What Is 'Web5' and How Is it Different From Web3?

The world is still getting its collective head around Web3 – a suite of decentralized protocols that add a (disputably) censorship-resistant financial layer to the internet. So why did Jack Dorsey, the creator of Web2 platform Twitter, skip right ahead to what he calls "Web5"?

It turns out that, despite the name, Web5 does not follow the yet-to-be-created Web4. The Web5 platform, announced in June, 2022 by TBD, the crypto and decentralized finance arm of Dorsey’s payments company, Block (née Square), is firmly based on Web3 tech, but promises “an extra decentralized web platform.”

To land on the name Web5, TBD just added Web3 (an internet powered by blockchain-based smart contracts) to Web2 (centralized content platforms, like Twitter or Facebook). Put simply: 3 + 2 = 5.

Web5’s core idea is to “put you in control of your data and identity” – a core tenet of Web3’s decentralized identity systems. Instead of inviting users to sign up for an account on a centralized platform (like an Instagram account), Web3 protocols reference users by their crypto wallet addresses. Protocols like the Ethereum Name Service let users turn their wallet’s garbled alphanumeric string into a word or phrase (like jane.eth) similar to how Domain Name Service (DNS) allowed websites to have addresses like coindesk.com rather than a long string of numbers like 54.235.191.121. Decentralized data storage is a concept already in existence and is provided by platforms like Filecoin and IPFS.

Dorsey’s Web5 offers similar capabilities. Instead of an internet that relies on accounts provided by companies that hold customer data “captive in app silos,” Web5 pushes for “a new class of decentralized apps and protocols that put individuals at the center.”

There are three pillars at Web5’s core: self-owned decentralized identifiers, verifiable credentials and decentralized web nodes for storing data and relaying messages. It sounds a lot like what decentralized identity services have been doing since the Ethereum Name Service launched in May 2017.

So, what’s new here – apart from yet another stab at decentralized identities? Part of the answer may lie in Dorsey’s allegiance to bitcoin and his aggressive dismissal of Web3 culture. For Dorsey, bitcoin, launched in a truly decentralized fashion in 2009, is the only cryptocurrency that matters, the rest having been corrupted by venture capitalists who bent the platforms to their will. Accordingly, Web5 is run without any “special utility tokens or subjective consensus” that is part of the governance-token, decentralized autonomous organization (DAO)-controlled protocols like the Ethereum Name Service.

In doing so, Web5 sounds like an attempt to rid Web3 of the centralized actors that Dorsey credits with sullying the mission of decentralization. Zion, a self-described Web5 app, uses Bitcoin’s base layer to help content creators work together with fans. But avoiding corruption is, of course, difficult: Web5’s nascent community already balked at TBD’s attempt to trademark the term Web5.

The other thing that is different from Web3 is that Web5 works with existing Web2 services; it does not seek to replace them entirely. Web5’s pitch deck provides the example of Groove adding a playlist to a Web5 user’s decentralized identifier, which another music service, Tidal, can use to fashion its own playlists within the app. The decentralized identifier prevents the user from having to recreate their preferences on another platform.

TBD’s other example of Web5 in action involves one user granting her hotel, airline and rental car provider the ability to add information to her database about her trip. The user can revoke access at any time and choose another service to “help her visualize her itinerary.” Again, the idea is to tie data that’s usually locked inside centralized services – something TBD calls “a massive, unworkable mess” – to a single user-controlled identity. Think of it as similar to how many sites and apps leverage a user’s Google account to log in, but in this case it will be a single login with a decentralized network of nodes.

Will it work? Time will tell. So far, the only decentralized identity service that’s caught on in any measure is the Ethereum Name Service, and the only data storage system with any cachet is the interplanetary file service (better known as IPFS).

One of the key things that distinguish TBD’s ambition is the backing of its billionaire progenitor, Jack Dorsey. But it’s unclear how Web5 would make money or why, ideological reasons aside, the company is creating such a service. Strategy consultant Adrien Book laid out the problem pretty well in a Medium post that followed Web5’s announcement: “Jack seems to want to keep the taste of Web3 without the calories. It’s like a high school student saying ‘yeah, but communism has never been REALLY tried as it’s meant to be.’ It’s naive.”