Web2 vs Web3: What's the difference?

March 9, 2023


Written by: Algorand Foundation

Web2 is the internet as we know it today and Web3 is a newer and improved version that we’re currently building. While Web2 has seen explosive growth over the last two decades, it has evolved with a catch: its narrative sees the internet governed by central authorities that collect and make money from our personal data. Web3, on the other hand, looks to shift towards a world where power is distributed, and users have agency over their digital lives. This vision is centered around blockchain which can provide transparency, security, and a new level of user control. In the article, we will explore the fundamental distinctions between Web2 vs Web3, starting with a history of the internet, followed by a comparison of the two most recent iterations of the internet, and a look at how Web3 can improve the way we interact online.  

The history and evolution of the web

Web 1.0 

In the early days of the internet, we had Web 1.0, a decentralized, static and one-way communication platform. This was the era of basic HTML websites, where users were spectators, consuming information without actively participating. It was like walking through a library, browsing through books but unable to leave your mark or engage with others in real time.

Web 2.0 

Then came the transformative age of Web 2.0, characterized by dynamic and interactive websites that revolutionized the way we connect and collaborate online. Web 2.0 evolved via a culmination of different technological capabilities, including social media platforms, online marketplaces, mobile, streaming services and more. Users were empowered to create, share, and interact with content. A handful of powerful companies emerged, but with their rise came concerns over data privacy, censorship, and the concentration of power. Users began to realize that their digital lives were in the hands of a few, and the need for a more transparent and user-centric approach became apparent.

Web 3.0 

Enter Web 3.0, the embodiment of a decentralized and user-centric internet. Built on blockchain technology, Web 3.0 aims to dismantle the centralized power structures of Web 2.0 and offer a new level of control and ownership to individuals. It's like entering a vibrant, self-governing community, where every participant has a say and can contribute to the collective decision-making process. Furthermore, Web3 emphasizes identity & ownership as key pillars, providing participants a web experience in which they own their creations, buy and sell digital and real-world assets, as well as have the power to choose which information they disclose to whom.  

Web2 vs Web3: What are the differences?

Web2 Web3
Controlled by large, centralized companies Controlled and governed by communities
Limited control over your data Ownership and control over your data
Reliance on third parties for transactions and interactions Direct peer-to-peer interactions without intermediaries
Lack of transparency in data handling and decision-making Transparent, open source, and democratic
Innovation driven by a few major players Open ecosystem fostering widespread innovation
Trust placed in large corporations Trust built into technology through cryptography and consensus mechanisms
Ownership verification provided by large corporations Ownership self-custodied and verified by users
Centralized payment systems and intermediaries Native digital currency payments with reduced intermediaries and fees
Vulnerable to censorship and content control Resistant to censorship due to decentralization
Limited privacy control and potential data exploitation Enhanced privacy control through cryptographic techniques
Limited scalability with growing user base Scalability potential through blockchain technology

What are the main ideas behind Web3?


Web3 is built upon the concept of decentralization, where power is distributed among participants rather than controlled by a central authority. It's based on a peer-to-peer network, where individuals can interact directly with each other without the need for intermediaries or a centralized server.


Web3 leverages blockchain to provide transparency and verifiability. Transactions and interactions can be recorded on a public ledger, enabling anyone to independently verify the authenticity and integrity of data. 


Trust is not placed solely in central authorities or intermediaries. Instead, trust is built into the technology itself through cryptographic algorithms and consensus mechanisms. 

Self governance  

Communities collectively make decisions and govern the platforms and protocols they use. Through decentralized governance mechanisms, such as token-based voting or consensus-based decision-making, users have a say in the direction and rules of the system. 


Web3 is open and permissionless, meaning anyone can participate without needing to seek approval or meet specific criteria. It breaks down barriers to entry and enables individuals to freely engage with the ecosystem.


In Web2, we have relied on banks to hold our money; on Visa, SWIFT, Paypal and others to transact our money; and on Google, Facebook and others to verify our identity. In Web3, our wallet (and the assets within it) can be used to verify our decentralized identity and as the “key” to unlock verification and commerce.  

Native payments 

Cryptocurrencies, like Bitcoin and Algorand, play a significant role in Web3, enabling direct and seamless transactions. This also allows for payments to bypass traditional financial intermediaries and reduce transaction fees. 

What are the key features of Web3?  

Technology: Web3 runs on blockchains like Algorand, leveraging their decentralized and transparent nature to enable trustless interactions and smart contract execution.

Ownership & sovereignty: Web3 shifts the power balance by giving users ownership and control over their data, allowing individuals to decide how their information is used.

Censorship resistance: Web3's decentralized nature makes it resistant to censorship, meaning platforms built on Web3, such as social media networks, can’t arbitrarily ban or censor users like in the way that centralized platforms can.

Greater privacy and security: With enhanced privacy and security measures, Web3 can reduce the need to share personal data with third parties in order to access services and applications. Users have more control over their personal information and can maintain a higher level of privacy.

Token economy: Web3 introduces a token economy where digital assets can hold real value and be used for payments and transactions within the ecosystem, so payments can be made peer-to-peer in cryptocurrencies like Bitcoin and Algorand. 

Governance: Web3 promotes community-driven DAO governance, where decisions are made collectively by participants through voting and consensus mechanisms. This ensures that the platform's direction and rules are determined by the community.

Identity: Web3 introduces digital identity solutions that allow users to have portable identities that can be used across various decentralized applications (DApps), allowing users to transfer and manage identity credentials within the Web3 ecosystem.

Native built-in payments: Web3 platforms have native payment capabilities, eliminating the need for traditional intermediaries like banks or payment processors. Users can make direct and secure payments using digital currencies within the ecosystem.

What are some real-world examples of Web3?

Web3 is being used in various real-world applications and industries. Here are some examples:

1. Decentralized finance (DeFi): DeFi platforms leverage Web3 technology to provide financial services without third parties, like banks. Examples on Algorand include lending and borrowing protocols like Folks Finance and Tinyman.

2. Non-fungible tokens (NFTs): NFTs, which are unique digital assets stored on a blockchain, have gained popularity in the art, gaming, and travel industries. Platforms like Rand Gallery and EXA Market allow users to buy, sell, and trade NFTs representing digital artwork. TravelX tokenizes airline tickets to simplify buying and selling tickets. 

3. Decentralized identity: Web3 enables self-sovereign digital identity solutions, where individuals have control over their personal information. Projects like NFDomains are building decentralized identity platforms that allow users to manage and verify their identity across different services and applications.

4. Supply chain management: Web3 is being utilized in supply chain management to increase transparency and traceability. Wholechain uses Algorand's blockchain technology to track and authenticate products throughout the supply chain, in order to reduce fraud, and counterfeiting, and ensure ethical sourcing.

5. Gaming and virtual worlds: Web3 technology is transforming the gaming industry by enabling true ownership of in-game assets and the creation of player-driven economies. Examples include Zone Gaming, where gamers can participate in a play-to-earn ecosystem, and Aegir Tactics, a play-to-earn competitive card game.

6. Social media, dating, and content platforms: Web3 offers alternatives to centralized social media platforms. Projects like Thinkin help creators grow a Web3 audience, and TruYou, improves the online dating experience through decentralized identity and gamification. Web3 provides users more control over their data, interactions, and content moderation. 

Web2 vs Web3: Frequently Asked Questions

What is the biggest difference between Web2 and Web3?

The biggest difference between Web2 and Web3 is the shift from a centralized internet to a decentralized one. Web2 relies on intermediaries and centralized platforms, while Web3 enables peer-to-peer interactions without the need for intermediaries, offering more control and ownership to users.

Is Web3 replacing Web2? 

Web3 is not replacing Web2 entirely. Instead, it represents the next evolution of the internet. Web3 is introducing new technologies and approaches to the internet as we currently know it. Web3 challenges the dominance of centralized platforms through decentralized applications (dApps) running on the blockchain.

Why is Web3 better than Web2? 

Web3 offers several advantages over Web2. It provides greater data ownership and control for individuals, eliminating the reliance on centralized authorities and reducing the risk of data misuse. Additionally, Web3 fosters transparency, trust, and democratization of the internet by leveraging distributed ledger technologies and allowing anyone to participate without monetizing their personal information.

What is Web2 vs Web3 for dummies? 

Web2, also known as the current version of the internet, is dominated by companies that offer services in exchange for personal data. In contrast, Web3 refers to decentralized applications (DApps) running on the blockchain, where users can participate without compromising their privacy and ownership of data. It's like transitioning from relying on a central authority for everything to having a more direct and secure peer-to-peer interaction online.

Are Web3 and the metaverse the same thing?

No, Web3 and the metaverse are not the same thing. Web3 refers to the next generation of the internet that is based on blockchain technology and decentralized applications. While the metaverse might affect how we experience and consume Web3 one day, the metaverse refers to a virtual reality space that allows users to interact with a computer-generated world and each other in real time. 

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