RV Blog The Challenges With Web3

The Challenges With Web3

The Challenges of Web3

Web3 has been heralded as the future of the internet. The phenomenon has been touted as the most popular approach to building a decentralized internet. While many Web3 projects are building toward a blockchain-based internet, there has been controversy surrounding its practicality.

A growing belief among some — mainly Bitcoiners — is that Web3 is anything but decentralized. According to opponents, Web3 is said to merely shift the power from internet users to venture capital and institutional players, who control it through a system of incentives, which is altogether different from the principles that Web3 claims to usher in.

It is the critics’ conviction that better options to decentralize the internet need to be presented. As such, the next iteration of a truly decentralized internet is being proposed. What goes by the name of Web5 is said to give users real control of their own identity and data. However, before we turn to the problems of Web3 and the emergence of Web5 as a new idea, we first need to familiarize ourselves with how the current internet has come about.

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Evolution of the Internet

The original version of the web was developed in the 1990s and was known as Web 1.0. This initial version laid the foundation for the internet as we know it today. Web 1.0 dominated the internet during the 1990s and early 2000s and was characterized by rudimentary websites with static pages and an audience that was mostly on the consumer side.

The shift to Web 2.0 started in the mid-2000s when the concept of the web as a platform began to evolve. As web users gradually shifted from consumerism to producing more digital content, Web 2.0 began to flourish. The content being produced was uploaded onto social media channels, video-sharing platforms, and blogs.

Consequently, websites also had to evolve from dull web pages to more interactive, customer-centric, and socially connected platforms. The current version of the internet we use today is Web 2.0 and is distinguished by its approach to enabling users to contribute to the internet through uploading content, creating accounts, commenting on sites, and building online communities. Users have transitioned from users into producers.

The development of Web2 was supported by the proliferation of mobile devices, widespread internet access, and the growth of social networks. The rise of mobile apps was a natural advancement as users sought more interconnectivity and convenience. However, an unforeseen and unintended consequence has been the rise of mega-internet companies such as Google, Facebook, Amazon, and the like.

This undoubtedly led to concerns about the internet being privatized and run by corporations. As a consequence, with the emergence of blockchain technology, the Web3 movement began growing to reverse this trend and shift the power back to individual internet users.

Problems with Web3

Web3 has evolved into a movement that envisions a radically new era of the internet, with a focus on a more decentralized, or for that matter, a more democratized internet. The overarching aim of Web3 is to populate the internet with user-owned economies powered by protocols that offer structured incentives for network nodes, participants, and developers alike.

Having said that, Web3, while being a bold approach, has run into a few problems. Let us observe what these challenges currently are.


In its entirety, the Web3 narrative has been genuinely shaped by the blockchain and crypto phenomenon. Web3 has come to espouse crypto assets, smart contracts, DeFi, NFTs, and metaverses. However, to make this new technology usable, Web3 protocols have coalesced around centralized platforms to run their servers and iterate on any new functionality that emerges. Examples of such intermediate centralized platforms include OpenSea, Etherscan, and MetaMask, which rely on Infura, a backend and Infrastructure-as-a-Service (IaaS) provider.

The reality is: Most Web3 protocols are slow to evolve and reliant on centralized platforms to iterate faster. The result is that so-called decentralized protocols and applications are based on centralized infrastructure, which makes them hardly a reliable contender for a new decentralized internet. This reality has also been pointed out by Moxie Marlinspike, the founder of messaging app Signal, in a highly referenced article a while ago.

Another argument was raised by Jack Dorsey, a leading proponent of Web5, that the influx of venture capital and corporations into Web3 has moved the power dynamic away from users to these organizations. This becomes clear when you consider that VCs generally hold big amounts of early-token investments in these Web3 protocols. However, this criticism is called into question by some of the most influential VCs in the Web3 space, arguing that Dorsey’s arguments are wrong on a factual basis. Chris Dixon, for example, general partner at the venture capital firm Andreessen Horowitz, argues that only a small minority position of Web3 protocols is owned by VCs.


Scalability has proven to be a big issue for blockchains and a big impediment to Web3 adoption. A long-term solution to the blockchain scalability trilemma has so far been elusive. The scalability trilemma states that out of security, decentralization, and scalability, only two out of three of these characteristics can be met by a public blockchain at once.

As a consequence, many Web3 protocols have compromised decentralization and security by prioritizing scalability. This way, these projects might be faster and can deliver low-cost transactions but their approach leads back to centralization though. We have seen several Web3 solutions being hacked because they are not decentralized sufficiently enough. Other Web3 applications have been shut down at times, delivering insecurity and uncertainty to users.

Related: How to Scale Ethereum

Poor UI/UX

UI/UX refers to user interface and user experience respectively and this is currently lacking in large parts when it comes to Web3 applications. One thing Web2 platforms like Facebook and Google have excelled at is delivering convenient, user-friendly UI/UX for their users.

Web3 products on the other hand have not fared well in these aspects, mainly because there is usually a trade-off between security, decentralization, and convenience. For example, typically, the more convenient and user-friendly an application, the less secure it is.

Being in their early innings, the current focus of Web3 protocols is building out the first set of solutions that function more like proof-of-concepts. Rather little or no attention is devoted to how users interact with them. Only gradually, complexity will be abstracted away.

Is Web5 a new solution?

The main argument of Web3 critics is that the current version of the internet is only decentralized in name but has been hijacked by VCs to enrich themselves. This is why they have proposed something called Web5. Judging by the proponents’ claim, this new version represents the right approach to decentralizing the internet.

And indeed, it was Jack Dorsey, the former Twitter CEO, who announced his intention to build Web5 on top of the Bitcoin blockchain. The project seeks to leverage Bitcoin’s technology to create a new ecosystem that will empower users to truly remain in control of their data because the storage thereof will occur in decentralized web nodes. These nodes will act as personal datastores that hold public and encrypted data.

The project’s version of Web5 will comprise decentralized identifiers (DIDs), decentralized web nodes (DWNs), and decentralized web apps (DWAs). According to Jack Dorsey and other Web5 proponents, the above features are important in building a Bitcoin-based Web5 internet. While this new internet according to the principles and components of Web5 is still mainly a theoretical concept, it will be interesting to see whether Web5 will be able to improve upon the current shortcomings of Web3. And let’s not forget: Web3 is also innovating and getting better. Although a lot of Web3 criticism is true right now, things might change in the future. After all, the future is a process, not a destination.