Even if you are not familiar with the term, you have probably come across it before. From a layman's perspective, Web3 is widely understood as the third and final "phase" of the Internet. So far, about every ten years, the Internet has entered a new phase of transition from Web1 to Web2 to Web3.
Interestingly, however, there is no single controlling organization or any universal line behind these phases as the Internet moves from Web1 dominance to Web2. These different periods, however, are characterized by the nature of Internet content. Simply put, the three phases of the Internet can be summarized as follows:
Web1 - static
Web2 - dynamic
Web3 - decentralized
The first phase of the Internet, Web1, was primarily concerned with the provision of online content and information. Thus, Web1 was largely static and allowed users to virtually only read information.
The introduction of Web2, which is usually associated with the growth of social networking platforms, was instead largely about the interactivity and usability of the interface. Web2 abandoned the previously static nature of the Internet becoming dynamic. This allowed users not only to consume or "read" information but also to create it themselves or "record" information. However, this broader Internet has also created problems with data privacy when personal data got into the hands of large digital platforms.
Web3, on the other hand, seeks to solve this problem by moving from a dynamic to a decentralized Internet. Moreover, in Web3, data is not owned by centralized organizations but is shared. Moreover, Web3 focuses on improving internal functionality, just as Web2 focused on front-end functionality. A hallmark of the Web3 era is also the emergence of dApps or decentralized applications that can replace traditional applications.
Web3 promises to make the Internet more decentralized, and this extends to the types of applications used in Web3. One of the integral parts of many dApp or Web3 applications is what is called "smart contracts". Those who have experience with blockchain technology are probably familiar with the concept of smart contracts. Smart contracts are essentially self-executing software agreements, pieces of code that run on a blockchain similar to the Ethereum blockchain. They are automatically "triggered" or executed when an appropriate set of conditions is met. Thus, these "contracts" can automatically verify and execute transactions between different parties.
The fact that Web3 and dApps use smart contracts means that the logic of the contracts can determine application behavior. In practice, this eliminates the need for a specific company or individual to act as an intermediary opening a brighter future for many industries, including retail, real estate, and marketing.