How do Web2 and Web3 differ?

What Is Web1?

Web1 describes the early era of the internet, spanning the 1990s to the early 2000s, as it began to reach mainstream adoption. This period was defined by one-way information flow: users could consume content via websites and email, but had very limited ability to publish their own material.

Technically, HTML was the primary standard for displaying text and images, resulting in mainly static web pages. With the arrival of Web1, global information became accessible and the democratization of data began, but options for online interaction and self-expression remained highly restricted.

During this time, collaborative websites like Wikipedia did not exist, while personal blogs became popular. Yet user-contributed content was tightly limited, and interactive functions were rare. Applications were only available via download, without options to inspect or alter functionality, and open source was uncommon.

What Is Web2?

Web2 refers to the evolution of the web from the 2000s through the 2010s, a concept that gained traction during the dot-com bubble. Its hallmark is the shift from users as passive recipients to active creators. Blogs and social networking platforms emerged, empowering users to freely share information online.

Web2 brought increased rich media—video, audio, and more—enabling interactive exchanges between users and websites, as well as among users themselves. This empowered individuals to express their identities and interests, and build online communities.

However, Web2 also introduced new challenges. Personal data and information became concentrated in the hands of large platform companies (such as GAFA), raising concerns about privacy and data ownership. These corporations gained the ability to censor content that violated community guidelines, generating new worries over freedom of expression.

Reliance on centralized servers created additional risks, including business disruption from server outages and dependence on company standards for payment services. These issues spurred the development of Web3 as the next stage of the internet.

What Is Web3?

Web3 represents the next generation of the internet—a concept centered on openness and democratization, powered by blockchain and decentralized applications (DApps). The term was first coined by Ethereum co-founder Gavin Wood in 2014.

Web3 aims to resolve Web2’s issues by making blockchain technology central to addressing problems such as personal data breaches and platform monopolies. In Web2, platforms controlled user information, increasing the risk of leaks and misuse.

In Web3, personal data is distributed across the blockchain, preventing access by any single administrator. This dramatically enhances protection of personal information. Users can independently manage their data and digital identities, realizing genuine data sovereignty.

One defining feature of Web3 is the shift from data ownership to data sharing. Blockchain technology lets all users verify information and contribute to data storage, building a more transparent system free from centralized control.

Web3 also includes elements related to the metaverse. Advanced 3D graphics, augmented reality (AR), and virtual reality (VR) are expected to power Web3 applications, creating more immersive online experiences.

Crucially, Web3 employs smart contracts—programs that automatically execute when preset conditions are met. This builds a more trustworthy internet and can eliminate the need for third-party intermediaries. Smart contracts are anticipated to greatly improve transparency and efficiency in online transactions.

Web3 Use Cases

Applications are considered Web3-optimized when they leverage blockchain technology. Examples include all cryptocurrencies, cryptography-enabled DeFi (decentralized finance), DApps, NFTs (non-fungible tokens), and DAOs (decentralized autonomous organizations).

Concrete examples include digital assets like Bitcoin, NFT marketplaces such as OpenSea, social media platforms powered by crypto assets, and Play-to-Earn (P2E) games. These platforms are establishing new economies where users can earn revenue directly by creating or trading content.

DeFi platforms enable financial services such as lending, borrowing, and trading without traditional banks. DAOs provide organizational models run by community voting rather than centralized management.

Benefits of Web3

Web3 brings significant benefits, with everyday internet users as the main beneficiaries. Large-scale adoption means every user helps build the internet, decentralizing power away from major tech firms and making it accessible to all.

Web3 also reduces environmental impact. Its sustainable model and improved connectivity result in more efficient systems. Smart contracts make the internet more reliable, boosting transparency and security in transactions.

By integrating AI and semantic web technologies, Web3 minimizes human error and leverages modern innovation more effectively. The semantic web enables computers to interpret the meaning of online information, yielding better search results and recommendations.

Key Differences Between Web2 and Web3

There are three main perspectives for understanding the differences between Web2 and Web3.

Decentralization

Web3 enables individuals to control their online data via decentralized networks, creating a fairer competitive landscape. No single person or company dominates the network; responsibility and rewards are distributed among all blockchain participants.

This decentralization allows for peer-to-peer networks where users interact directly, rather than through centralized platforms. Data storage is distributed, reducing the risk of a single point of failure.

Privacy

Privacy is a major concern for internet users, with numerous data breaches making headlines in recent years. Web3 is expected to deliver far greater privacy by distributing personal data, giving individuals stronger control over their information.

Advocates believe this reduces reliance on third-party companies for data management. Users decide how their data is used and with whom it is shared.

However, open data on the blockchain can conflict with the goal of enhanced privacy. Technologies like zero-knowledge proofs are being developed to address these concerns.

No Authentication or Permission Required

Smart contracts enable a trustless internet, eliminating the need to verify third-party credentials. Transactions are executed automatically based on encrypted information through smart contract technology.

This removes permission requirements for web participation—any user can validate transactions or mine on the blockchain. Users can buy and sell freely, without third-party approval.

As a result, users can act without censorship or restrictions from centralized administrators. Cross-border transactions also become easier, driving global economic activity.

Japan’s National Web3 Strategy

The Japanese government has made digital transformation—including blockchain and Web3—part of its national strategy, aiming to spur domestic growth and innovation.

This push encourages collaboration across industries, research institutions, and entertainment, with government backing expected to accelerate the growth of Web3 companies in Japan.

Government initiatives include support for Web3 technology development, talent training, and research funding. The goal is to expand related industries and create new jobs through Web3 adoption.

Japan’s Financial Services Agency has laid out digital asset policies as part of its financial administration guidelines, addressing digital assets, Web3, and CBDC (central bank digital currency). The agenda focuses on balancing economic growth with solutions to social challenges, working toward a “digital society.”

Efforts include promoting Web3, developing rules for digital money and crypto assets, and establishing self-regulatory organizations. These measures are fueling anticipation for Japan’s Web3 strategy and are expected to boost its global competitiveness in the field.

Summary: The Web3 Movement Is Set to Accelerate

Web2 enabled users to publish online and fostered interactive communication. In contrast, Web3 seeks a more open and democratic internet powered by blockchain and DApps.

Web3 is drawing major attention as the future of the internet, but it remains in a formative stage, presenting new challenges and risks. Many issues—from technology hurdles and regulatory clarity to user education—still need to be addressed.

Nonetheless, Web3’s features—decentralization, privacy, and trustless systems—hold promise for overcoming Web2’s limitations, attracting keen interest from companies and governments. Japan, in particular, is pushing Web3 as a national strategy, accelerating industry-wide adoption.

Web3’s momentum is likely to keep building. As blockchain matures, regulations evolve, and user experience improves, Web3 will become increasingly mainstream. Anyone interested in Web3 should follow technological advances and industry trends closely to prepare for this transformative shift.

FAQ

What is the biggest difference between Web2 and Web3?

Web2 is built on centralized services where companies manage data. Web3 uses blockchain for decentralization, giving users ownership of their assets and data.

What new technologies are used in Web3?

Web3 employs blockchain, decentralized finance (DeFi), and non-fungible tokens (NFTs). These innovative technologies deliver secure, transparent, and user-controlled digital interactions.

How do security and personal data protection differ between Web2 and Web3?

Web2 relies on centralized organizations for data management, increasing risks of privacy breaches and leaks. Web3 decentralizes data using blockchain, empowering users to control their information and enhancing transparency and security.

How can users control their own data in Web3?

Blockchain technology in Web3 gives users complete ownership of their data. Individuals freely decide how their data is shared, achieving privacy and self-sovereignty. Data is managed by the user, not a central authority.

What are some real-world applications of Web3?

Web3 real-world use cases include NFT art, DeFi, and DAOs. Creators can sell directly without fees, users can access financial services without banks, and brands distribute NFTs to boost fan engagement.