"How is Web3 different from Web2?"

"Web2 is the social, interactive internet dominated by centralised platforms like Google and Facebook. Web3 replaces platform-mediated interactions with peer-to-peer blockchain protocols where users own their data and participate in governance through cryptographic mechanisms."

"What technologies power Web3?"

"Web3 is built on blockchain networks, smart contracts, cryptographic wallets, decentralised storage (IPFS), and token economics. These technologies enable user ownership, permissionless access, and decentralised governance."

Term

Web3: Definition, History, and the Decentralised Internet Vision

Q: "What is Web3?"

"Web3 refers to a proposed next generation of internet architecture characterised by decentralisation, blockchain-based infrastructure, and user ownership of data and digital assets. The term was coined by Gavin Wood, co-founder of Ethereum, in 2014."

Web3 (also written Web 3.0, though distinct from earlier “semantic web” uses of that term) refers to a proposed next generation of internet architecture characterised by decentralisation, blockchain-based infrastructure, and user ownership of data and digital assets. The term was coined by Gavin Wood — co-founder of Ethereum and founder of the Web3 Foundation — in a 2014 article outlining a vision for a “decentralised online ecosystem based on blockchain.”

The Three-Generation Framework

Web3 is most commonly understood by contrast with its predecessors:

Web1 (approximately 1990-2004): Read-Only

The first generation of the World Wide Web was characterised by static content delivered by servers to passive users. Websites were documents — pages of text, images, and hyperlinks. Users consumed content; they did not create it. Interaction was minimal, commerce was nascent, and the architecture was genuinely decentralised in the sense that there was no dominant platform: content was hosted on millions of individual servers, accessed through open protocols (HTTP, SMTP, FTP).

Web2 (approximately 2004-present): Read-Write, Centralised

The second generation of the web enabled user-generated content, social interaction, and two-way participation. Users could write — posting to Facebook, publishing on Twitter, uploading to YouTube, reviewing on Amazon. Web2 created enormous economic value through network effects: the platform with the most users attracts the most content, which attracts more users.

The structural consequence of Web2 is centralisation. A small number of platforms — Google, Meta, Amazon, Apple, Microsoft — control the dominant share of web activity, user data, digital identities, and economic value. Users create content; platforms extract the economic value. The user is not a customer but a product: attention is monetised through surveillance-based advertising.

Web2 also centralised identity. A user’s online identity is controlled by the platforms on which it exists. Account termination — by Meta, Twitter/X, Google, or any other platform — can destroy a user’s digital presence, community, and economic livelihood. There is no portable, platform-independent digital identity.

Web3 (proposed): Read-Write-Own

Web3 proposes a third generation characterised by user ownership of data, digital assets, and identity. The framework adds “own” to Web2’s “read-write”: users not only create content but own it, in the sense that ownership is encoded in a public blockchain rather than recorded in a platform’s private database.

Web3’s foundational technology is the blockchain: a distributed ledger maintained by a decentralised network of nodes, where records (transactions, token ownership, contract state) are immutable and publicly verifiable without trusting any single entity. Smart contracts — self-executing programs deployed to blockchains — enforce agreements and coordinate economic activity without intermediaries.

In the Web3 model:

Digital assets (tokens, NFTs, in-game items) are owned by users through blockchain addresses, not platform accounts.
Financial services (lending, trading, asset management) are provided by open smart contract protocols rather than licensed financial institutions.
Governance of shared infrastructure (protocols, platforms) is conducted through on-chain voting by token holders rather than by corporate management.
Identity is controlled by the user through cryptographic keys, not by platform accounts that can be revoked.

Gavin Wood’s 2014 Definition

The term Web3 was introduced by Gavin Wood in a 2014 post titled “DApps: What Web 3.0 Looks Like,” written while he was serving as Ethereum’s first CTO. Wood described Web3 as an architecture based on “trustless interactions” — where participants in a system could interact without needing to trust each other or any intermediary, because the rules of interaction were enforced by cryptography and public blockchain consensus.

Wood’s formulation was technically specific: Web3 uses end-to-end encrypted messaging (rather than platform-controlled messaging), identity tied to cryptographic keys (rather than platform accounts), consensus-based computation (rather than centralised servers), and blockchain-based asset management (rather than platform-controlled databases). The Web3 Foundation — which Wood subsequently founded and domiciled in Zug, Switzerland — takes its name from this vision.

Wood later founded Polkadot as a practical implementation of the heterogeneous multi-chain Web3 architecture he envisioned: many specialised blockchains, each optimised for specific use cases, connected through a common security and communication layer.

The Role of Blockchains, Tokens, and Smart Contracts

Three technologies are foundational to the Web3 architecture:

Blockchains: Distributed ledgers maintained by decentralised networks of nodes. A blockchain provides a tamper-resistant, publicly verifiable record of state — who owns what, what contracts say, what votes have been cast. The two most significant public blockchains for Web3 are Ethereum (the primary smart contract platform) and the networks built on or connected to it.

Tokens: Cryptographic assets issued and tracked on blockchains. Tokens represent ownership — of currency (ETH, BTC), governance rights (UNI, MKR), access credentials (utility tokens), unique digital assets (NFTs), or shares in real-world assets (tokenised securities). Tokens enable the “own” in “read-write-own”: users hold tokens in self-custodied wallets, controlling their own assets without relying on a platform’s permission.

Smart Contracts: Self-executing programs deployed to blockchains, whose code runs deterministically on every node in the network. Smart contracts enforce rules without human intermediaries: a DeFi lending protocol’s interest rate is set by an algorithm, not a loan officer; an NFT royalty is paid by code, not a royalty accounting department; a DAO governance decision is executed by a smart contract, not a board of directors. Smart contracts are the automation layer that makes trustless applications possible.

Criticisms of Web3

Web3 has attracted substantive criticism from technologists, economists, and policy analysts:

The Decentralisation Critique: Critics argue that Web3 in practice is no more decentralised than Web2. Most users access Ethereum through a handful of RPC providers (Infura, Alchemy); most DeFi TVL is concentrated in a small number of protocols controlled by large token holders; most NFT activity runs through centralised marketplaces (OpenSea, Blur); most stablecoins are issued by centralised entities (Circle, Tether). Decentralisation is asserted more than achieved.

The Scalability Critique: Blockchains are inherently less efficient than centralised databases. Ethereum mainnet processes ~15 TPS (before L2 scaling); Visa processes ~24,000 TPS. The costs of decentralisation — every node storing all state, consensus requiring communication across thousands of nodes — impose performance constraints that centralised systems do not face. Rollup scaling reduces but does not eliminate this gap.

The User Experience Critique: Web3 applications are harder to use than Web2 equivalents. Private key management, wallet software, gas fees, confirmation times, and complex transaction formats create significant barriers for non-technical users. Account abstraction (ERC-4337) and improved wallet software are reducing these barriers, but the gap remains.

The Speculation Critique: Critics argue that most Web3 economic activity is speculative — token prices driven by anticipated future value rather than current utility, NFT markets driven by greater-fool dynamics, DeFi yields sustained by token inflation rather than genuine economic activity. The 2022 bear market, which saw most token prices fall 70-95%, and collapses including Terra/LUNA and FTX, strengthened this critique.

The Environmental Critique: Proof of Work blockchains (including Bitcoin) consume significant electricity. This critique is less applicable to Proof of Stake networks (including Ethereum since the Merge), which consume orders of magnitude less energy.

These criticisms are serious and unresolved. Web3 advocates respond that the technology is early, that scaling solutions are working, that speculation precedes utility adoption (as it did in the early web), and that the decentralisation shortfalls are transitional rather than permanent. The debate is genuine and ongoing.

Web3 in 2026 is best understood not as a completed technological transition but as an ongoing project — an attempt to rebuild internet infrastructure on public blockchain rails, with significant progress in some domains (DeFi, tokenised assets, on-chain governance) and persistent challenges in others (user experience, scalability, genuine decentralisation). Whether the Web3 vision is ultimately achieved, partially achieved, or supplanted by something different remains genuinely uncertain.

Author: Donovan Vanderbilt | The Vanderbilt Portfolio AG, Zurich Published: 24 February 2026

Web3decentralisationblockchainsmart contractsGavin Woodinternet history

Web3: Definition, History, and the Decentralised Internet Vision