. 

 

So how do we keep records objective and immune to human biases? We remove humans from the equation altogether. And that is where Web 3.0 comes in.

 

Web 3.0 is a new iteration of the internet that is being built on the foundation of blockchain technology. The blockchain is simply a software that keeps record of transactions. Think of it as a decentralized digital list (ledger) of who holds what in the network. This can be money, property titles, medical records. Anything someone would care to 'own'.

 

Blockchains automate trust. Users don't need to trust record keepers anymore, they can place their faith in the blockchain records because they're verified by the network. A decentralized network. A network that does not allow bad actors to manipulate records. Because there is no central authority with an agenda. The network is governed by a series of participants in the network. Trust is coded into the system itself, distributed across all the network participants. It's a self-governing networked community of people all across the globe. And why do people participate in it? Because it rewards you for maintaining the network. The same way society pays you money for giving it what it needs, blockchains pay you coins for giving the network what it needs.

 

By harnessing the blockchain to “decentralize” management, we are finally able to reduce the control of big corporations, such as Google or Meta, and make the internet more democratic. By being open-source (that is its code is available for the world to see and use, trustless (which means it doesn’t require the support of a trusted intermediary or institution), and permissionless (which means that it is not governed by any one body, but rather by the global network of users) Web 3.0 can finally live upto the original ethos of the internet.

 

Let’s use the O.G. Blockchain Bitcoin to understand how blockchains work to keep track of money transactions. Think of Bitcoin as a giant excel sheet that records every transaction.

 

  • The Bitcoin ledger keeps track of how much currency each user holds
  • The network is maintained by a set of computers who are validating the transactions. They are called miners and they get rewards in Bitcoin for securing the records.
  • Let’s say I want to pay you 1 Bitcoin (BTC)
  • Everyone in the network updates their copy of the ledger with a new block of data that contains a record stating that I paid you 1 BTC.
  • This new block of data is verified and cryptographically secured by miners, who get paid in Bitcoin for their computing power.

 

Now let’s look at the Ethereum network. The idea of a network running applications should sound familiar to you by now. Ethereum is a decentralized alternative for the centralized Internet. A new Internet that is owned by all of its users instead of a single corporate behemoth.

 

If Bitcoin is a spreadsheet, Ethereum is a spreadsheet with macros. Macros are basically applications that you can write to automate tasks in Microsoft Excel. Simply put, Ethereum is a blockchain with its very own programming language. Developers can build applications that help us do tasks. However these applications are decentralized as well and they are called dapps - decentralized apps.

 

For example, if you had to take a loan in the past, you would probably have to approach a central authority like a bank, show them the entire history of your income, your credit history and lots of other stuff before they even consider giving you a loan. With a dapp like Aave or compound you could just add your wallet address and the protocol which is the code behind the application will connect you to a lender in a peer to peer manner and help you get a loans by pledging your securities - let’s say your bitcoin or NFTs or other assets for example, - into the contract. Simply put, it's a decentralized lending system built on the Ethereum blockchain that grants digital asset holders the ability to borrow and lend crypto against security.

 

Like how Bitcoin's blockchain pays BTC for securing the ledger, Ethereum pays Ether (ETH) for executing and verifying the code of decentralized applications. It's like a giant supercomputer made up of all the computers in the Ethereum network.

 

Of course, Ethereum has its own shortcomings but we are slowly and steadily moving to a better version - Ethereum 2.0 so to say. It is definitely going to drive mainstream adoption hard once it gets released. And it is definitely not alone in the game. Other blockchains such as Cardano, Solana etc. have different implementations by themselves. By doing that, they are trying to solve Ethereum’s problems - specifically the blockchain trilemma which we will get to in the next episode on decoding the blockchain. But whoever wins the game, we are going to have a more open version of the internet, that’s for sure.

 

For now the closing thought is that Web 3.0 is essential because it cuts out the middleman and directly connects people to each other. Just as the 2010s were the decade when Web 2.0 became the dominant force in the global business and cultural landscape, it might just be Web 3.0’s turn in the 2020s. Web 3.0 technologies are striving to create a more ‘democratic’ version of the internet. And even corporate giants are feeling the punch. Facebook’s name change to Meta on Oct. 28, 2021, could well turn out to be an early sign that the shift to Web 3.0 is picking up steam. It is after all the new age of the Internet. Unhackable, uncensorable. Governed by its users and rewarding the work the network needs with a native currency. A trinity of Internet, free market and democracy. It's the original vision for the web come true.

 

That’s it for today folks. In the next episode we will dive in deeper to understand all the aspects of what makes a blockchain network so unique and important to Web 3.0. Stay tuned because over the course of this podcast we will explore many other tech innovations that are going to change the way we live in a big way. 

 

I hope you enjoyed this episode about why Web 3.0 came into being. I would love to hear your feedback on this episode. Drop me a comment on my website TheMetaRoy.com, on twitter @TheMetaRoy or through instagram @TheMetaRoy.