Here at Peach Rocks, we like to keep a keen eye on new technologies to help focus our future development directions. Since 2014 we’ve been keeping an eye on Web3 and the opportunities it will give to improve our product and make life easier for the users of our product. We believe that the current concept of Web3 websites is far too basic, more regression than progression.

Our product should be the future direction of Web3 websites. Our Web3 web applications fell like improvement and users of our product feel like it’s 10 years ahead rather than a decade behind. Want to know the basics of Web3, our opinion on it and where we are going? Read on.

Before we dive into Web3 let’s just take stock of where we are currently. From our product perspective we are currently somewhere between Web 2.5 and Web3, we’ll come to why in just a moment, but before that let’s have a quick look back at the history of the web. Around 1991 Web 1.0 arrived with a bang and all our lives changed. The static, read-only web had arrived. Content was server-side and created by organisations for our consumption in the form of index linked pages. Consumers consumed content but rarely created it.

Around 2004, arguably well before, social media arrived and according to history so did Web 2.0. The likes of Facebook, Twitter, Google allowed users to create content of their own albeit within silos of data stored by single corporations. These tech-giants housed the data produced by the consumers and used it to mine the information about our daily lives and needs. This was the cost of the data storage. More users and user content equals more revenue predominantly through advertising.

The key point is although access and usage is free to users, there is an underlying cost via mining of their data stored within large corporation data centres. This is the state of play today.

Around 2014 the term Web3 was coined. Built on the back of the work around the Ethereum network. This actually stood on the shoulders of Bitcoin and blockchain. We loved micro-payments in bitcoin and utilised the technology heavily in the early days. The arrival of Ethereum was however a game changer. The Bitcoin blockchain focused on BTC as a currency, initially as micro-payments and then perhaps as an investment or asset.

Ethereum differs in this respect in so far as the currency ETHER is secondary to its main purpose which is providing the possibility of computer source code to be stored on the blockchain in the form of smart contracts. The transactions published to the Ethereum blockchain are paid for in gas fees (ETHER), these are the exact equivalent of bitcoin transaction fees. There are miners freeing blocks and processing transactions in both blockchains using a mechanism of consensus to validate authenticity across the network nodes.

So, the key point here is that with Ethereum we can publish (or mint) byte code in the form of smart contracts onto the blockchain. The native digital currency is ETHER and is used to drive the system, with gas fees and new block creation and also through direct payments between user’s wallets. Ethereum was the first blockchain network to create part of the vision of Web3.

We would put ourselves somewhere >Web 2.5 but less than Web3. We had the vision to remove the dependency on big tech way back in 2011. We had a belief that business and users should own their own data in a decentralised way which is a key feature of Web3. We’re looking forward to implementing further releases of what we consider are key parts or the most functional value of Web3 features.

We’ll cover more later after we continue with more background into Web3. We’ve also a view that it’s not Web3 or nothing. We believe it will be parts of Web3 plus Web 2.0 for the conceivable future, the next decade. Let’s dig a little deeper into Web3 before we comment further on what’s good and what’s not, in our humble opinion.

All Ethereum blockchains have the concept of running code stored on a block in the chain of blocks. So, Polygon network has it too, being based on Ethereum. There are other blockchains too, like Solana and Cardano. Later on, we will contrast Polygon with Ethereum. Back to Smart contracts, these are small or maybe medium size pieces of computer code that are published to the blockchain that solve some problem. They contain functions and data that can be called and manipulated publically by anyone or just the owner. A couple of examples here might help.

Consider you own an NFT (Non-Fungible Token) and want to sell, let’s say your impressive “Bored Ape Yacht Club” membership. Forget marketplaces like OpenSea or Rarible for a moment. You want to do it yourself on the blockchain. You have the Ape NFT in your wallet and your buyer has the ETHER in their wallet. What about trust? You send me the ETHER and I’ll send you the Ape or visa versa. Would you? Problems like this have traditionally be done via a trusted 3rd party like a marketplace, escrow or a solicitor/lawyer. What if you could create a contract on the blockchain that executed the actions required in code. Just like the following pseudo code smart contract:

Consider you want to raise some capital for your fledgling start-up. Since NFTs can point to physical assets, not just digital assets, why not allow a group to finance your project right on your very own website with no 3rd party. Say we want to raise 100 ETHER from 10 investors. Each Investor will gain 1% of the company shares. Just follow the pseudo code below:

So smart contracts take the pain out of trust in financial transactions. That’s why the banks are so interested in DeFi (Decentralised Finance). DeFi runs on Ethereum type blockchains via smart contracts.

Hopefully you can now see the benefits of smart contracts, we really like this concept in Web3 and think it’s a clear winner in terms of contractual transactions. So, theoretically, this is an amazing new world that solves and records all our transactional problems.

However, in our opinion it’s a long way of working functionally in the real world. Why? Let’s do a bit more recent history on blockchain and see the real-world problems in function and finance that have arisen.

In 2011 we had just started out on our start-up journey with Peach Rocks. We needed a way to test our product’s application messaging code and libraries in the real world. We came up with Cash Clamber, you might have heard of it or even played it. It was a ‘thing’ in the Bitcoin world from late 2011 until 2018. So, the idea was to let people play games online head-to-head in a web browser.

We also ran a streaker game every half hour to distribute small amounts of £1 GBP bitcoin prizes. We get 365/24/7 code resilience/penetration testing and our testers are playing games for bitcoin and in the background transferring billions of application messages over our product’s smart connections.

Back in 2011 it was hard to send less than a pound via traditional banking since the transaction fees were so high. Enter Bitcoin. Send tiny amounts for a tiny transaction fee. It became possible to send our players £1 GBP or less easily for a fraction of a penny. Micro-payments nailed and for many years it worked until it didn’t.

What went wrong? Bitcoin became more of an asset/investment than a micro-payments platform. As the value of bitcoin rose, the higher the tiny transaction fees and the slower the time to process payments unless you offered a bigger transaction fee to the miners. Bitcoin had reverted from fast, cheap micro-payments to an asset-based investment. The coin price of Bitcoin seemed to be the only value.

Let’s not mention the green issues with the mining (proof of work) consensus model. 772Kg/Co2 for a single BTC transaction. The whole Bitcoin blockchain mining and consensus process uses 130TW/hour which is about the same as Argentina uses as a country. This broke the whole point to us at Peach Rocks. It broke and continues to break the permission-less model of Web3, anyone can participate and replaces it with the old fiat money paradigm, anyone can participate if you have the money.

In 2014 as the term Web3 was coined by Gavin Wood it was completely misunderstood by the general public, as is always the case. The tech-world might well of embraced the idea behind code is King on the blockchain and coin simply oils the cogs BUT generally it was seen as the ALT coin that is ETHER. Folks traded ETHER the exact same way as BTC, as an opportunity to make profit and traded it the exact same way.

In our opinion this trading and asset viewpoint tainted the pure concept of code on a blockchain and smart contracts. The same thing happened to ETHER that had happened and continues to happen with BTC. The coin price rose to over £1,000. The majority of transactions were financial, coin trades, rather than smart contracts. The once low gas fees rose to £15 for a single transaction. It could cost £1,500 to mint a handful of NFTs. Remember each invocation of a smart contract consumes a gas fee.

It gets worse outside the world of theory, the Ethereum network can only handle about 16 transactions per second which are handled sequentially. Tempting miners to process the transactions involves paying more in gas fees. The network grinds to an overpriced halt. Until recently the Ethereum blockchain used the GPU mining (proof of work) model with its associated high environmental costs. The recent switch to staking (proof of stake) reduces CO2 emissions by 98%. Ethereum v2 will fix even more problems with scalability but it will not fix the ETHER price which remains stubbornly high.

Around 2017 techies with a keen eye on Ethereum thought hey let’s fix the problems with Ethereum by building a compatible blockchain on top of Ethereum. Enter Polygon with its MATIC coin. It’s back where Ethereum was in 2014. You can do things for free with low gas fees, like a fraction of a cent. The coin value is less than a £1.

It’s no wonder that banking organisations are starting to migrate. J. P. Morgan just the other week. I can still mint my NFTs for free on Polygon. Smart contracts are fractions of a cent to run. Will history repeat itself with Polygon MATIC coin becoming an investment? Likely? For now, let’s just consider Polygon and MATIC as Ethereum V2. It matters not, it’s all about smart contracts, a great idea.

Irrespective of scaling, processing, costs and blockchain age we at Peach Rocks like the idea of code in a ledger. It is the future of contracts. The banks are right. However, folks seem to try and shoehorn everything onto the blockchain. It’s not a global solution to storing data. It’s too slow.

A hammer and a saw can both chop wood but one is better suited. It will never replace a high throughput database for storing and retrieving data. For the right purpose it’s a good thing. It stands on its own aside from the other concepts in Web3. We at Peach Rocks are starting to use smart contact technology in our own products.

So, we’ve seen that blockchain and public transactions is a part of Web3. But how else does it empower you as a user. It starts with an extended wallet that can store more than just coin. You’ll need your Ethereum wallet much more than your Bitcoin wallet, they aren’t compatible before you ask, you cannot directly store BTC in your MetaMask Ethereum wallet.

There’s a set of standards to token types in Ethereum, ERC-20 is a coin, ERC-721 is an NFT and there are others. This is how your wallet identifies the type of token that you are storing. In your wallet you can store your NFTs alongside your digital money, ok technically they are stored on the blockchain but displayed in your wallet. It’s bigger, you can store your Web3 domain name in your wallet too.

There’s a set of standards to token types in Ethereum, ERC-20 is a coin, ERC-721 is an NFT and there are others. This is how your wallet identifies the type of token that you are storing. In your wallet you can store your NFTs alongside your digital money, ok technically they are stored on the blockchain but displayed in your wallet. It’s bigger, you can store your Web3 domain name in your wallet too.

Are you seeing that it’s all about ownership. In previous web versions your assets were predominantly held by another trusted 3rd party. Hopefully they will be around to look after your asset forever, maybe. Your ownership is key to the Web3 concept.

Your wallet is key to ownership. You can store all your Web3 assets in there. Your coins, your NFTs, your Domains, your common login and so on. It’s also the way that you pay your way in the Web3 world. Did you think you would get it for free? The concept is that in the Web 2.0 world where big business stores your assets then they pick up the tab.

In the shiny new Web3 world you own your assets and pay for transactions, the network gas fee. Almost all write blockchain transactions involve a fee, albeit what should be a small one. Currently it hasn’t worked out this way with the Ethereum network where even the gas fees are expensive.

Your wallet can be an app on your phone or a browser extension or some browsers are now Web3 enabling natively. So, remember, paying with your wallet will become common place to everything you do. So, what can you do?

You will be well aware of this problem in Web 2.0, remembering all those logins to all those websites. What if you owned your login details in your wallet? We trust Web 2.0 corporations to store our login details, user and password plus personal data, in a safe and secure manner. How’s that gone in the past. They get hacked along with your data.

Wouldn’t it be so much better if nobody stored your login information apart from you and your wallet and that login was all that was necessary for all websites. There would be no server data to be compromised. Your login could also be optionally validated during creation from your driving licence or passport. It’s you, you own it and can prove it’s you without disclosing very sensitive information to 3rd parties.

We covered the basics of NFTs earlier. It’s a much bigger concept than collectables in the form of the ‘Bored Ape Yacht Club’ and ‘CyptoPunks’ which trade for unbelievable amounts of coin. The marketplaces like ‘OpenSea’ and ‘Rarible’ shift millions in collectable NFT value each month. Remember NFTs can point to both digital and physical assets.

NFT’s could be part of a physical company share or stake in a physical real-world asset. You should read NFT as anything that is NOT coin. So, a smart contract is an NFT, a Web3 domain is an NFT, everything not coin and based on the ERC-721 standard. Coin is based on ERC-20. Looking at an Ethereum wallet makes sense of this which invariably has two tabs, coin and NFT.

A Web3 domain is more than just indirection to your website like Web 2.0, its primary purpose is to point to your wallet with a user-friendly name rather than the 42-character hexadecimal address. For example, I could grab the Web3 domain peach.eth and point it to my wallet instead of 0xbAD65DE65AE2c23f5eA30d12fC8c2f883cbe671f makes it much easier for a buyer to pay to our company wallet.

Also, it’s possible to assign the domain to your content (or rather Web3 website) by updating ENS records or the unstoppable equivalent for the Polygon network. The domain is an NFT so it can be stored in your wallet and traded on exchanges like OpenSea. A couple of downsides. It costs a gas fee each time you want to make a change since it involves a blockchain write. Currently a single write to connect the domain to your website could cost you £15, each change you make costs money. No too big a problem on Polygon, at the moment.

Currently in comparison with Web 2.0 you’re going to be extremely disappointed in Web3 websites. Unless you want something that is simply static it’s currently a work in progress. A distributed website is based on the IPFS (Inter Planetary File System) which again is pay as you go involving writes to blockchain. What? Changes to your website are chargeable and potentially network specifically expensive, over and over? Yes. And don’t forget it takes a while for the change to mint on the blockchain and propagate.

 So, no PHP? Not yet! What about WordPress? Sorry, no, for now. Effectively we are back in good old Web 1.0 with static websites. The core development tools are also a work in progress. In short, it’s not an easy process. It’s very doable but limited. Into the future who knows. Theoretically it’s a great idea for a decentralised website, but practically at the moment it’s really a none starter for a modern web application.

Since one of the core concepts of Web3 is permissionless, where all can participate without censorship and regulation, abuse can happen and it is commonplace. The number of phishing websites is growing since it’s completely unregulated. This is of course a key concept of Web3.

The IPFS is a neat concept regarding duplication of files across the network. It’s too big a discussion for an overview of Web3 however it’s sufficient to know that files are hashed and there can be no duplicates on the decentralised network since a file, hashed on content, always produces the same hash. It’s also replicated across the decentralised network. A really good idea.

Currently you won’t be able to access your shiny new Web3 IPFS decentralised website with your classic web browser natively. Some have browser extensions to help in the process. Opera is on the way to having native Web3 support and will probably get there first. You can use a next generation browser like Brave. Let’s hope that that currently parallel universe of Web3 websites is brought mainstream with ENS (like DNS but for Ethereum blockchain) to standardise web browser access. The most popular browsers like Google Chrome are using extensions for implementations of Web3. Let's hope that this migrates into product in the very near future however...

For now, we wait and see.

Decentralised databases which are not made from blockchain are starting to appear. Ceramic Network is pioneering the way with community data models which represent standardisations of data. The idea being that all applications should not duplicate data but create data in a standardised and central manner.

So, a retail product used by say eBay is the same product that is used on Amazon, rather than two separate entities in each distinct system. The community will create the data models and developers can pick a schema that matches their product.

The distinct applications will render common data so that it will become the data that is central and not the viewing application so that the user has more choice rather than being tied to the creating application. The ownership of the data has now moved, however there is no implication that product is held in wallet but rather owned in a decentralised way.

There is a lot of standalone technologies in Web3 that are trying to join together to provide an homogenised toolset. The entry point to attract a developer is currently very high, to attract an average user it’s far too high. We feel websites are a particular weak point with a static site offering is not adequate in terms of advanced web applications.

There’s simply too big a jump backwards from our >Web 2.5 offering with live push, websockets and perfect state. There’s good work being done with IPFS and Fleek however it’s not there in our opinion. Payments are also a disabler, for Ethereum it’s far too expensive for the average user. There is currently a perception that changing a website is both free and instant, and in some respects live to all watchers using websockets.

On the other hand, smart contracts are a neat idea that can supplement our existing Web 2.0 websites. Web3 doesn’t have to be an all or nothing. Web 2.0 will exist alongside Web3 technologies for years to come. There are powerful players in and around Web 2.0 technologies as well as powerful political institutions that in our belief would not stand back and drop into the background. However, there is always compromise.

The best of the features like wallet, domains and single owned login it’s hard to fault and it’s clearly better. Websites have a way to go, decentralised is great, static not so great. Our real-time websites are 10 years ahead! What if we distributed them across our network nodes? We have Web3 websites out of the box!

We’re keeping a close eye on Web3. We’d like our web applications to be decentralised into the future and we’re working on the concepts without relying on IPFS. We’re looking into ways to decentralise our websites in a Web3 way but without losing the great features we’ve developed for live web applications.

We’re investigating CDN and reverse proxies as a way of resilience and decentralisation including distributed websockets. We’ll keep you posted as we push our >Web 2.5 towards Web3. We’re not there yet, but neither is Web3. We’d like our web applications to actually be the true leading direction for Web3 applications into the future. Watch this space…