It is always interesting to see how things unfold. Ethereum was one of the first blockchains to get major recognition. Vitalik became an overnight superstar. The idea of decentralization was before us with the future being laid out.
Unfortunately, things can go awry. The decisions regarding that chain have it to the point where it is teetering on Web3. In fact, it is easy to see how Hive actually fits the description better than that chain.
In this article, we will explore Web3 along with what it means. To do this, we will go right to the source. Then, we will cover how things are progressing in that area to see if there is any light at the end of this proverbial tunnel.
What Is Web3?
To get this answer, we will go right to the source.
It is best if we use proper terminology when discussing something. Since Ethereum introduced the world to this, we will go with their documentation.
For this reason, we will pull what is written on Ethereum.org. This is as close to the original source as we can get.
According to this article on that site, the credit for the name is given to one of the co-founders, Gavin Wood. He came up with the term shortly after the launch in 2014.
Here was the basic problem:
the Web required too much trust.
Few will deny the fact that the Internet is controlled by just a few companies. This is something that Web3 is designed to address.
Basically, Web3 has blockchain and cryptocurrency at its core. This will allow for the moving away from the centralized control that is commonplace today.
Web3 versus Web 3.0
Before going any further, we have to distinguish between Web3 and Web 3.0. In doing some research, it appears Gavin Wood focused upon Web3. By this, he was concentrating on blockchain and cryptocurrency alone.
Hence, if we are discussing a blockchain based system, that is Web3.
This does, however, operate against a larger backdrop. It is not only the transformation of the Internet but also the entire industrial economy.
Web 3.0 is forecast to contain:
- artificial intelligence
- robotics (and drones)
- spatial web
- genetics
- bio-tech
- nuclear fusion and other energy sources
- quantum computing
Naturally, many of these are still in the very early stages, with no guarantee of success. Therefore, Web 3.0 will be realized in hindsight. Some term this another industrial revolution.
Why Web3 Is Important
The idea of the Web3 is as follows:
Read-Write-Own
We know that, presently, we have read-write abilities but there is no ownership on the part of the individual user. It is all in the hands of these technology companies, especially those involved in social media.
Reverting back to the Ethereum site, we have this information which gets to the core of what we are discussing.
Web3 is decentralized: instead of large swathes of the internet controlled and owned by centralized entities, ownership gets distributed amongst its builders and users.
Web3 is permissionless: everyone has equal access to participate in Web3, and no one gets excluded.
Web3 has native payments: it uses cryptocurrency for spending and sending money online instead of relying on the outdated infrastructure of banks and payment processors.
Web3 is trustless: it operates using incentives and economic mechanisms instead of relying on trusted third-parties.
It goes on to explain that we have these vital features:
- ownership
- censorship resistance
- decentralized autonomous organizations (DAOs)
- identity
- native payments
All of this look pretty good. So how is Ethereum doing and let's contract that with Hive.
Ethereum Is Not Decentralized
Here is where things take an ironic turn.
When this was written, Etheruem was a Proof-of-Work (Pow) chain. Blocks were formed using miners, in the same way as Bitcoin. What separated Ethereum from that chain was the addition of smart contracts.
For the first half decade, we could apply the concept of Web3 to Ethereum. There is a problem: it switched to coin voting a couple years back.
When that was undertaken, suddenly stake became a major criteria. Operating under a mining system means coin distribution is not relevant. When it comes to the running of the network, if the coin is in the hands of 3 wallets or 1 million, it makes no difference.
This all changed when the switch was made. Suddenly, those who were involved in the founder's stake or pre-mine had enormous power. An individual like Joe Lubin who has a ton of ETH could exercise incredible control. The same was true of Vitalik.
Here is where decentralization falls short. We see discussion of things such as KYC being considered for the nodes on that chain. How is that even possible if we are dealing with decentralized system?
The answer quickly becomes clear.
Major node operators will have to KYC because they are vulnerable. When the largest two pools have more than 60% of the stake, this means their chance of getting the blocks is high. We are not dealing with entities that are going to get 3% or 4% of the block production.
Unfortunately, Ethereum falls short as a Web3 network based upon the definition and criteria it set up.
Hive Is Web3
Many claim that Hive is centralized. This is not the case.
When it comes to stake, we see nobody with more than 3%. This is not likely the case with Ethereum.
It is naturally impossible to know how much ETH any individual has. People like Joe Lubin accumulated a ton over the years. Not only was he involved in the early distribution but he went on a massive buying spree. He might be the largest individual ETH holder.
As long-time people on Hive know, large stake from a pre-mine is dangerous. This is true regardless of the system.
Another factor to consider is who is producing the blocks. Hive operates on a rotating basis. The Top 20 witnesses, as long as they remain, will have the opportunity to produce the same number of blockchain. With 20, that means nobody has more than 5% of the block production.
Of course, this is actually reduced since there are back up witnesses who also create blocks. This means the rewards are spread over more than 100 nodes with the lower ones getting a few opportunities at block production.
Ethereum basically incentivizes people to stake with the largest pools. There is little reason to go with the ones ranked lower. With Hive's governance system, we see how voting is done based upon a number of votes. The vote weight is based upon stake that wallet holds but the voting mechanism is much different.
Look at the list again:
- Hive is decentralized: as we discussed, this is more than most chains out there because the major pre-mine was eliminated
- Hive is permission-less: as long as one has the key and enough resource credits to engage with the database, nothing else is required
- Hive has native payments: there are actually two coins that can be used for this purpose with one being an algorithmic stablecoin
- Hive is trustless: like most blockchains, the network is the counterparty
Ethereum hits on 3 of those. However, it is becoming evident that it fails on the decentralized end of the equation. As we hear more talk of KYC and see Wall Street sniffing around, we can predict this is just the beginning of the process.
It all comes down to distribution. With Hive, it is more Web3 than Ethereum right now.