TL;DR: Web3 is the next version of the Internet with a focus on removing central organizations for user privacy. It utilizes blockchain technology for social media, the NFT market, decentralized finance and governance, cryptocurrencies, and more.
Perhaps you’ve first heard of Web3 through a friend enthusiastic in all things crypto. Or you’re an artist thinking of creating your own NFTs to sell on the digital marketplace. You may have gone online to do research, only to encounter fancy terms like blockchains and DeFi. What are they, anyways?
What is Web3?
A brief history of the Internet: Web1 was the first commercial Internet back in the 1990s with only a limited number of static pages. Web2 is the current Internet, featuring greater interactivity in the form of social media and e-commerce. Both versions are centralized, meaning that core organizations (website owners and social media platforms) control all user data. Ultimately, this has led large corporations to disregard consumer privacy and collect vast quantities of data for commercial use.
Web3 is the next generation of the Internet, and it aims to decentralize the web by removing those central organizations and giving control of data back to the users. The end goal is to ensure that privacy is protected and data usage is transparent.
How does Web3 work?
To achieve these goals, programs on Web3 utilize blockchain technology. A blockchain is a public list of information that is stored and constantly updated on each computer in the network. When an exchange is made, it is added to a block, verified by every computer, and mathematically linked to other blocks to form a blockchain. Once added to the blockchain, the block cannot be modified. If it is tampered with, all subsequent blocks are altered, making it easy for the network to detect fraudulent activity.
Decentralized applications, or dApps, are software programs commonly used on Web3 that run on blockchains. They serve a variety of purposes ranging from finance, gaming, social networking, and more, just like centralized applications such as PayPal, Netflix, and Facebook.
A few of Web3’s usages
Social media: Consumers have more privacy on Web3’s platforms. Any user can participate in the platforms’ governance and regulate how their data is used.
Decentralized autonomous organizations (DAOs): DAOs are digital organizations that allow stakeholders to vote on governance, fund allocation, and more. They provide a platform for users to contribute to decentralized decision-making.
Non-fungible tokens (NFTs): These are unique digital assets comparable to physical collectibles like rare trading cards or paintings. Blockchains on Web3 store transactional data and clearly define ownership, which gives users full control over their NFTs.
Decentralized finance (DeFi): Like banks, DeFi applications facilitate lending, borrowing, trading, and more, except they use blockchain technology in the place of traditional institutions.
Cryptocurrencies: Cryptocurrencies, such as Bitcoin and Ethereum, are digital currencies without any physical representation like banknotes and coins, and they use blockchain technology for enhanced security. They are seen as an investment opportunity with potential for high return, albeit with higher volatility than the traditional stock market.
How to access Web3
In order to try this out for yourself, you need to have a Web3-compatible browser installed, such as Brave and Opera, or a browser plugin like MetaMask. These will provide a user interface for dApps and a wallet to manage digital assets. Since the purpose of Web3 is to ensure a private experience, the decentralized wallets will not collect personal information.
Proceed with caution
Web3 is an emerging technology, and the regulatory framework is still in development. It is crucial to use reputable dApps and be cautious of potential fraudulent activity. Remember to do your own research on updates, features, and risks.
Learning about Web3 may seem overwhelming, but AI assistants can be used to help. A few weeks ago, I was a complete beginner, but MinMax AI’s search engine and chatbot answered many of my questions. It was also a great help when I was researching this article. If your interest was piqued by anything mentioned earlier, feel free to check it out for yourself.