Summary
The Internet has evolved from the “read only” Web 1.0 to the often participatory and socially based Web 2.0. Now, we are moving gradually towards the next phase of the internet, namely Web 3.0, often nicknamed Web3 in the world of digital assets. Web3 promises the ability for users to own goods digitally, transact easily online, and have greater control over their personal data. The blockchain and crypto ecosystem already has a variety of working Web3 products. For example, users can make peer-to-peer (P2P) payments and collect digital items with a crypto wallet. Most blockchain-based projects are decentralized and allow anyone to use them.
Introduction
Digital assets could become an intrinsic part of Web3, the new internet that is expected to solve the Web's current problems such as the concentration of power on a handful of centralized social media platforms and the exploitation of users' personal data. The decentralized and permissionless nature of blockchain is essential in distributing communication power. With this technology, we do not need to hand over decision making to a central authority.
In addition to bringing native digital payments to Web3, digital assets can also function as tokens programmed to perform a variety of roles in the digital economic system. Blockchain and crypto can also make Web3 more community-based through decentralized autonomous organizations (DAOs).
How is Web3 different from Web2?
The major evolution of the internet is often described as several qualitative phases such as Web1, Web2, and Web3. In the Web1 era, users cannot modify online data or upload their own content into websites. In those days, the internet consisted of static HTML pages that enabled simple one-way experiences, such as reading information forums.
Web1 enables content consumption and simple interaction. Then, Web2 emerged gradually as a more interactive internet. Users are becoming more involved in content creation. Because this mode of online interaction was facilitated primarily by social media platforms, Web2 gave rise to a number of centralized technology giants.
The Web2 ecosystem is now undergoing other changes to address its various shortcomings. For example, internet users are becoming more concerned about tracking and data ownership as well as censorship issues.
The power of centralized companies became apparent when they began leveraging it to ban certain users and organizations from their platforms. Web2 Companies also use data to keep users on their websites and create targeted advertising for the benefit of third parties. These economic incentives can encourage related companies to act not in the interests of users.
The Web3 vision is the next step towards a better internet. The main promise is to present an online platform that is decentralized, trustless and permissionless. Web3 can also make digital ownership, digitally native payments and censorship resistance a new standard for Web products and services.
Blockchain and crypto are well-suited as core Web3 technologies, as they are decentralized so anyone can record information on-chain, tokenize assets, and create digital identities.
What is the role of blockchain and crypto in Web3?
Decentralization: As already mentioned, one of the main problems of Web2 is the concentration of power and data in the hands of a few large companies. Blockchain and crypto can decentralize Web3 by facilitating wider distribution of information and power. Web3 can implement a public distributed ledger backed by blockchain to enable greater transparency and decentralization.
Permissionless nature: Blockchain-based projects replace traditional corporate proprietary systems with openly available code. The permissionless nature of applications built on blockchain allows anyone around the world to access and interact with them without restrictions.
Trustless nature: Blockchain and crypto eliminate the need to trust third parties, such as banks or individual intermediaries. Web3 users can transact without having to provide trust to any entity except the network itself.
Payment paths: Cryptocurrencies can serve as Web3's digitally native payment infrastructure. Digital assets have the potential to improve Web2's expensive and bulky payments infrastructure. Crypto is borderless and does not require intermediaries.
Ownership: Crypto already offers tools such as self-custodial crypto wallets that allow users to store their funds without intermediaries. Users can also connect the wallet to decentralized applications to use their funds in various ways or display their digital items. Anyone can verify ownership of those funds and items using a transparent public ledger.
Resistance to censorship: Blockchain is designed to be resistant to censorship. This means that no party can change transaction records unilaterally. Once added to the blockchain, records are nearly impossible to delete. This feature can help prevent censorship by governments and companies.
Are blockchain and crypto important for Web3?
Web3 may utilize technology unrelated to blockchain or cryptocurrencies. For example, technologies such as augmented reality (AR), virtual reality (VR), internet of things (IoT), and metaverse can also play an important role for this new era internet. Blockchain can be further utilized for web3 infrastructure purposes, while the above technologies and solutions can help make the internet more immersive and connected to the real world.
IoT can connect various devices over the internet, AR can add digital visual elements to the real world, while VR can build computer-generated environments filled with items represented as digital assets. Finally, the process of scaling and unifying these technologies could make the metaverse the 'face' of Web3.
Crypto can provide digital native payment paths and many other things. Utility tokens can give rise to a wide variety of uses that are important for Web3. Additionally, non-fungible tokens (NFTs) can help verify identity and ownership in the digital world in a way that does not compromise users' control over their personal data.
What would Web3 look like with crypto and blockchain?
Blockchain technology may be one of the foundations of Web3, but users may not be aware of it. If applications built on blockchain were user-friendly and intuitive, people would not think about the underlying infrastructure. This is the same as we rarely think about the data servers and internet protocols that are the basis for the social media platforms we use every day.
NFTs can enable users to display digital collectibles to other users and help create and maintain a unique digital identity. NFTs can also carry out other functional purposes, such as supporting various key processes in online gaming.
Blockchain and crypto can change the way Web3 users coordinate and implement collective action through decentralized autonomous organizations (DAOs). DAOs empower people to organize common interests without a central decision-making authority. Instead, token owners vote to collectively determine the best course of action. In addition, all activity and voting can be monitored via blockchain. In this way, DAOs can push Web3 to become more decentralized, transparent, and community-centric.
Closing
Web3 can solve major problems in today's internet and reduce the power of the tech giants. However, Web3 is currently still a vision, not a reality. Even so, the technology that is believed to disrupt the Web is clearly already in development.
Blockchain and crypto are often considered to be among the technologies that will most likely result in the Web3 revolution, as they are designed to facilitate decentralized, permissionless, and trustless interactions. In addition, blockchain technology and digital assets can coexist with other Web components, such as AR, VR, and the internet of things. The combination of all these technologies has the potential to produce the most promising solutions.