The web is based on the Internet Protocol (IP) and the Hypertext Transfer Protocol (HTTP). Behind a web server are usually application servers and databases that provide and execute the web-based services. Web applications serve as access to these services. Users can access these services through their web browser or their own web application. The variety of available web services and applications is large and covers virtually all areas.
Blockchains are also an application built on top of existing network access, networking, and transport. Same as the web server and the applications and databases available on top of it. Only, unlike web servers, blockchains build their own network (overlay) on top of the existing network (underlay). Blockchains are applications that build their own infrastructure with their own network and their own distributed ledger. Each user connects to this network and ledger. Some of the blockchains (e.g. Ethereum) also provide Turing-complete virtual computers in their application. They can execute small applications (e.g. smart contracts) that are located on the blockchain themselves.
In the OSI network model, web applications provided by web servers and blockchain are both found on layer 7 (application layer), while they are found on layer 4 when using the 4-layer TCP/IP model. In both models, they build on existing network access, network and transport. There is no network at the application layer. Therefore, blockchains must build and operate their own application-level network. A blockchain needs a consensus, which needs computing power and storage. The result is the "distributed ledger" on which states can be recorded and cryptographically secured independently of a central instance. Some of these include smart contracts, which are logical flows that can control transactions between two or more parties.
Running smart contracts requires additional computing power. All of this incurs costs, which are reflected in transaction costs. A blockchain is a distributed ledger, but not a database. Any app “running” on a blockchain, will pass on these transaction costs to its users. Therefore, it makes only economic sense to use blockchains where the specific functional properties of a blockchain are required for the app functionality. Given the high transaction cost of public and some of the private blockchains, off-chain standard SQL or NoSQL databases, off-chain logic and off-chain compute and storage should be used whenever possible. A blockchain infrastructure provides specific functionality that can be helpful for specific circumstances, such as if there is no single party trusted by every transaction participant.
The private key is stored in a wallet that provides access to the blockchain and the digital assets. Without additional security measures, there is only a single-factor authentication. To add further factors, further mechanisms are needed. While they can be done locally on a device, there is a substantial risk of loss if the device is lost or stops working properly. Therefore, multi-authentication mechanisms for wallets that involve web services are predominant. This has as effect, that without web service, there is no blockchain access. Part of the authentication towards this web service is through e-mail, which requires an e-mail account. Unlike blockchains, e-mail is a centralized service that requires centralized services such as a mail server and DNS. The result is that wallet security depends on non-blockchain traditional services provided over the internet.
Blockchains provide consensus infrastructure and decentralized ledgers. Some of them also provide support for smart contracts, which are logical flows that can control transactions between two or more parties. Web applications can include blockchain services, but for most web applications there are many alternatives to chose from. And for those web applications that need those blockchain services, it makes sense to keep the transactions on the specific blockchain as low as possible. In the blockchain sector, the combination of on-chain and off-chain computing and storage are a key focus to make that possible. Another focus is the transfer between different blockchains.
- Web 3.0 doesn’t need blockchains, but blockchains can provide specific infrastructure services for web applications.
- The use of blockchains without web is limited, whereas certain web applications would profit from the instant trust and proof provided by a blockchain.
- Web applications can reduce the complexity of using a blockchain.