Month: September 2022

Every technology goes through generational cycles, including the internet. When a critical threshold of upgrades is crossed, it marks the beginning of a new generation. This moment, and its significance for the marketplace, can prove confusing.

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After all, the features that existed in the first generation still exist, only with additional layers. This is what happened when  Web1 morphed into Web2 and now we see this occurring in the shift to Web3. Let’s start differentiating them:

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The Path to Web3 Explained

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In the late-90s, the internet was just starting to go mainstream. The Web1 era was highly decentralized for a couple of reasons:

• Low bandwidth infrastructure (up to 1Mbps) precluded the media-heavy internet as we know it today, with 4K video-streaming platforms.

• Underdeveloped infrastructure went hand-in-hand with simple coding practices. Everyone could learn HTML or copy a template to deploy a website, as they were built Server-side: generating web content and database query on servers.

As a result, Web1 was static, simple, and non-interactive, making it possible for everyone to create their own websites — blogs, news, forums, and yellow pages. Most internet content was centered around personal web pages hosted on ISP-provided servers, often for free.

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Over time, telecom companies built broadband infrastructure (above 10Mbps) and spurred entrepreneurs to develop new ventures that deepened the experience, and the economics, of the internet.

In the late-’00s, ventures such as YouTube and Netflix scaled as they delivered streamed content to the mass market.

More complicated software stacks began to emerge as the internet demonstrated it was a new channel for television, radio, and publishing.

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Customize Stacks

Alongside HTML, the Web2 software stack includes PHP, CSS, JavaScript, Ajax, HTML5, Java, Ruby, and other programming languages.

In essence, Web2 is the merger of Server-side (programs executed on a server) and Client-side (programs executed in a browser) programming, with web browser languages as the starting point:

• Web browser stack: HTML, JavaScript, CSS

• More advanced Server-side and Client-side stack: PHP, JavaScript, Ruby, Python, Java

• Additionally, to scale up web development more easily and maintain large websites, Server-side web frameworks emerged: Django, Ruby on Rails, Laravel, and other scripting libraries.

Web developers often customize their stacks. For example, the MEAN stack consists of MongoDB, Express.js, AngularJS/Angular, and Node.js. Or, they could focus on the MERN stack: MongoDB, Express.js, React, and Node.js.

These programming layers made it possible to create dynamic web content, sandwiched between Client-side and Server-side.

Such platforms manifest as Vimeo, YouTube, Twitter, (Meta) Facebook, and TikTok. All of them have in common increased user interaction and effortless content contribution, enabled by Client-side web stacks.

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Web2 Centralization

Web2 was predicated on raising capital and traditional management of business. That meant centralization.  Additional programming stacks made web content both labor and hosting intensive.

Moreover, no individual or small business could pay for vast months of data traffic delivered through video sharing and social media platforms. On top of that, the network effect took place. Even if someone could clone Twitter, the value of Twitter is not in its software, but in the number of people using it. Even former Twitter CEO, Jack Dorsey, admitted as much.

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In other words, as people became dependent on Web2 platforms, they magnetized them for further growth, dulling even quality competition.

This is best exemplified by companies like Google. It went from a search engine start-up to a go-to platform (Alphabet) for everything under the sun — ad integration and monetization, news aggregation, video-sharing, payment rails, AI, robotics, and smartphones.

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Google’s annual revenue from 2002 to 2021, exemplifying power and wealth concentration during Web2. Source: Statista
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As if corporations in control of user data weren’t enough, an extra problem surfaced — deplatforming and inter-corporate collusion. Companies control who uses their platforms.

In the end, Web2 turned into an ecosystem made up of a handful of tightly-regimented nodes. These nodes make it convenient to interact with the world, but companies control the nodes and can change their policies when they like.

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Web3 Explained

When all is said and done, everything is about the concentration of power. The more a system is centralized, the more it yields lopsided results.

Case in point, when the Federal Reserve started bailing out commercial banks during the Crash of 2008 by pumping $498B into their balance sheets, the Occupy Wall Street movement expressed outrage at the use of taxpayer funding.

Protests and movements come and go, but technology stays. A year after the Great Recession of 2008–09, Bitcoin emerged as peer-to-peer (P2P) digital money, its genesis block directly referencing bank bailouts. Bitcoin emerged as an alternative to central banking.