Web3 vs. Web2: Blockchain Myths & Unveiling Hidden Truths

Web3 and blockchain technology have been hailed as revolutionary forces that promise to transform the internet. Advocates claim that Web3 will empower users through decentralization, enhance security, and provide greater transparency and privacy. However, let’s peel back the marketing gloss and critically examine these claims.

Centralization Persists

A fundamental premise of Web3 is decentralization via blockchain technology. Yet, many popular Web3 applications still rely on large, centralized intermediaries. For instance:

• Cryptocurrency exchanges like Coinbase and Binance function similarly to traditional banks, acting as custodians of user assets.
• NFT marketplaces like OpenSea use blockchain technology, but transactions flow through centralized servers.
• Numerous crypto and Web3 companies store user data and process transactions using centralized cloud service providers like AWS.

These practices introduce security risks, points of failure, and perpetuate the same intermediary rents that Web3 aimed to eliminate.

Overpromised Security

Web3 promises enhanced security and privacy through encryption and decentralization. However, the track record reveals vulnerabilities:

• DeFi hacks and scams have led to over $3 billion in losses since 2019.
• Allegedly secure smart contracts are routinely found to have vulnerabilities by platforms like CodeHawks and Cyfrinaudits.

Examples of Web3 applications

 Let’s explore additional examples of Web3 applications that showcase the potential of blockchain technology:

1. Decentralized Finance (DeFi):
   • DeFi platforms like Compound, Aave, and MakerDAO enable users to borrow, lend, and earn interest on their crypto assets without intermediaries.
   • Uniswap and SushiSwap are decentralized exchanges (DEXs) that allow users to trade tokens directly from their wallets.
2. Non-Fungible Tokens (NFTs):
   • NFT marketplaces like Rarible, Foundation, and SuperRare facilitate the creation, buying, and selling of unique digital assets.
   • Artists, musicians, and creators use NFTs to tokenize their work and gain ownership control.
3. Decentralized Social Media:
   • Mastodon and Peepeth offer alternatives to centralized social media platforms. Users have control over their data and interactions.
   • Audius is a decentralized music streaming platform where artists receive a fair share of revenue.
4. Decentralized Identity (DID):
   • uPort and Civic provide self-sovereign identity solutions. Users manage their identity without relying on centralized authorities.
   • DID systems enhance privacy and reduce identity theft risks.
5. Supply Chain Management:
   • VeChain and OriginTrail use blockchain to track and verify supply chain data. This ensures transparency, reduces fraud, and improves traceability.
6. Gaming and Virtual Worlds:
   • Decentraland and The Sandbox create virtual worlds where users own land, assets, and participate in a decentralized economy.
   • In-game items as NFTs allow true ownership and interoperability across games.

While Web3 has its merits, it’s essential to recognize its limitations. Rather than fully replacing the Web2 model, Web3 may inadvertently reinforce existing Big Tech power structures. As we navigate this evolving landscape, critical thinking and discernment are crucial.

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