tl;dr: On June 10 Jack Dorsey (ex Twitter CEO) announced Web5, which is basically Web3, but without the token scams.
The crypto space is somehow divided in Bitcoin maximalists, who accept no other
god blockchain. Their position is that Bitcoin is the only valid use case for blockchains. It's also the only distributed and secure blockchain, as well as the only one that's not a Ponzi scheme. Unfortunately it is wasting enormous amounts of energy.
On the other side we have Ethereum and all the more advanced blockchains, which are basically frameworks for building decentralised apps on top. The problem: many "apps" are just coins, whose developers might or might not be scammers, using the coins to fund their projects outside of the regulated investment channels. Most of these blockchains do not kill our planet, as they use other consensus mechanisms than Bitcoin. Well, Ethereum still does, but at least they admit it's a problem and try to migrate.
Jack Dorsey is a Bitcoin maxi, but he also likes the Web3 idea of decentralised apps with self-sovereign identity and user controlled data management for privacy. So he and his company TBD are now developing the building blocks for such applications in the Bitcoin space.
The key difference to Web3 is: only identity is stored on-chain. Everything else is stored on user-run nodes. This means: no smart contracts, no "shitcoins" (I don't like this term), and no fraudulent tokenomics with air drops, yield farming, or staking.
• Decentralised identifiers (DiDs). They are unique IDs for every user, like a public key (wallet address) in Web3. They are implemented as a Layer 2 protocol on Bitcoin (like Lightning) called ION.
• Verifiable credentials (VCs) are additional information for each user. This might your home address, a digital signature, your age, or something else. AFAIK access can be implemented with ZK algorithms to protect privacy.
• Decentralised Web Nodes (DWNs). DWNs are decentralised computers. They store data and facilitate communication between DiDs. Analogous to smart contracts in Web3, but run locally (I guess this means on a single node) instead of "on the blockchain" (which means on every node).
• Decentralised Web Apps (DWAs). Users interact with Web5 using a DWA. This is like a web app with a key difference: users control their own data and there is no intermediary.
Since applications cannot be implemented directly in Bitcoin (due to the lack of smart contracts) Web5 brings building blocks, such as an L2 protocol for identity and data management. This seems like a bad deal for developers, as everything gets more complex, but it might solve the problems and frauds we see in Web3 to some extent... so why not give it a try?
You can read more about Web5 on TBD's project website: https://developer.tbd.website/projects/web5/
They also have slides (PDF).
I have to thank @ntkris, because I copied a lot from his tweets for this article.