Do you ever wonder, "What is Web3?" You're not the only one. The idea is having a moment, whether you measure it by VC funding, lobby blitzes, or incomprehensible company announcements. But it can be hard to determine what all the hype is about.

For believers, Web3 represents the next phase of the Internet and, perhaps, of organizing society. Web 1.0, so the story goes, was the era of decentralized, open protocols, in which most online activities consisted of navigating to individual static Web pages. Web 2.0, which we now live in, in the era of centralization, in which much of the communication and commerce takes place on closed platforms owned by a handful of super-powerful companies - think Google, Facebook, Amazon - subject to the nominal control of centralized government regulators. Web3 is supposed to free the world from that monopolistic control.

At its most basic level, Web3 refers to a decentralized online ecosystem based on the blockchain. Platforms and apps built on Web3 will not be owned by a central gatekeeper, but rather by users, who earn their ownership interest by helping to develop and maintain these services.

Gavin Wood coined the term Web3 (originally Web 3.0) in 2014. At the time, he had just finished helping to develop Ethereum, the cryptocurrency second only to Bitcoin in prominence and market size. Today, he leads the Web3 Foundation, which supports decentralized technology projects, as well as Parity Technologies, a company focused on building blockchain infrastructure for Web3. 

Wood, who is based in Switzerland, said via video about where Web 2.0 went wrong, his vision for the future, and why we should all be trustless. The following interview is a transcript of our conversation, slightly edited for clarity and length.

As I understand it, the idea of Web3 at the most basic level is that the current setup, Web 2.0, is no good. So before we talk about what Web3 would entail, how would you describe the problems with the status quo?

Gavin Wood: I think the model for Web 2.0 was about the same as the model for society before the Internet existed. If you go back 500 years, people basically stuck to their little villages and towns. And they traded with people they knew. And they relied on the social fabric to make sure that expectations were credible, that they would come true: These apples aren't rotten, or this horseshoe doesn't break after three weeks.

And that works reasonably well because it's difficult and very time-consuming and expensive to move from one city to another. So you have a fairly high degree of credibility that someone is going to stay and not want to be exiled.

But as society evolved into something larger in scale, and we have cities and countries and international organizations, we moved to this strange kind of brand reputation thing. We created these powerful but regulated bodies, and the regulators basically make sure that our expectations are met. There are certain legal requirements that you have to meet to operate in a certain industry.

This is not a great solution, for a couple of reasons. One is, it's very difficult to regulate new industries. The government is slow, it takes a while to catch up. Another is that regulators are not perfect. And especially when they work closely with the industry, there is often a revolving door relationship between the industry and the regulator.

Another is that a regulatory body has limited firepower. It's the amount of money that the government puts in. And so regulation will necessarily be piecemeal. They may be able to regulate the biggest offenders, but they are not able to exert a strong influence all the time and everywhere. 

And of course, regulators and laws vary from jurisdiction to jurisdiction. If you're somewhere in the EU, activity X is fine; if you're somewhere else, it's not fine. And since we have become a very international society, this basically means that your expectations are still not met.

So we need to go beyond this. But unfortunately, Web 2.0 still exists very much in this very centralized model.

What is Web3 exactly?

At a basic level, the idea behind Web3 is to take the world wide web as we know it and add blockchains - the technology behind cryptocurrencies like bitcoin - to it.

Why would you want to do that?

The web was once seen as a utopia in which anyone could do anything, but proponents of Web3 say it is now dominated by large corporations and proprietary algorithms. Blockchains could give people fair ownership of their presence on the Internet. "Web3 is a way to deal with the trauma of losing a once-possible great future for the Internet," says Niels Ten Oever of the University of Amsterdam.

Wait a minute, what about Web 1 and 2?

The first web was simply the World Wide Web, launched by Tim Berners-Lee in 1989, which allowed people with technical knowledge to put information online in a decentralized way. Web 2.0, first mentioned in a magazine article in 1999, saw the development of user-friendly tools that allowed anyone to create content online, not just experts, but at the expense of centralization in the tech giants we have today, like Facebook and Google.

Web3 sets its own typographic trend by dropping the ".0" and a space and will enable the best of both worlds, say its proponents: easy-to-use, decentralized tools.

So what does it actually entail?

At the core of Web3 are distributed applications (or dapps) built using the Ethereum blockchain, which makes payouts to users that help keep the network online.

Dapps will play a similar role for Web3 as the App Store did in unlocking the potential of the iPhone, says Zoe Scaman, founder of London-based strategy studio Bodacious and a supporter of Web3. "We need to remove friction and create broad use cases, which will happen as more third-party developers start releasing more dapps built on top of blockchains," Scaman says.

Whether you think Web3 is a curse or a blessing, it is here to stay. What do you think of Web3 and its uses?