Proponents call Web3 a decentralized version of the Internet, one that is not dominated by a handful of power players like Amazon, Microsoft Y Google.

Web1 started with the idea of ​​an open, decentralized Internet, but Web2, the Internet we know today, led to the birth of trillion-dollar tech companies that have strong influence on the Internet and own much of the infrastructure on which it runs. the web is built. in.

“The big problem with this is… sort of the same as putting all your eggs in one basket, if something goes wrong with one of these services, the service suddenly becomes unavailable to a large number of people.” . Wood told CNBC’s “Beyond the Valley” podcast.

“Also, the key word here is trust. We have to trust the people behind the services. We have to trust the owners of the companies that run the service… And yes, we did manage to design ourselves.” in this, something like a dystopian version of what the world could be”.

For Wood, Web3 is truly decentralized and a more democratic version of today’s Internet.

“Web3 is really kind of an alternative vision of the web, where the services we use are not hosted by a single service provider company, but are purely algorithmic things that are, in a sense, hosted by the whole world. So it’s Like, it’s very like for like, right? … The idea is that all participants contribute a small portion of the final service,” Wood said.

“And so no one really has any advantage over anyone else… not in the same sense, at least as, as you know, when, for example, you go to Amazon or you go to eBay or Facebook, where the company behind the service really has absolute power over what they do in providing the service.

Blockchain is a key technology behind Web3. It is most often associated with the cryptocurrency bitcoin and is the technology that underpins it. The bitcoin blockchain is a public ledger of bitcoin network activity. But bitcoin is not owned by a single company or person and is not issued by a central authority like a central bank. Instead, it is decentralized, and the network is maintained by a global group of people running specialized computers.

So blockchain is a key technology and decentralization is an important phrase.

Web3 is based on the idea of ​​a “trustless” model. Right now, we have to trust companies to deliver the service they promise. But if Web3’s products and services are blockchain-based and decentralized, you’ll just have to trust the underlying algorithm to deliver that product.

That comes with its own risks, of course.

Wood gave the example of a Web3 version of Twitter that he said would give more users control over their posts and make it easier to verify identities, for example.

“So it’s a lot harder for someone to like, fake my identity, because we have … cryptographic proof that I’ve done this, and only I could have done it,” Wood said.

“We probably have somewhat larger elements, like free speech…in the sense that the system is not going to inherently have gatekeepers that, in the same way that you know, there are Twitter employees who effectively act as gatekeepers for the system. “

Web3 proponents suggest that cryptocurrencies will play a key role in the future of the Internet. An example could be where there is a Web3 application running on a certain blockchain that uses a specific digital currency.

For example, services running on the Ethereum blockchain may require ether-based digital tokens.

There have been thousands of virtual currencies that have appeared in the last few years. But Wood said that Web3, as he envisions it, may not be heavily dependent on cryptocurrency.

“I suspect that currency will continue to play a role in services. But I think…in general, we’re going to start to see services being delivered without the need to use tokens,” Wood told CNBC.

“And I think it’s going to be a big leap. And I think it’s one of the key factors that will open the door to the mainstream,” he added, suggesting that most people probably won’t want to buy a lot of different tokens. to use a service.

Bitcoin itself has never been regulated because it is very difficult to do so since it is not owned by a single entity. However, companies that touch cryptocurrency in any way, such as exchanges, are often under some form of regulation.

So if a Web3 service is based on the same decentralization theory as Bitcoin, how will regulators deal with it?

For now, countries around the world are still trying to figure out the best way to regulate cryptocurrencies and related technologies. Web3 is part of that conversation.

Wood suggests that it will be difficult for authorities to regulate Web3 services on their own. Instead, it might be in an app’s “self-interest” in terms of its product to introduce rules that align with regulators, Wood said.

He added that regulators could seek to regulate “users of the service rather than the service itself.”

Web3 advocates suggest that with Web3, the power of the tech giants could be challenged.

However, those same companies like Microsoft and Twitter are also investing in Web3.

Wood said it will be “hard to make a dent…in these Goliaths,” but compared their potential situation to that of Microsoft in the late 2000s and years to come.

“It didn’t matter if you were running the Windows operating system or creating your document in Microsoft Word…we used the web as a platform, and the web could be used on any operating system,” Wood said.

“Ultimately… I hope that Web3 meets the needs of the future in a way that these centralized service providers will never be able to meet,” he added.