Relationship Between Blockchain and Web3

The internet has progressed from “read-only” Web 1.0 to the current level of Web 2.0, which is frequently described as participatory and socially driven. Now, we are progressively approaching the next phase of the internet, Web 3.0, often known as Web3 in the digital asset world. Web3 promises to enable people to own things digitally, transact conveniently online, and have more control over their data. Web3 products are already available in the blockchain and crypto ecosystems. Users, for example, can utilize crypto wallets to make peer-to-peer (P2P) payments and collect digital objects. Many blockchain-based applications are designed to be decentralized and accessible to everybody.

Introduction

Digital assets have the potential to become an integral part of Web3, a new internet that is projected to address the present Web’s flaws, such as the concentration of power in the hands of a few centralized social media platforms and the exploitation of users’ data. Blockchains’ decentralized and permissionless nature is useful in dispersing communication power rather than granting it to the central authority.

While digital assets enable native digital payments on Web3, they can also serve as tokens programmed to perform a variety of functions in digital economic systems. Blockchain and cryptocurrency could help make Web3 more community-focused by enabling decentralized autonomous groups (DAOs).

What distinguishes Web3 from Web2?

The primary stages of the internet’s history are sometimes depicted as qualitatively distinct phases termed Web1, Web2, and Web3. Users could not update online data or contribute their material to the websites with which they interacted in the Web1 era. Back then, the internet was made up of static HTML pages that allowed for rudimentary, one-way interactions, such as reading information forums.

Web2 enabled content consumption as well as simple interactivity. Then, over time, Web2 evolved into a more participatory internet in which users were increasingly involved in creating their content. Web2 saw the birth of new types of centralized tech giants since these modes of online interactions were primarily facilitated by social media platforms. The present Web2 ecology is changing once more as new flaws are revealed.

Internet users, for example, have been increasingly concerned about data tracking and ownership, as well as censorship difficulties.

The power of centralized firms became more apparent when they began to utilize it to remove certain people and organizations from their platforms. Web2 firms also utilize the data to keep people on their websites and to develop targeted adverts for the benefit of third parties. Such economic incentives may cause such companies to operate in ways that are not in the best interests of their customers.

Web3’s vision is of the next step toward a better internet. Its primary promises include decentralized, trustless, and permissionless internet platforms. It might also usher in a new era of digital ownership, digital-native payments, and censorship resistance in Web products and services.

Because blockchain and crypto are fundamentally decentralized, anybody may record information on-chain, tokenize assets, and create digital identities, they are perfectly positioned to become critical Web3 technologies.

How do blockchain and cryptocurrency fit into the Web3 philosophy?

Decentralization. As previously stated, one of the primary issues with Web2 is the concentration of power and data in the hands of a few significant corporations. Blockchain and cryptocurrency have the potential to decentralize Web3 by promoting a more equitable allocation of information and power. Web3 may use blockchain-powered public distributed ledgers to increase transparency and decentralization.

Permissionlessness: Blockchain-based projects replace traditional corporations’ proprietary systems with publicly available code. Because blockchain applications are permissionless, everyone in the world can access and interact with them without restrictions.

Trustlessness: Blockchain and cryptocurrency remove the need to rely on a third party, such as a bank or an individual intermediary. Web3 users can transact without putting their trust in anyone other than the network itself.

Payment rails: Cryptocurrencies have the potential to act as Web3’s digitally native payment infrastructure. Because digital assets are truly borderless and do not require middlemen, they have the potential to improve Web2’s expensive and unwieldy payment infrastructure.

Ownership: Crypto already provides solutions such as self-custodial crypto wallets, which allow users to keep funds without the involvement of middlemen. Users can also connect their wallets to decentralized apps in order to use their funds in a variety of ways or to display their digital things.

Using a transparent public ledger, anyone can verify ownership of these monies and goods.

Censorship resistance: Blockchains are supposed to be censorship-resistant, which means that no party may unilaterally change the transaction record. It is nearly hard to erase a record after it has been uploaded to the blockchain. This feature could aid in the protection of all forms of speech against the government and corporate suppression.

Are blockchain and cryptocurrency required for Web3?

Web3 could rely on technology unrelated to blockchain or cryptocurrencies. Technologies such as augmented reality (AR), virtual reality (VR), the internet of things (IoT), and the metaverse, for example, may become indispensable in the new internet era. 

While blockchain may function more on the infrastructure side of Web3, these technologies and solutions have the potential to make the internet more immersive and connected to the real world.

IoT could connect numerous devices over the internet, while AR could embed digital visual aspects into the actual world and VR could create computer-generated settings populated by digital assets. Finally, expanding and integrating these technologies might make a unified metaverse a Web3 reality.

Cryptocurrency has the potential to create digital-native payment rails and much more. Utility tokens have the potential to open up a new world of Web3 application cases. Nonfungible tokens (NFTs) could also be used to validate identity and ownership in the digital environment in a way that does not jeopardize users’ sovereignty over their data.

What would Web3 look like with cryptocurrency and blockchain?

Blockchain technology has the potential to become one of the pillars of Web3, but users may be unaware of it. If the applications developed on blockchains are user-friendly and straightforward, consumers will not think twice about the underlying infrastructure, much as we rarely think about the data servers and internet protocols that underpin the social media sites we use every day.

NFTs could allow users to display digital collectible things to other users while also assisting them in creating and maintaining their unique digital identities. They may also be used for other applications, such as supporting several critical procedures in online gaming.

Blockchain and cryptocurrency have the potential to change the way Web3 users coordinate and enforce collective action via decentralized autonomous groups (DAOs). DAOs enable people to unite around a common interest without the need for a centralized decision-making body. Instead, token holders vote collectively to select the best course of action. Furthermore, all activity and votes are recorded on a blockchain. As a result, DAOs can push Web3 to become more decentralized, transparent, and community-focused.

Final thoughts

Web3 may fix today’s major internet problems while limiting the influence of the tech titans. However, it remains an ideal concept rather than a realistic reality. Nonetheless, the technologies that will most likely undergird the future generation of the Web are already in the works.

Because they are meant to promote decentralized, permissionless, and trustless interactions, blockchain and cryptocurrency are frequently regarded as among the technologies most likely to usher in the Web3 revolution. Furthermore, blockchain technology and digital assets do not compete with other major components of the Web, such as AR, VR, and the internet of things, as they are expected to provide the most promising solutions when combined.