What Is Web3 and Why Does It Matter?
What Is Web3 and Why Does It Matter?

What Is Web3 and Why Does It Matter?

Published Jan 8, 2020Updated Jun 9, 2023


The Internet is a constantly evolving technology that continues to innovate. So far, we’ve experienced Web 1.0 and 2.0, and there’s much discussion of what to expect from Web3. Web 1.0 provided a static experience for users without the ability to create the content-rich sites we have today. Web 2.0 brought us together with social media and dynamic websites, but at the cost of centralization.

Web3 looks to give us control of our online information and also create a semantic web. This means that machines will easily read and process user-generated content. Blockchain will provide the power for decentralization, free digital identities with crypto wallets, and open digital economies.

The ways we interact with the net will become more immersive with 3D options available. The benefits to the user also include efficient browsing, relevant advertising, and improved customer support. Some of the most widely used Web3 technology can be seen with virtual assistants like Siri and Alexa and connected smart homes.


Over the past twenty or so years, the Internet has changed dramatically. We've gone from Internet Relay Chat (IRC) to modern social media platforms. Basic digital payments to sophisticated online banking services. We've even experienced brand new, Internet-based technologies like crypto and blockchain. The Internet has become a vital part of human interactions and connectivity - and continues to evolve. So far, we've seen Web 1.0 and 2.0, but what exactly should we expect from Web3? Let's dive into the details and see what's in store for us.

What is Web3?

Web3 is the next generation of Internet technology that heavily relies on machine learning, artificial intelligence (AI), and blockchain technology. The term was created by Gavin Wood, Polkadot's founder and the co-founder of Ethereum. While Web 2.0 focuses on user-created content hosted on centralized websites, Web3 will give users more control of their online data. 

The movement aims to create open, connected, intelligent websites and web apps with an improved machine-based understanding of data. Decentralization and digital economies also play an important role in Web3, as they allow us to place value on the content created on the net. It's also important to understand that Web3 is a changing concept. There is no single definition, and its exact meaning can differ from person to person.

How does Web3 work?

Web3 aims to provide personalized and relevant information faster through the use of AI and advanced machine learning techniques. Smarter search algorithms and development in Big Data analytics will mean that machines can intuitively understand and recommend content. Web3 will also focus on user-ownership of content and support for accessible digital economies.

Current websites typically display static information or user-driven content, like forums or social media. While this allows data to be published to the masses, it doesn't cater to specific users' needs. A website should tailor the information it provides to each user, similar to the dynamism of real-world human communication. With Web 2.0, once this information is online, users lose ownership and control.

Another key figure in the Web3 concept is computer scientist Tim Berners-Lee, the World Wide Web inventor. He provided his idea of a web future in 1999:

I have a dream for the Web [in which computers] become capable of analyzing all the data on the Web – the content, links, and transactions between people and computers. A "Semantic Web," which makes this possible, has yet to emerge, but when it does, the day-to-day mechanisms of trade, bureaucracy, and our daily lives will be handled by machines talking to machines.

Berners-Lee's vision has since combined with Gavin Wood's message. Here, an ocean of decentralized information will be available to websites and applications. They will understand and use that data meaningfully with individual users. Blockchain acts as a solution for managing this online identity, data, and ownership in a fair manner.

A brief history of the evolution of the web

To understand Web3 better, let's look at where we are now and what we've developed from. Over two decades, we've already seen enormous changes:

Web 1.0

The original Internet provided an experience now known as Web 1.0. The term was coined in 1999 by author and web designer Darci DiNucci when distinguishing between Web 1.0 and Web 2.0. In the early 1990s, websites were built using static HTML pages that could only display information. There was no way for users to change the data or upload their own. Social interactions were limited to simple chat messengers and forums.

Web 2.0

During the late 1990s, a shift towards a more interactive Internet started taking form. With Web 2.0, users were able to interact with websites through databases, server-side processing, forms, and social media. These tools changed the web experience from a static to a dynamic one. 

Web 2.0 brought an increased emphasis on user-generated content and interoperability between different sites and applications. Web 2.0 was less about observation and more about participation. By the mid-2000s, most websites transitioned to Web 2.0, and big tech began building up social networks and cloud-based services.

The future and Web3

The evolution of a semantically intelligent web makes sense when looking at the Internet's history. Data was first statically presented to users. Then users could interact with that data dynamically. Now, algorithms will use all that data to improve user experience and make the web more personalized and familiar. You only need to look at YouTube or Netflix to see the power of algorithms and how they have already improved.

Web3, while not fully defined, can leverage peer-to-peer (P2P) technologies like blockchain, open-source software, virtual reality, the Internet of Things (IoT), and more. Web3 also aims to make the Internet more open and decentralized. In the current framework, users rely on network and cellular providers that access their personal data and information. With the advent of distributed ledger technologies, that soon might change, and users could take back ownership of their data.

To see the main differences between Web 1.0, 2.0, and Web3 at a glance, refer to our table below:

Web 1.0

Web 2.0



Passive interaction for the user

Community platforms and user-generated content

User-ownership for content creators



Dynamic HTML, Javascript,

Blockchain, AI, machine learning

Virtual environments


Some basic 3D use

3D, VR, AR


Obtrusive (banners, etc.)


Targeted based on user behavior

Data storage

Stored on individual websites’ servers

Owned by large tech giants

Distributed across users


Individual users

Specific communities of users 

Interconnected users across multiple platforms and devices


Key features of Web3

Web3 is still far from complete adoption, but its core concepts are mostly already defined. The four topics below are commonly listed as the most important aspects of the Web3 future.

Semantic markup

Over time, machines have improved at understanding the data and content humans create. However, there is still a long way to create a seamless experience where semantics are fully understood. For example, the use of the word "bad" can, in some cases, mean 'good'. For a machine to understand this can be incredibly hard. However, with Big Data and more information to study, AI is beginning to understand better what we write on the web and present it intuitively.

Blockchain and cryptocurrencies

Data ownership, online economies, and decentralization are essential aspects of Gavin Wood's Web3 future. We'll cover the topic in more detail later on, but blockchain provides a tried and tested system to reach many of these goals. The power for anyone to tokenize assets, put information on-chain, and create a digital identity is a huge innovation that lends itself to Web3.

3D visualization and interaction presentation

Put simply, the way the web looks will change hugely. We're already seeing a move towards 3D environments that even incorporate virtual reality. The metaverse is one area pioneering these experiences, and we're already familiar with socializing through 3D video games. The fields of UI and UX also work towards presenting information in more intuitive ways for web users.

Artificial intelligence

Artificial intelligence is the key to turning human-created content into machine-readable data. We're already familiar with customer service bots, but this is just the beginning. AI can both present data to us and sort it, making it a versatile tool for Web3. Best of all, AI will learn and improve itself, reducing the work needed for human development in the future.

What makes Web3 superior to its predecessors?

The combination of Web3’s key features will lead to a variety of benefits in theory. Don’t forget that these will all depend on the success of the underlying technology:

1. No central point of control - Since intermediaries are removed from the equation, they will no longer control user data. This freedom reduces the risk of censorship by governments or corporations and cuts down the effectiveness of Denial-of-Service (DoS) attacks.

2. Increased information interconnectivity - As more products become connected to the Internet, larger data sets provide algorithms with more information to analyze. This can help them deliver more accurate information that accommodates the individual user's specific needs.

3. More efficient browsing - When using search engines, finding the best results have sometimes posed a challenge. However, they have become better at finding semantically-relevant results based on search context and metadata over the years. This results in a more convenient web browsing experience that can help anyone find the exact information they need with ease.

4. Improved advertising and marketing - No one likes being bombarded with online ads. However, if the ads are relevant to your needs, they could be useful instead of being an annoyance. Web3 aims to improve advertising by leveraging smarter AI systems and targeting specific audiences based on consumer data.

5. Better customer support - Customer service is critical for a smooth user experience for websites and web applications. Due to the massive costs, though, many web services that become successful struggle to scale their customer service operations. Using more intelligent chatbots that can talk to multiple customers simultaneously, users can enjoy a superior experience when dealing with support agents.

How does crypto fit into Web3?

Blockchain and crypto have great potential when it comes to Web3. Decentralized networks successfully create incentives for more responsible data ownership, governance, and content creation. Some of its most relevant aspects for Web3 include:

1. Digital crypto wallets - Anyone can create a wallet that allows you to make transactions and acts as a digital identity. There's no need to store your details or create an account with a centralized service provider. You have total control over your wallet, and often the same wallet can be used across multiple blockchains.

2. Decentralization - The transparent spread of information and power across a vast collection of people is simple with blockchain. This is in contrast to Web 2.0, where large tech giants dominate huge areas of our online lives.

3. Digital economies - The ability to own data on a blockchain and use decentralized transactions creates new digital economies. These allow us to easily value and trade online goods, services, and content without the need for banking or personal details. This openness helps improve access to financial services and empowers users to begin earning.

4. Interoperability - On-chain DApps and data are increasingly becoming more compatible. Blockchains built using the Ethereum Virtual Machine can easily support each other's DApps, wallets, and tokens. This helps improve the ubiquity needed for a connected Web3 experience.

Web3 use cases

Although Web3 is still in development, we do have some examples that are already in use today:

Siri & Alexa virtual assistants

Both Apple’s Siri and Amazon’s Alexa offer virtual assistants that check many of the Web3 boxes. AI and natural language processing help both services better understand human voice commands. The more people use Siri and Alexa, the more their AI improves its recommendations and interactions. This makes it a perfect example of a semantically intelligent web app that belongs in the Web3 world.

Connected smart homes

One key feature of Web3 is ubiquity. This means that we can access our data and online services across multiple devices. Systems that control your home’s heating, air conditioning, and other utilities can now do so in a smart and connected manner. Your smart home can tell when you leave, arrive, and how hot or cold you like your house. It can use this information, and more, to create a personalized experience. You can then access this service from your phone or other online devices, no matter where you are.

Closing thoughts

The evolution of the Internet has been a long journey and will surely continue towards further iterations. With the massive explosion of available data, websites and applications are transitioning to a more immersive web experience. While there is still no concrete definition for Web3, the innovations are already in motion. It’s plain to see the direction we are going, and blockchain, of course, looks to be a key part of the Web3 future.