Web1 (circa 1990-2005) was an open protocol about decentralization and community governance. Most of the value is borne by the edges of the network—users and builders.

Web2 (circa 2005-2020) was about siled, centralized services run by businesses. Most of the value is accumulated by a small number of companies such as Google, Apple, Amazon, and Facebook.

We are now at the beginning of the web3 era, which combines the decentralization, community management ethos of web1 with the advanced, modern features of web2.

Web3 is an internet owned by builders and users, coordinated with tokens.

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Why is web3 important?

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Centralized platforms follow a predictable lifecycle. At first, they did what they could to recruit users and third-party complementers like creators, developers, and businesses.

They do this to strengthen their network effects. As platforms move along the adoption S-curve, their power over users and third parties grows steadily.

When they reach the top of the S-curve, their relationship with network participants changes from positive-sum to zero-sum. In order to continue to grow, data needs to be extracted from users and competition with (former) partners.

Notable examples of this are: Microsoft to Netscape, Google to Yelp, Facebook to Zynga, Twitter to third-party customers, and Epic to Apple.

For third parties, the transition from cooperation to competition feels like a bait and switch. Over time, the best entrepreneurs, developers, and investors have learned not to build on top of centralized platforms. This has stifled innovation.

Now let's talk about web3. In web3, ownership and control are decentralized. Users and builders can own fragments of Internet services by owning tokens, including non-homogeneous (NFTs) and homogeneity.

Tokens give users property rights: the ability to own a piece of the internet.

NFTs give users the ability to own objects, which can be art, photos, code, music, text, game objects, certificates, governance rights, access licenses, and whatever else people dream up next.

NFTs exist on top of blockchains like Ethereum. Ethereum is a decentralized global computer owned and operated by its users.

Blockchains are special computers that anyone can access, but no one can own.

Ethereum is powered by a fungible token, ETH, which is used to incentivize the physical computers that underpin the system. ETH is also the system's native transaction currency, such as NFT purchases.

Users have many ways to acquire fungible and non-fungible tokens. You can buy them, but there are also ways to get them.

Uniswap famously retroactively airdropped 15% of its governance tokens to early adopters of the protocol. Community grants like these are already common in web3 as a way to build goodwill and incentivize adoption.

You can also earn tokens for creative and entrepreneurial activities. For example, people earn about $100 million worth of ETH every day by selling NFTs.

Tokens unite network participants to work towards a common goal - growth of the network and appreciation of the token.

This solves the core problem of the centralized web, which is that value is accumulated by one company, which ultimately plays against its own users and partners.

Before web3, users and builders had to choose between the limited functionality of web1 and the enterprise centralized model of web2.

Web3 offers a new approach, combining the best aspects of previous eras. It's early days for this movement and a great time to get involved.

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