Over the past year, perhaps no buzzword has generated more buzz in online discussions than “Web3”. Some people call it the future of the Internet, and some say it’s exclusively the domain for cryptobros … but most people just scratch their heads wondering what it is and what has it got to do with pictures of apes? (More of that later)

All three groups have a point.

Web3 is indeed the future of the Internet, though whether it will happen the way it is presently envisaged or not is very much an open question.

Back when the worldwide web was first built by Tim Berners-Lee, it was envisaged as a completely open and accessible system wherein people could share their ideas and information would be free. The reality was that developing for the web in those days required technical skills and resources that were only available to a rarefied subset of geeks or big companies who could hire said geeks. Control of the web was thus centralised by default.

In the so-called “Web 2.0” era (where we are now) social media and blogging platforms emerged that enabled people without technical skills to create their pages and share their data and ideas in just the way envisaged by Berners-Lee. But of course, those platforms were controlled by Big Tech like Facebook (now Meta) and Google (now Alphabet) and others. The open, free and accessible web also ends up centralised in the hands of a few, as do the profits.

What’s more, users are increasingly realising that when they hand their data to those platforms they lose control over it, and they can’t necessarily trust it will be used in their interests. Ownership of data and sovereignty over its use has become a huge issue for many users (indeed we, the users, have become the product).

This is where crypto comes in. While the conversation around Web3 has only heated up since last year, the term was coined as far back as 2014 by Gavin Wood, a cryptocurrency pioneer and the co-founder of Ethereum.

As he imagined it, Web3 is an Internet built around the concept of the blockchain — a secure and decentralised chain of data that is verified by its users, cannot be modified and does not require a third party to maintain. To date, the most widely used applications of blockchain technology have been cryptocurrencies like Ethereum and Bitcoin. Now the focus is on building applications and software on Web3 much like we use today, but with a different set of rules for who the data and profits belong to.

Which is where the pictures of apes come in. Thousands of stylised cartoon apes are being purchased and traded through the “Bored Ape Yacht Club” for large sums of money by corporate titans and Hollywood royalty. This is one of the early examples of Non-Fungible Tokens (NFTs) — digital items whose record of ownership is tied to a blockchain and therefore verifiable. Think of it this way – the real value in the Mona Lisa is in the original that lives in the Louvre, not the copy sitting above your bathroom door. In a world where digital assets are becoming more and more valuable (like a digital twin of a nuclear power plant!), the ability to have unique and clear ownership becomes crucial.

Internet drawings of apes may seem like a light-hearted application of blockchain technology, but they act as a stress test for more serious applications — like smart contracts, which allow parties to negotiate without intermediaries because the entire transaction is verified by the blockchain.

The benefits are self-evident. In a world where people have complete verifiable ownership and control over their digital assets, traditional gatekeepers and intermediaries like governments, financial institutions and corporations — with their own interests and agendas — become less relevant.

Imagine being able to share a video online without any worry about it being stolen and distributed against your will. Imagine being able to monetise your content without having to give a slice to Google or Facebook or Apple. That’s the promise.

Naturally, governments, banks and incumbent corporations are worried. This is why many central banks around the world are investigating digital currencies. The more digital transactions move away from fiat currency, the more governments need to be in the mix somewhere, if only to have an idea of how big the digital economy is. 

It’s also why Facebook rebranded as Meta (well, one of the reasons) and is betting all on its blockchain-driven vision of the “Metaverse”. Mark Zuckerberg envisions a time when people will interact more digitally, and where it will be increasingly important to trust those interactions. Blockchain is a way to facilitate that trust, and Zuckerberg wants Meta to be the facilitator of that blockchain — or someone else will be.

Governments are wary of Web3 because the way it is forming now, it is virtually ungovernable. A lack of regulation looks great for entrepreneurs and innovators wanting to build a new frontier, but it’s also scary for anyone who just wants to live there. People may like the government to get out of the way, but without the security that a legislative framework provides, they may not be game to live in the metaverse.

The other major criticism of Web3 is on environmental grounds. Some blockchains (like Bitcoin) consume an enormous amount of energy, and they only get bigger. According to the Cambridge Bitcoin Electricity Consumption Index, a single Bitcoin transaction uses nearly 2300 kilowatt-hours of electricity — enough to run an average Australian household for 121 days. However, there are a variety of new and revised blockchains (like Silicon Valley darling ‘Solana’) that are built using new technologies that are far less energy intensive. This transition will be important given the growing focus on our environmental impact and for Web3 to become a reality without killing us all.

Web3 has numerous other technical issues that will need to be resolved. It’s hard to get into Web3 tech without encountering a wall of jargon. The danger is that just as Web 1.0 belonged to the high priests who spoke its language, Web3 will end up in the hands of the few who understand it.

Jack Dorsey, a founder of Twitter and now a Web3 proponent with his company Block, warned against this de facto centralisation in a tweet last year: “You don’t own Web3,” he wrote, “VCs and their LPs do. It will never escape their incentives. It’s ultimately a centralized entity with a different label.” Quite a criticism from someone who is actually in favour of the thing.

Web3 offers the promise of something amazing, something revolutionary and something that will genuinely change how we interact with technology and with each other. But, as Dorsey’s tweet tirade concluded: “Know what you’re getting into …”