What is Web3? An interpretation of the evolution and future of the decentralized internet

In the wave of the digital age, Web3 has become a focal point of discussion in the fields of technology and finance. But many people are still confused: what exactly is Web3? How does it differ from the internet we are familiar with? Why has this term suddenly become popular recently? In fact, to understand what Web3 is, we need to review the evolution of the internet itself.

The Three Eras of the Internet: From Static to Interactive to Decentralized

The internet was not always as it is now. It has gone through three distinct stages of development, each representing a fundamental shift in how users interact with information.

Web1.0 Era (1994-2004): Read-Only

Web1.0 is the first era of the internet. Although people only started to access the internet around 1994, as early as 1968, the U.S. government launched a project called ARPANET — the precursor to the internet. At that time, ARPANET was a small network composed of a few universities and military contractors used for data exchange.

What are the main features of Web1.0? Simply put, it was “static.” Websites at that time were mainly static HTML pages, and users could only browse information with very limited interaction. Although there were portal sites like AOL, as well as social tools like forums and chat rooms, online payment and transaction functions were almost nonexistent.

Why was that? Because encryption technology at the time was not secure enough to guarantee the safety of online transactions. Pizzahut’s online ordering website launched in 1995 was considered innovative at the time, but interestingly, consumers could only place orders online and had to pay cash in person at the store. This is a true reflection of Web1.0 — with severely limited interactivity.

Web2.0 Era (2004 to present): The Cost of Prosperous Interaction

By around 2004, the internet underwent a revolutionary change. Network speeds increased, fiber optic infrastructure became widespread, search engines became smarter, and users’ demand for social, video, music sharing, and online payments grew significantly. Web2.0 emerged accordingly.

This was the golden age of the internet. Social media platforms like Facebook, Twitter, and MySpace allowed people to share their lives; Google provided convenient information retrieval; YouTube fulfilled video sharing needs; financial institutions like Bank of America introduced more secure encryption payment standards (such as 256-bit AES). User interaction experiences soared, transforming the internet from an “information showcase” into a “social life circle.”

But problems also arose — issues that persist to this day. To enjoy these services, users must hand over their data to centralized giants. Your personal information, browsing history, social connections, and consumption data are all controlled by giants like Facebook, Google, and Amazon. These companies hold absolute power over user data. Just in October 2021, the combined visits to Google, YouTube, Facebook, and Amazon reached 23.56 billion — indicating how many people’s daily internet lives are controlled by these centralized platforms.

What is Web3? A New Paradigm for a Decentralized Internet

In 2008, everything began to change. A person using the pseudonym “Satoshi Nakamoto” published the Bitcoin white paper, proposing a revolutionary idea: we can replace trust with cryptography and distributed networks. He wrote: “We need a cryptographic proof-based, trustless electronic payment system.”

Bitcoin enabled peer-to-peer digital payments, but the real breakthrough came after the invention of smart contracts. In 2014, Gavin Wood, co-founder of Ethereum, redefined the concept of “Web 3.0” proposed by Tim Berners-Lee (the father of the internet) with a new term. He pointed out that Web3 should be a blockchain technology ecosystem based on a “trustless interaction system.” He even gave Web3 a philosophical definition: “Less trust, more facts.”

Simply put, what is Web3? It is a decentralized internet. In Web3, users can interact directly with each other without intermediaries or large platforms. This combines the decentralization of Web1.0 with the rich interactive experience of Web2.0 — users can enjoy social, gaming, financial, and other complex functions while truly owning and controlling their data and assets.

The Technical Foundations of Web3: Blockchain, Smart Contracts, and Oracles

To understand what Web3 is, you need to know its core technological support.

Blockchain is the foundational layer of Web3. It is a highly decentralized, secure network where data is stored in a shared ledger that no centralized entity can control. Blockchain provides a secure execution environment for Web3, enabling the creation, issuance, and trading of encrypted assets, and the operation of smart contracts.

Encrypted assets are digital value carriers. Unlike virtual tokens in the Web2 era (such as game coins), encrypted assets in Web3 are programmable, transparent, and tradable. They can represent investments in projects, be used for payments, or allow holders to participate in project governance.

Smart contracts make blockchain truly “smart.” They are self-executing programs running on the blockchain, following logic like “if X happens, then automatically execute Y.” Through smart contracts, developers can build decentralized applications (dApps) — these applications are not operated by any individual or company but are collectively run by the entire blockchain network.

However, the challenge is that smart contracts need to interact with real-world data. For example, an insurance contract needs to know today’s weather data. This is the role of oracles — they act as bridges between the blockchain and the outside world, securely transmitting real-world data into smart contracts. Chainlink is such a solution, providing financial market data for DeFi applications, random numbers for NFT applications, and weather and flight data for insurance applications.

Practical Applications of Web3: Revolution in Finance and Gaming

Now you might ask: what is Web3, and what is it used for? In fact, Web3 has already demonstrated powerful transformative effects in multiple fields.

DeFi revolution: Web3 allows anyone to participate in financial markets without bank accounts or intermediaries. For example, Aave, a lending protocol integrated with Chainlink oracles, has successfully protected over $12 billion in user assets. Users can lend and borrow directly, with interest rates automatically adjusted by smart contracts, fully transparent and tamper-proof. This is unprecedented in traditional finance.

NFTs and the new world of gaming: NFTs (non-fungible tokens) give digital assets a unique identity. A digital artwork can be proven to be original and unique like a physical object. Projects like Bored Ape Yacht Club (BAYC) have become symbols of digital art. Blockchain games like Axie Infinity allow players to truly own in-game assets and even earn income by playing — fundamentally changing the logic of traditional gaming industries.

Automated parametric insurance: Traditional insurance involves cumbersome claims processes. But in Web3, projects like Arbol use blockchain to realize automated insurance. For example, if a farmer purchases crop insurance, and rainfall drops below a preset 20 inches, Chainlink’s weather data automatically triggers the smart contract to pay the claim immediately — no waiting, no manual review. This model can also be applied to flight insurance, fire insurance, and other fields.

The Future of Web3: From Early Exploration to Mainstream Adoption

Currently, Web3 is still in its early stages of development. But according to Sergey Nazarov, co-founder of Chainlink, the big trend of Web3 has already formed, and the future has enormous potential. He points out that cryptography will eventually permeate all aspects of daily life — from investment, trading, gaming, and art, to education, healthcare, and real estate — no industry will be untouched by Web3’s decentralization spirit.

The key is that the essence of what Web3 is is being increasingly understood: it is not just technological innovation, but a fundamental transformation of trust models. In Web2, we trust brands and companies; in Web3, we trust code and cryptography. The former can be manipulated easily, while the latter is transparent and tamper-proof.

Although Web3 is still far from fully replacing Web2, its direction is clear — to create a more transparent, reliable, and user-friendly internet. Sergey once said something worth remembering: “Web3 will eventually catch up with Web2.0 in speed, efficiency, and cost, but it also has an advantage Web2.0 does not — cryptographic guarantees with minimal trust.” This is the core value of Web3.

From the birth of ARPANET to Web1.0’s static pages, then to Web2.0’s social boom, the internet has been continuously evolving. And Web3 is writing the next chapter of internet development — an era led by users, not platforms.