Web3 is relatively new and many people ask different questions regarding this fastest-growing aspect of blockchain technologies. From what is Web3 used for, to what is Web3 real-life examples, and many more questions around the introduction of Web3. If you have asked such questions or have related Web3 questions unanswered, then this guide is for you.
As the internet evolves, so too do the ways we use it. You may have heard the term “Web3” floating around lately, especially in discussions about the future of technology, blockchain, and cryptocurrencies. But what exactly is Web3? Why does it matter, and how is it different from the internet we know today?
In this beginner-friendly guide, we will walk you through everything you need to know about Web3, breaking down complex terms and ideas into simple concepts. By the end of this article, you’ll clearly understand what Web3 is, why it’s important, and how it could reshape our online lives.
1. What is Web3?
Web3 is the term used to describe the next phase of the internet’s evolution, which aims to create a decentralized web. This new version of the internet will be powered by blockchain technology and offer more control to individual users. In essence, Web3 represents a shift from a web controlled by big companies and organizations (like Facebook, Google, or Amazon) to a web controlled by individuals through decentralized applications (dApps).
Web3 is often described as the “decentralized internet” because, unlike the current internet (Web2), which relies on centralized servers and third-party companies to store data, Web3 aims to return control to users by using a peer-to-peer network.
2. How does Web3 differ from Web1 and Web2?
To understand Web3, it helps first to understand the previous stages of the Internet:
- Web1 (1990s – Early 2000s): Also known as the “read-only web,” Web1 consisted mainly of static websites. Users could view content, but they couldn’t interact with it much. The internet was decentralized but basic, and most people were passive consumers.
- Web2 (2000s – Present): Also called the “read-write web,” Web2 introduced dynamic, interactive websites. Social media platforms like Facebook, Twitter, and Instagram allow users to generate content and engage in discussions. However, the downside of Web2 is its centralization—large corporations own most of the data and control how it is used.
- Web3 (Present – Future): Web3 is the “read-write-own” web, where users have more control over their data and online identities. Instead of relying on intermediaries like banks or social media platforms, Web3 operates on decentralized networks. Ownership and control are distributed across the network’s users.
3. Core technologies behind Web3
Several key technologies make Web3 possible, each contributing to the concept of decentralization:
- Blockchain: The foundational technology behind Web3, providing a secure, transparent, and decentralized ledger for recording transactions and data.
- Cryptography: Used to secure transactions and ensure user privacy in decentralized systems.
- Decentralized Networks: Systems that allow for the sharing of resources (like data or computing power) across a peer-to-peer network without relying on centralized authorities.
- Decentralized Applications (dApps): Applications built on decentralized networks that function without a central authority.
4. Decentralization: The backbone of Web3
At the core of Web3 is the idea of decentralization. In the current Web2 model, most websites and applications run on centralized servers controlled by corporations. This centralization means that these companies have control over your data, and often use it for advertising, marketing, or even surveillance purposes.
Web3, on the other hand, seeks to distribute power away from central authorities and give it back to users. In a decentralized network, data is stored on multiple nodes (computers in the network) instead of on one central server. This creates a trustless system where no single party controls the entire network.
5. Blockchain technology and Web3
Blockchain is the technology that makes Web3 possible. It is a type of database that stores information securely and transparently. Unlike traditional databases, which are controlled by a single authority, blockchains are decentralized and distributed across many computers.
Multiple participants in the network verify every piece of information stored on a blockchain, making it highly secure and resistant to tampering. In Web3, blockchain serves as the foundation for decentralized applications (dApps) and digital currencies, ensuring transparency and trust without the need for middlemen.
6. The role of cryptocurrencies in Web3
Cryptocurrencies, like Bitcoin and Ethereum, are essential components of Web3. These digital currencies run on blockchain technology and enable secure, decentralized transactions without the need for a bank or payment processor.
In Web3, cryptocurrencies play multiple roles:
- Currency: They are used as a form of payment for goods and services within decentralized networks.
- Governance: In some decentralized platforms, token holders (those who own the platform’s cryptocurrency) can vote on decisions affecting the network.
- Incentive: Users are often rewarded with cryptocurrency for contributing to decentralized networks by offering computing power or validating transactions.
7. Smart Contracts: Automating trust
One of the most revolutionary aspects of Web3 is the concept of smart contracts. These are self-executing contracts with the terms of the agreement directly written into code. Smart contracts automatically enforce and execute the terms when certain conditions are met, eliminating the need for a third party, like a lawyer or mediator, to oversee the process.
For example, in a Web3 marketplace, a smart contract could ensure that a digital product is only delivered to a buyer once the payment is confirmed, all without relying on a centralized platform like Amazon or eBay.
8. NFTs and Web3: A new way to own digital assets
Non-fungible tokens (NFTs) have gained significant attention recently and are a major component of Web3. NFTs are unique digital assets that represent ownership of a specific item or piece of content, whether that’s art, music, a tweet, or even a piece of virtual real estate.
In Web3, NFTs enable true digital ownership. Unlike Web2, where users don’t truly own the content they create or buy (e.g., you don’t own the songs on Spotify), NFTs allow users to prove ownership of digital assets in a decentralized and transparent way.
9. The Metaverse and Web3
The Metaverse is a virtual world where users can interact with one another and with digital objects. While the metaverse isn’t exclusive to Web3, its future could heavily rely on Web3 technologies. In a Web3-powered metaverse, users would be able to buy and sell virtual land, create and own digital assets, and even earn income, all without relying on centralized platforms.
10. The Importance of Web3 for Users
Web3 offers several advantages for internet users:
- Ownership: Users have full control over their data and digital assets.
- Security: Decentralized networks are more secure because they don’t have a single point of failure.
- Transparency: Blockchain technology ensures that all transactions and changes are transparent and open for anyone to verify.
- Privacy: Cryptography allows users to maintain privacy while interacting on the web.
11. Challenges and criticisms of Web3
While Web3 holds great promise, it is not without its challenges and criticisms. Some of the major concerns include:
- Scalability: Blockchain technology is currently slower than traditional centralized systems, making it hard to scale up for millions of users.
- Energy Consumption: Some blockchain networks, particularly those using proof-of-work algorithms like Bitcoin, require significant amounts of energy.
- Regulation: Governments around the world are still figuring out how to regulate Web3 technologies, especially cryptocurrencies and decentralized finance (DeFi) platforms.
What are Web3 real life examples?
Let’s take a look at some of the real-world examples of Web3 projects.
Web3 is still in its early stages, but several projects and platforms already showcased its potential. These examples illustrate how decentralization, blockchain technology, and user ownership are being implemented in real-world applications:
Cryptocurrencies (Bitcoin, Ethereum)
Cryptocurrencies like Bitcoin and Ethereum are perhaps the most well-known examples of Web3 in action. Both operate on decentralized, blockchain-based networks that allow users to send and receive payments without relying on intermediaries such as banks.
- Bitcoin is primarily used as a decentralized currency, allowing users to make peer-to-peer transactions without centralized control.
- Ethereum is more than just a cryptocurrency. It supports decentralized applications (dApps) and smart contracts, which are key elements of the Web3 ecosystem.
Decentralized Finance (DeFi)
Decentralized finance (DeFi) platforms are another major example of Web3. DeFi applications run on blockchain networks and allow users to access financial services—such as lending, borrowing, and trading—without needing to go through a traditional bank.
- Uniswap: A decentralized exchange (DEX) where users can trade cryptocurrencies directly without an intermediary.
- Aave: A DeFi platform that allows users to lend and borrow cryptocurrency assets in a decentralized, peer-to-peer fashion.
- Compound: Another DeFi protocol for lending and borrowing, with users earning interest by supplying crypto to the platform.
These DeFi platforms empower users by eliminating the need for centralized institutions and intermediaries, allowing for transparent, peer-to-peer transactions.
NFT Marketplaces
Non-fungible tokens (NFTs) have exploded in popularity, showcasing a real-world use case of Web3 in the digital art and collectibles space. NFTs are digital assets that represent ownership of unique items, and they exist on decentralized blockchains, ensuring authenticity and traceability.
- OpenSea: One of the largest decentralized NFT marketplaces where users can buy, sell, and trade digital assets like art, music, virtual real estate, and collectibles.
- Rarible: Another NFT marketplace, Rarible allows creators and artists to mint, sell, and auction their NFTs, with decentralized governance powered by RARI tokens.
- NBA Top Shot: A platform for buying, selling, and trading officially licensed NBA collectibles in the form of NFTs, such as video highlights and moments.
Decentralized Autonomous Organizations (DAOs)
DAOs are decentralized communities governed by smart contracts, where decision-making is distributed among token holders rather than centralized leadership. Members of DAOs can vote on proposals, budgets, and decisions, making the organization fully transparent and community-driven.
- MakerDAO: One of the most prominent DAOs, MakerDAO governs the Maker protocol, which enables users to generate the decentralized stablecoin DAI.
- Gitcoin: A DAO that funds open-source projects by pooling resources from its community, using blockchain technology to ensure transparency and fairness in allocating funds.
File storage and sharing (Decentralized Cloud)
Web3 aims to decentralize not only financial services but also how data is stored and shared. Decentralized file storage systems are a growing example of Web3’s impact on cloud computing.
- IPFS (InterPlanetary File System): A decentralized protocol for sharing and storing files across multiple nodes, ensuring that no single entity controls or owns the data.
- Filecoin: A decentralized storage network that allows users to rent out unused storage space, creating a distributed cloud storage system without centralized data centers like those operated by Amazon or Google.
Social Networks
Decentralized social networks aim to give users control over their data and content, in contrast to centralized platforms like Facebook or Twitter which often monetize user information.
- Mastodon: A decentralized social network where users can create their communities (or “instances”) and have full control over the content and rules.
- Lens Protocol: A blockchain-based social networking protocol that allows users to fully own and control their profiles, posts, and connections across multiple decentralized apps.
Gaming and Virtual Worlds
Web3 is enabling new models of ownership in gaming, where players can truly own in-game items and assets using blockchain technology. In virtual worlds built on Web3 principles, users can trade, sell, or even earn income from their digital property.
- Decentraland: A decentralized virtual world where users can buy, sell, and trade virtual land, interact with others, and build digital experiences using blockchain technology. The entire ecosystem is powered by the cryptocurrency MANA.
- Axie Infinity: A play-to-earn game where players can collect, breed, and battle creatures called Axies, earning cryptocurrency rewards in the process. It operates on a blockchain, giving users ownership of their in-game assets.
- The Sandbox: Another decentralized virtual world, The Sandbox allows users to create, own, and monetize virtual experiences using its native cryptocurrency SAND.
Brave Browser
The Brave browser is a real-world Web3 tool that prioritizes privacy and decentralization. It blocks ads and trackers by default, allowing users to browse the web securely. Brave also offers its own cryptocurrency, Basic Attention Token (BAT), which rewards users for opting into privacy-respecting ads. This is a prime example of how Web3 can reshape traditional advertising models.
Helium Network
The Helium Network is a decentralized wireless network built for the Internet of Things (IoT). Instead of using centralized cell towers, Helium relies on individuals who operate “hotspots” (nodes) to provide wireless coverage. Users who run hotspots are rewarded with HNT tokens, creating a decentralized system for wireless data transmission.
Steemit
Steemit is a decentralized social media platform that rewards users for creating and curating content. Built on the Steem blockchain, users earn STEEM tokens based on the popularity of their posts and contributions, giving them monetary incentives to engage with the community.
Conclusion
Web3 represents a massive shift in how we interact with the internet, offering the potential for a more secure, transparent, and user-centric online experience. While it is still in its early stages, Web3’s focus on decentralization and blockchain technology could redefine the way we think about ownership, privacy, and even identity in the digital world.
As more developers build decentralized applications and as the technology matures, we may soon find ourselves living in a world where users—not corporations—are in control of the internet.
What is your opinion about the control of the internet getting into the hands of users and no longer in the hands of a few tech giants? Feel free to share your thoughts with us using the comment box below.