● Intermediate Technology

What is Web3 and What Does it Mean for Crypto?

8 minutes a year ago

If Web1 is the standard internet we use every day, web2 is the user-generated internet shaped by social media, like Meta or Twitter - but what is web3?

Web3 or web 3.0, is described as the next evolution of the internet. It’s mostly used in conversations around cryptocurrency, NFTs, decentralisation, blockchain and the metaverse, but it’s easy for these modern-day buzzwords to confuse newcomers in the industry.

Let’s examine what web3 is, what it’s used for and what it means for crypto.

What is web3?

Web3 is an internet built on the blockchain. The term was coined in 2014 by the same people that founded Ethereum, and it now describes the next generation of the internet - the decentralised internet.

Since this internet runs on public blockchains, it’s technically users that control pieces (or blocks) of it. No central authority is needed to approve transactions between parties, so there’s no requirement for “trust”. Web 3.0 should also better protect user privacy, thanks to its use of cryptography. Data can only be accessed by those with permission to do so, and will only be classed as valid if copies across multiple servers match up.

What is web3 used for?

Web3 could be an answer for people that have grown tired of an internet controlled by major tech companies. People want more control over their data, whether that be for peace of mind or for security when they browse and create.

In web3, users effectively become shareholders rather than just customers. These shares are cryptocurrencies or tokens, and are a representation of ownership.

Right now, we’re seeing the potential of web3 expand into multiple industries at an impressive rate.

Some examples of what you will likely be able to do on web3 include:

  • Trade cryptocurrency
  • Create, buy and sell NFTs (whether that’s art, music, event tickets and more)
  • Play games and interact with virtual worlds - users will vote on what games should do and can own items from said games in the form of NFTs
  • Immerse yourself in the metaverse (with the help of AR and VR)
  • Engage on decentralised social networks
  • Have complete control over your digital assets, be that cryptocurrencies or your own original content.

How web3 will change the internet

Whether or not Web 3.0 will replace Web 2.0 remains to be seen, but some industry experts imagine a scenario where both coexist and users can choose the option they prefer as they go along.

However, there are some ways it will change how we stay connected:

There will be no censorship

In the Web 2.0 world, tech giants own the rights to their users’ content and data. They can ban people from platforms and delete user posts. They can also filter content to ensure what you are seeing is specifically tailored to your preferences.

By getting rid of any centralised authority, it will be much harder to censor on web3. Users will earn tokens for their input on networks, and any decisions will need to be made clear and open to said token owners.

The ability to monetise content

Whenever users currently post on social media platforms, the only reward is through engagement. Currently there is no way to monetise posts unless you’re an influencer or brand. Web3 will let users earn tokens when they participate in the ecosystem, be that by producing original content, playing their blockchain video game, or any number or other applications.

A less disruptive user experience

Web3 users might be able to finally say goodbye to disruptive advertising. It’s difficult to escape pop-ups and unskippable ads on Web 2.0, but the next generation could give users more control over what they see. Some speculations suggest this will go as far as letting users control how many (if any) ads they see, and compensating them accordingly. And in the end that is what web3 is all about, allowing the end user to have control over the content they interact with and consume.

What does web3 mean for crypto?

The cryptocurrency and NFT communities are where most of the excitement is located surrounding web3 and its possible future.

That is because the community would benefit from an internet that prioritises blockchain technology - the technology that crypto currently runs on. It is easy to expect increasingly stronger ties being made between Web 3.0, cryptocurrency and blockchain. As these technologies will be interoperable, and will be able to seamlessly integrate with one another through automated smart contracts.

It is entirely possible that web3 will unlock new opportunities in crypto. Previously, blockchain technology was used to buy and sell crypto, and monitor its fluctuations. With the birth of this next generation of the internet, users can do more on the blockchain - such as buy and sell digital art, earn money playing video games, and purchase digital plots of land.

What does the future of Web 3.0 look like?

A few major companies are shifting their business model to find a route into web3. Reddit, for example, is working on using digital tokens to allow users to own a portion of the communities they’re involved in. Users would earn these tokens (known as ”community points”) when they participate in certain forums. This would help give users that make higher value comments, or those who moderate the forums, more of a say in decisions that impact the Reddit community they are involved with.

Web 3.0 is still in its infancy and so not without criticism. The likes of Elon Musk, and major tech company Meta, have spoken out against a decentralised internet. Web3 will also have to find a way to escape crypto and NFT scams before it becomes more mainstream. However, with the capabilities of blockchain advancing at such a speed, it’s likely that we are at the tipping point of the next phase of the internet.

(None of the above information is to be construed as financial advice. Ultimately, it’s up to the individual to do their own research and risk analysis before trading in cryptocurrency.)

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