The emergence of Web3, or the decentralized web, has sparked excitement and curiosity among tech enthusiasts and investors alike. However, as with any emerging technology, there are concerns surrounding its development and implementation. In this post, we will discuss some of the main concerns and merits of Web3.
Energy Consumption
One of the primary concerns surrounding Web3 is its significant energy consumption. Blockchain technology, which is the backbone of Web3, requires a vast amount of computing power and energy to function. In fact, according to jbs.cam.ac.uk, the Bitcoin network alone uses more energy than some small countries. The carbon trad-off for this energy consumption is equal to half that of gold mining at about 50 million tons of carbon dioxide equivalent.
However, more renewable resources and alternative energies are being developed every year. Even innovations in energy-efficient consensus algorithms will do much to alleviate the current energy consumption by blockchain technologies. For instance, Proof of Stake (PoS) is a more energy-efficient consensus algorithm than Proof of Work (PoW). On Ehtereum.org, Ethereum’s recent switch to POS has seen a reduction in the network’s energy consumption from an annualized consumption of 78 Tara Watt hours (TWh) to just 0.0026TWh. That is about a 99.9% reduction in energy consumption just by changing the consensus mechanism.
Scalability
Another concern with Web3 is scalability. Most blockchain networks can only handle a limited number of transactions per second, which can limit the scalability of Web3 applications. This means that the technology may struggle to keep up with the increasing demand for faster and more efficient processing of transactions.
It is worth noting that there are various solutions in development to address this issue, such as sharding, layer 2 solutions, and more efficient consensus algorithms.
It's important to know that the internet that we have been using was never designed to be secure. When it started out as ARPANET the original intention was to allow researchers to use supercomputers at the time over long distances so that a team wouldn’t have to wait on one computer to serve all of their computing needs. In the 80s protocols for transferring files and data were being developed and resulted in information being transmitted in plain text that anybody might intercept and read. Any security we see employed in the internet today has come as an afterthought.
Blockchain technology is considered secure due to its decentralized and immutable nature though it is not entirely foolproof. With security baked in from the beginning there will not be a need for usernames and/or passwords and would use crypto keys instead. There have been instances of hacks and security breaches in the past, and it's possible that new vulnerabilities may emerge as Web3 continues to evolve.
However, the blockchain community is constantly working to improve security measures, and the use of smart contracts and decentralized applications (dApps) can enhance security by eliminating the need for intermediaries and central points of failure.
Regulatory Challenges
The decentralized nature of Web3 applications makes it challenging for regulators to enforce laws and regulations. This could lead to legal uncertainties, which could limit the growth and adoption of the technology. Currently there is still much ambiguity about whether a specific cryptocurrency is considered a security. This lack of clarity is a large hurdle for institutional adoption.
Many believe that self-regulation and the development of decentralized governance structures will help to address these issues.
User Adoption
Web3 is still in its early stages of development, and like any nascent technology, many people may find it difficult to understand and use. This has been limiting its adoption by the mainstream audience, but more user-friendly interfaces and dApps are increasing adoption as the benefits of Web3 are becoming more apparent.
Potential of Web3
Web3 presents a paradigm shift in the way we interact with the internet and each other. It also enables the development of decentralized applications and services, which can provide greater privacy, security, and transparency than their centralized counterparts. By enabling peer-to-peer interactions, Web3 has the potential to eliminate the need for intermediaries and central authorities in various industries, including finance, healthcare, and more.
Web3 also has the potential to enable new business models and disrupt existing industries, such as finance, healthcare, and more. Moreover, Web3 could promote greater economic inclusivity by enabling individuals to participate in the economy without the need for traditional banking or financial institutions. Ever hear the term, "band the unbanked"?
While there are concerns surrounding its development and implementation, the potential benefits are vast. The new web built on blockchain technology will break down economic borders with peer to peer transaction all across the world. Sounds like a "power to the people" move.
Despite the concerns surrounding Web3, many experts believe that it has the potential to revolutionize the way we interact with the internet and each other. The decentralized nature of Web3 enables greater privacy, security, and transparency, which could lead to greater economic inclusivity and empower individuals to participate in the economy without the need for traditional banking or financial institutions. Sounds like a good idea to me.
