The world of cryptocurrencies is full of buzzwords. One of them you can hear on many occasions is "Web3". However, crypto resources that mention this term rarely offer even a superficial explanation of what it means, often confusing crypto enthusiasts.

What’s Web3 and what does it have to do with crypto?

Meanwhile, the concept of Web3 is an extremely important element of the crypto realm, especially in the context of its future evolution. Moreover, even if you are not interested in cryptocurrencies and blockchain but are an active Internet user, Web3 will touch your life sooner or later.

So, let’s talk about it.

Web 1 and Web 2 explained

To better understand what Web3 (or Web 3.0 - whichever you prefer) is, we should start with a little excursion into history and find out what Web1 and Web2 were.

As you know, the history of the World Wide Web stretches back many decades (depending on how broadly you interpret the concept of the Internet, the starting point for its creation can be traced even to the 1960s). However, it was only in the 1990s that this earth-shattering technology became available to a wide range of casual users.

Thus began the Web1 era – the first period in the history of the Internet, which lasted approximately from the early 1990s to 2004. Its key characteristic was the so-called "read-only" nature. This means users had access to various websites (mostly owned by companies), but usually only to read what was posted there. In other words, Web1 already contained numerous pieces of information, but all users could do was access and perceive it, unable to modify any data or interact with each other online.

This status quo (which, admittedly, was not absolute, because even in the "read-only" era there were user forums that attracted the most passionate web enthusiasts) changed in 2004, when Facebook was created. Starting from this moment, the Internet evolved into the Web2 phase, in which the "read-only" functionality changed to the "read-write" one. In addition to receiving information from the Internet, people started generating content, actively influencing the formation of the World Wide Web.

Major issues with Web2

Having started in 2004, the Web2 phase continues today. However, this iteration of the Internet is increasingly criticized. Arguments against it include:

• Monopolization. The largest and most influential Web2 Internet resources are controlled by large corporations, giving the latter unprecedented levels of impact on the online sphere.
• Privacy and security. We are used to the Internet as a resource we enjoy for free (excluding the cost of our subscriptions and providers’ services). However, every Internet user pays additional price with personal data that websites harvest and later sell to advertisers.
• Content ownership. Web2 is largely driven by user-generated content. However, this content is at the disposal of the platforms on which it is hosted. Any arbitrary changes in the platforms' policies can easily lead to content being removed or demonetized, and there's nothing creators can do about it.

These (and many other) key issues have fueled debate about the need for the next iteration of the Internet to emerge. This iteration acquired the conventional name of Web3.

 Defining Web3

Web3 is still a work in progress: some of its elements are already made a reality, while others are still waiting for their implementation. Considering all the key ideas regarding this project, it can be defined in the following way:

Web3 is the new iteration of the Internet that prioritizes decentralization, relies heavily on blockchain technology, and incorporates token-based economy using cryptocurrencies.

In other words, this is a natural next stage of the Internet’s development, within which blockchain and cryptocurrencies are actively integrated into the infrastructure of the World Wide Web as its main functional elements.

 Web3 and crypto

 

What does Web3 have to do with crypto? The short answer is “everything”. The very term “Web3” has been coined by a prominent crypto pioneer Gavin Wood, a co-founder of Ethereum, to denote a decentralized blockchain-based online ecosystem of the future. And it was the development of blockchain technology that made this idea possible. While Bitcoin revolutionized financial transactions, establishing the use of cryptocurrencies as a payment means, Ethereum introduced the idea of smart contracts, enabling automated trustless operations – the very essence of Web3.

This way, Web3 architecture relies heavily on the concepts of blockchain and cryptocurrency – in fact, so heavily that its very existence would’ve been impossible without them.

Key features of Web3

To better understand the specifics of Web 3.0, let’s discuss some of its most notable features:

Decentralization. Instead of large corporations, control over key Web3 resources is distributed among their users. Under such conditions, these platforms can be managed as DAOs (Decentralized Autonomous Organizations), with crypto tokens granting their holders decision-making powers (just like company shares) and consensus algorithms ensuring agreement and coordination among network participants.

Tokenization. In Web3, tokens are not just digital currencies; they serve as the lifeblood, incentivizing participants and ensuring their interests. These tokens fuel decentralized networks, providing rewards, governance power, and fostering a self-sustaining ecosystem where value is circulated within the community.

Permissionless nature. Functioning as a non-hierarchical set of P2P (Peer-to-Peer) networks, Web3 liberates innovation from traditional gatekeepers. Anyone, regardless of geographical location or institutional affiliation, is free to participate in Web3 without seeking approval. The permissionless nature of Web3 architecture takes down barriers, creating a more inclusive and dynamic digital environment.

Trustlessness. Traditional Web2-based systems usually depend on trusted intermediaries – third parties that mediate core interactions on a platform. They are “trusted” due to the confidence that users place in these entities to fulfill their functions responsibly. In turn, by automating the internal processes through smart contracts and cryptographic principles, Web3 eliminates the need for blind reliance on trusted intermediaries, establishing a set of trustless systems based on which Web3 platforms and DApps (decentralized applications) function.

Decentralized finance (DeFi). By integrating cryptocurrency into the fabric of digital interactions, Web3 allows users to bypass banks and other conventional financial mediators when conducting online transactions. Such a decentralized approach to payments enhances their efficiency, reduces costs, and empowers users with direct control over their digital assets.

Asset Ownership. Unlike traditional models where platforms retain control over intra-platform assets, Web3 borrows and implements core principles of the Internet of Value, allowing users to truly own their digital possessions. With Non-Fungible Tokens (NFTs), Web3 users can gain control over their digital assets and seamlessly transfer them across various platforms relying on the principles of blockchain interoperability.

With all these features, Web3 can effectively solve the problems associated with Web2 and take the Internet as we know it to the next evolutionary stage.

Final words

Despite the impression many may have, Web3 is not some global update that will be suddenly installed to completely replace Web2 overnight. If the Internet evolves to its next iteration, this process will be gradual and sequential. Some key elements of Web3 architecture are already in use among crypto enthusiasts, allowing them to build their own closed, decentralized, blockchain-based islands in the turbulent ocean of Web2. However, to reach a truly global level, Web3 still has a long way to go. Which is good, since it gives crypto enthusiasts a time advantage to gain a foothold in the blockchain realm before crowds join in!

In the meantime, you can begin preparing yourself and filling your crypto wallets with the resources needed to embrace the next iteration of the Internet. All it takes is a few clicks to buy crypto and dive into the possibilities that blockchain offers. You’ve got the opportunity to become a Web3 pioneer before it becomes mainstream – so don't let it slip away!

Disclaimer: Our content does not constitute financial advice. It is only intended for informational and educational purposes.