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The crypto community has been talking for several years about the creation of a decentralized Internet, which is commonly called Web3. But by June 2022, the situation began to change, and Web5 began to be discussed.
In the material we will tell you what Web5 is and why they began to talk about it without yet creating Web3. For clarity, we will give simplified examples and analogies.
The Essence of Web5
Web5 is the concept of a decentralized open source platform, which was introduced on June 10, 2022 by Twitter co-founder Jack Dorsey. The development is engaged in TBD – a division of the company Block, which is led by Dorsey after leaving Twitter.
The name Web5 itself refers specifically to the platform that Jack Dorsey and TBD are developing. This is the name of the project, not the approach to the development of the Internet, like Web3. And the number “5” in the name Of Web5 means the unification, summation of the concepts of Web2 and Web3.
The goal of Web5 is to create a platform that gives users full control over their personal data and digital identities. Let’s give an example to suggest how this platform will work according to the idea of Jack Dorsey.
Currently, users do not own their personal data. They are authorized on sites and services using passwords, e-mail and phone number. But the data itself is stored on the servers of these companies. For example, they may have user passport details, payment history, bank card details, and home address.
In Web2, the user gives his personal data to the services and they store them on their servers
At the same time, no one uses only one service, so many companies have this data at once: banks, food delivery services, marketplaces, private clinics, etc. And periodically in these companies there are database leaks, and information about users is put up for auction on the darknet. Then it is used for spam and fraudulent schemes.
In Web5, services themselves access the user’s data store and cannot save it for themselves. therefore all data is stored only by the user
On the Internet on the Web5 platform, each user will have his own decentralized storage of personal data. Only the user will have access to it. This storage will be used for authorization in various services: from banks to food delivery. At the same time, companies will only be able to read the data. And they will be stored by the user in a cryptographically protected form. Therefore, the problem of leakage of personal data will disappear.
Important components of Web5
The work of the Web5 platform is provided by 3 technologies. Below we describe in more detail each of them.
Decentralized Identifiers (DID) – Decentralized identifiers. They will be generated by the user himself. They will be used for authorization on the sites of various services. They can be compared with a digital passport or an account on the State Services, with which you can go to other government sites.
Decentralized Web Nodes (DWN) – Decentralized Web sites. These are the same decentralized storages in which all user data will be located. They can be compared with a memory card, access to which only the owner has. And he decides which devices to connect it to.
Verifiable Credentials (VC) – Verifiable credentials. These are the data formats for cryptographic claims verification. They can be compared with encryption systems that are used in anonymous messengers, such as Signal. Only its recipient can read the message, and it is impossible to recognize the correspondence from the outside. But VCs will be more reliable because of the use of cryptography.
Trends that Web5 falls into
The Web5 platform corresponds to the technological trends that the crypto community is passionate about. Below we talk about them in more detail.
Decentralized Identity – the concept of a decentralized personality. Its essence is to create a replacement of identity documents in digital format with the help of blockchain technologies. Thanks to cryptography, such a system will be able to guarantee the authenticity of data. And thanks to the blockchain, this data will be impossible to lose, like ordinary documents.
Digital Reputation — the concept of digital reputation. It complements the idea of a decentralized personality. Its essence is that a person can remain anonymous on the network, but this anonymous person will form his own reputation. For example, it will include the history of interactions with other users, reviews, participation in projects, credit history and other data. Some of them bwill go public, some won’t.
Self-sovereign identity (SSI) – an approach to creating a digital identity. Its essence is to give a person his private storage, information from which he can disclose at will. This approach is used in the Web5 platform.
Soulbound tokens (SBT) is a new kind of NFT. They will be tied to the owner’s wallet and cannot be sent or sold to anyone. SBTs will accumulate on the wallet and perform the role of reputation. For example, they can be obtained for doing work, participating in conferences, helping the community.
Vitalik Buterin and the Ethereum Foundation are working on the development of SBT. Buterin has already spoken positively about Jack Dorsey’s developments and the did concept.
What is the difference between Web5 and Web3
Jack Dorsey has repeatedly criticized the Web3 concept. In his opinion, it is focused on earnings and the financial component. In Web3, blockchains with their own tokens are used everywhere. This leads to 3 problems:
- instead of technology development, most projects and users are trying to make money;
- focus on short-term profits leads to a large number of projects operating on the principle of financial pyramids;
- the impact of venture capital funds reduces the decentralization of projects. Most blockchain startups exist through investments from these funds and give them a significant portion of their tokens. As a result, large investors have shares in many projects and, accordingly, influence on the entire Web3 system.
Messari statistics on the initial distribution of tokens in blockchains. Yellow indicates the share of tokens that belong to venture funds and the development team
Therefore, there will be no tokens in Web5. But the project will partially involve the bitcoin blockchain. How exactly Web5 will use it, the developers have not yet specified.
Web5 is a decentralized, open-source platform developed by Jack Dorsey’s Block company. It will provide users with its own storage of personal data, access to which will be available only to themselves. And the services that people use will only be able to read this data with the permission of the user.
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