I lost some ETH two weeks ago because I sent it to another. network and that was all, no way to get it back. It was just gone.
I sat down, reflecting on how fickle and easy it is to lose tokens because of the acclaimed security infrastructure, but it does not give room for learners to thrive as any little error; all your hard work is gone.
When the news about ETFs came out, I was shocked to see crypto enthusiasts excited. I was a bit taken aback. Is ETF not centralized, so why is it a call for jubilation? and it hits me.
This looks like a giant money-making business and nothing more.
Before I dive deeper, let us look at Web2 and Web3 and see if we can spot the core difference between them.
Web3 and blockchain technology hype has reached a fever pitch in recent years. Proponents claim it will revolutionize the internet, handing power back to users through decentralization while providing greater transparency, security, and privacy.
However, peel back the marketing gloss, and many of the claims about Web3 fail to hold up to scrutiny.
In reality, Web3 suffers from significant technical limitations, lacks killer consumer use cases, and is unlikely to fully replace the Web2 model that has driven the internet’s growth for the past 20 years.
This is why.
Centralized Giants Still Reign
A core premise of Web3 is decentralization through blockchain technology. Yet many popular Web3 applications still rely on large, centralized intermediaries.
Cryptocurrency exchanges like Coinbase and Binance function much like traditional banks, custodians of user assets, and they can shut down, block, or control how you use your tokens.
NFT marketplaces like OpenSea use blockchain technology, but transactions flow through centralized servers.
Many crypto and Web3 companies still store user data and process transactions using centralized cloud service providers like AWS.
This introduces security risks, points of failure, and the same intermediary rents Web3 was supposed to eliminate.
The Web2 giants also aren’t going anywhere. Rather than ushering in a new decentralized age, Web3 could further entrench existing Big Tech power structures.
Blackrock recently got approval to float ETF, proving we are getting more of a circle than a straight line.
Overpromising on Security
Another key promise of Web3 is enhanced security and privacy through encryption and decentralization. However, the track record reveals a technology still vulnerable to hacking and exploitation.
Since 2019, over $3 billion has been lost in DeFi hacks and scams. Botched smart contract code, flash loan attacks, phishing schemes and more have drained funds from Web3 protocols that claimed bulletproof security.
Every other day on Twitter, companies like CodeHawks, Cyfrinaudits, and many other platforms spring up daily. finding vulnerabilities in alleged secure smart contracts where millions are wiped daily, and there is no method to get them back.
Even decentralized networks like Bitcoin and Ethereum have experienced several 51% attacks or threats where a single miner gained majority control.
Cryptocurrency exchanges are hacked, so often, sites are dedicated to tracking exchange theft.
For the average consumer, Web2 services like banks and credit cards provide simpler and stronger security guarantees than the Wild West landscape of Web3 today.
According to Infosecurity, in 2022 and 2023 alone, the total number of hacks amounted to 5.3 billion.
Limited Use Cases, Confusing UX
Web3 lacks compelling uses for regular internet users outside of speculation. Buying NFTs of monkey cartoons, trying to make money via yield farming, or purchasing virtual real estate in Decentraland haven’t attracted mainstream uptake.
At the same time, Web3 introduces unfamiliar concepts like gas fees, seed phrases, crypto wallets, and DAO governance that make it painful for casual users to navigate.
Apart from being an avenue to trade, there is no other direct usage of crypto, and that is a fact; everything else is just hype and tears.
Key management also places full responsibility on individuals to secure funds without any of the consumer protections around fraud or theft in traditional finance.
Until Web3 can move beyond this confusing user experience and showcase why its applications are superior for non-technical users compared to Web2, its promise will remain largely unfulfilled for the masses.
Questionable Environmental Impact
One of the biggest criticisms against blockchain technology is its massive energy consumption and carbon footprint due to the computations required for mining.
Although networks like Ethereum have transitioned to less intensive consensus models, this environmental impact casts doubt on the claim that Web3 represents evolutionary progress.
Bitcoin still uses proof of work, which is energy-intensive, and while many still doubt the objectivity of such work only for one winner, time will tell when the final coin is mined.
Between questions about financial inclusion, regulatory uncertainty, rampant scams, and more, there are still many open-ended issues around whether Web3 can deliver on its lofty vision to overhaul the digital economy and internet architecture as we know it.
The Next Internet Revolution?
None of this suggests decentralized technology lacks merits or isn’t worth pursuing. However, based on results, Web3 seems unlikely to supplant Web2 as the predominant internet model soon.
The internet took decades to develop into what it is today, with early dot-com crash implosions and painful lessons. Web3 will follow a similar arduous path of evolution versus sudden revolution.
For Web3 to fulfill its destiny as the next paradigm powering how we interact online, it needs to move beyond the land grab speculation and mania into real consumer problem-solving.
Only then can it showcase why decentralization provides fundamentally better solutions and user experiences than today’s Web2 giants.
Until Web3 projects address fundamental usability, security, and sustainability challenges, prove adoption beyond crypto insiders, and give people reasons to switch in daily life, the Web2 model looks poised to dominate for years to come.
Behind the lofty ambitions, hype cycles, and proclamations of revolution, the Web3 ecosystem has substantial progress left to make good on its promises.
Finally, Web3 will thrive, and I believe it is on to something, but I do not feel it is there yet or the hype is anywhere near what it should be.
While I still mourn the loss of my tokens, I do feel If you find this post exciting, find more exciting posts on Learnhub Blog; we write everything tech from Cloud computing to Frontend Dev, Cybersecurity, AI, and Blockchain.