How Identity in Web3 Differs from Web2: A New Era of Digital Security and Ownership

The evolution from Web2 to Web3 stands as a reflection of how we perceive and manage our online identities.

Jun 6, 2024

Digital identity

The evolution from Web2 to Web3 stands as a reflection of how we perceive and manage our online identities. Web2, characterized by centralized platforms like Facebook, Google, and Twitter, has been the dominant framework for over a decade. 

However, with the advent of Web3, built on decentralized technologies like a blockchain, our understanding and use of digital identity is transforming. This brings enhanced security, user control, and privacy. Let's explore these changes and the implications they hold for the future of the internet.

Web2: Centralized Control

In Web2, identity management is heavily centralized. Major platforms store vast amounts of personal data, controlling user identities and access. This centralized approach has led to several critical issues:

High-profile data breaches have become alarmingly common. In 2021 alone, there were 1,862 data breaches, exposing over 4.1 billion records. Platforms that are trusted by millions of users, including Facebook and LinkedIn, have faced significant breaches, compromising user data on a massive scale.

Users have limited control over their data within this framework. Companies often monetize user information through targeted advertising, raising significant privacy concerns. According to a survey by Pew Research Center, 81% of Americans are concerned about how companies use their data — and the current landscape of centralized data storage and usage has done little to address this concern. The centralized nature of Web2 also makes it a prime target for identity theft. In 2020, the Federal Trade Commission (FTC) received 1.4 million identity theft reports, doubling from 2019 figures.

While Web2's centralized identity management systems have their drawbacks, they also offer several benefits. Centralized platforms provide seamless user experiences, enabling quick and easy sign-ups and logins through single sign-on (SSO) solutions like Google or Facebook authentication. This convenience reduces friction for users and increases engagement for online services. 

Centralized systems can also efficiently manage and recover accounts, offering customer support and recovery options in case of forgotten passwords or hacked accounts. The economies of scale in these platforms also allow for sophisticated security measures and regular updates to protect against new threats, which can be more challenging for decentralized systems to implement across multiple chains and projects uniformly. 

As we discuss how Web3 can heighten security and privacy, we should also note that centralized data storage facilitates compliance with regulations and standards, providing a streamlined approach to privacy and security that can adapt quickly to new legal requirements. These aspects make Web2's identity management highly accessible and user-friendly, catering to a broad audience with varying levels of technical expertise.

Web3: Decentralization

Web3 aims to address the shortcomings of Web2 by leveraging blockchain and decentralized technologies. Here are the key features that distinguish Web3 identity management. In Web3, identities are managed on decentralized networks, reducing the single points of failure inherent in Web2 systems. This decentralization makes it much harder for hackers to compromise large sets of data.

Web3 gives users control over their data. With decentralized identity (DID) systems, users own and manage their identities without relying on central authorities. This self-sovereign identity model ensures that users decide who can access their information and how it is used.

Blockchain technology provides robust security features. The immutability and transparency of blockchain ensure that data cannot be tampered with, significantly reducing the risk of identity theft and fraud.

Web3 identities can be used across multiple platforms and services. This interoperability is made possible by standardized protocols, allowing users to maintain a consistent identity across different applications without repeated sign-ups and data sharing.

While blockchain technology offers enhanced security and transparency for managing identities, it also presents several drawbacks. One significant concern is scalability — the decentralized nature of blockchain can lead to slower transaction times and higher costs as the network grows, making it less efficient for large-scale identity management. 

The immutability of this system, while an overall security strength, means that any erroneous data entered cannot be easily corrected, posing risks to the integrity of identity records. Widespread adoption of blockchain for identity management requires significant infrastructural changes to be more aligned with Web2 user experiences, which can be resource-intensive and challenging to implement.

The Future of Digital Identity

The transition from Web2 to Web3 is still in its early stages, but the potential benefits are substantial. As more platforms adopt decentralized identity solutions, users will experience greater privacy and security. dApps, built on blockchain, inherently support Web3 identities, offering users enhanced control and security. The usage of dApps is rapidly increasing, with an impressive 77% rise within the first quarter of 2024. This upward trend indicates that individuals are seeking alternatives to Web2 and more of them are growing accustomed to Web3 security and identity management features.

Governments and regulatory bodies are also beginning to recognize the benefits of decentralized identity. For instance, the European Union is exploring digital identity frameworks that incorporate blockchain technology.

We’re already seeing a shift in how we manage digital identities to address the critical flaws of Web2. By embracing decentralization, user control, and enhanced security, Web3 promises a safer and more private online experience. As this technology continues to evolve, it holds the potential to redefine trust and identity in the digital age, paving the way for a more secure and user-centric internet.