The original internet (Web1) was static — largely a destination for reading things. The evolution to Web2 revolutionized the world: sites became interactive, social media monopolized the scene, and whole new business models popped up. But after that system reached maturity, folks started noticing the cracks.
Google and Meta (the old Facebook) provide “free” services, but users pay in data. These companies make billions selling on information from browsing history, interests, and online behavior to advertisers. Over 80% of Google’s revenue, for instance, continues to be from advertising. This targeting can be efficient, but frequently steps across the line ethically as well as legally. In 2019, Meta was hit with a $5 billion fine by the U.S. Federal Trade Commission — the largest ever imposed related to privacy.
Aside from privacy issues, Web2 businesses are able to modify terms of service at will, limit accounts, or determine what information people are shown. Their algorithms are designed to maximize interaction, even at the cost of disseminating polarizing and sensational “clickbait.” Studies ever more frequently associate heavy use of social media with mental health issues such as anxiety, depression, and low self-esteem.
Can Web3 Change This?
The Web3 vision outlines an alternative model — a decentralized one. Rather than a CEO or board of directors making decisions in secret, token holders control decentralized applications (dApps). Proposals, voting, and alterations occur openly on blockchains.
Imagine Facebook or Google needing user consent before implementing new policies or gathering additional personal information. The size of surveillance advertising today probably wouldn’t be there. At least theoretically, Web3 reduces the dangers imposed by centralization.
The Caveats
Nevertheless, Web3 is not flawless. Most projects that label themselves as “decentralized” are less distributed than they claim to be. Token distributions in networks such as Solana, Avalanche, or Celo typically allocate more than 40% to founders and early backers. While feedback from the community is greater compared to legacy tech companies, insiders retain disproportionate control.
And then there is the financial aspect: for most startups, the only method of producing returns is selling tokens to the general public. This is a market situation in which early entrants tend to amass fortunes while latter-day entrants assume greater risk — recalling the “Wild West” analogy critics tend to invoke.
