What is Web 3.0 in Crypto?

In the context of blockchain technology, the term “web3” denotes a decentralized web in which crypto wallet addresses serve as an online identity. Web3 talks about how the web could change so that users have control over their information instead of giving it up to companies through tracking cookies and terms of service that are rarely read.

The idea of web3 is connected to crypto ideas like freedom and tokens, so we will talk about where these technologies meet. We’ll also talk about how web3 has changed the way we use the web and how it could change it even more.

From Web 1.0 to Web 3.0 – How Did We Get Here?

To better understand web3, it helps to look at how it differs from Web 1.0 and Web 2.0.

Web 1.0 

In the beginning of the web, blogs only had static information. Someone had to change the HTML file if a page needed to be updated. That’s how the page looked until someone changed the code again. Web 1.0 didn’t have the features that make the web what it is today.

Scientists created the World Wide Web in 1989 as a way to share knowledge. Soon after, the business web came along. Sites like bloomberg.com went live in 1993, and apple.com did the same in 1994.

Web 2.0

With the move to Web 2.0, there were also new ways to use JavaScript, a computer language that was first made in 1995 and can run code in web browsers to make web pages dynamic. The web we use now is more interesting because of Web 2.0, but it also made it possible for businesses to make money from the web by collecting huge amounts of user data.

Web 2.0 also raised worries about censoring since many of the sites we think of as “public squares” limit speech or even ban users, which means that their contributions are often erased. Web 2.0 made the web more organized than many people thought was possible.

Web 3.0

On the other hand, claims to give people back control over their data and online identities. Does it work? We’ll look at some early examples of best Web3 cryptocurrency projects that show us where an open future might go.

What is the Meaning of Web3?

Web3 means using the address of a crypto wallet as your web identity. Web3 systems often decentralize other parts as well, like transaction data that is kept on the blockchain and copied on hundreds or thousands of computers around the world and web storage that uses peer-to-peer file sharing.

The smart contracts, which are computer programs that run on the blockchain, can talk to these wallet addresses. In short, Web3 means that each of us is in charge of our own internet identities. A company or administrator can’t take that identity away. We can also keep our internet information safe by using different identities.

Vitalik Buterin, one of the founders of Ethereum, shared a wallet address with the world on Twitter (now X), for example. On web3 systems, this example wallet address could be used as a username. Since we already know that Vitalik owns that address, we are not invading anyone’s privacy.

You can use a crypto wallet to log in to blockchain-based web3 sites by using the wallet address as your online name and the private keys in the wallet to sign your “login.” People who aren’t Vitalik won’t be able to get to his secret keys. In the same way, Vitalik will not have your secret keys. In this way, web3 lets people use fake names to access websites that it supports, using crypto wallets as a way to prove their identity.

There are also almost infinite address-based identities that a person or thing can have. You could, for instance, use one wallet address for small purchases, another to store bigger amounts of money, and a third, fourth, or fifth to connect with web3 platforms. You can also connect an Ethereum address to an ENS (Ethereum Name Service) name. One example is Vitalik. Eth, which leads to another wallet address that belongs to Vitalik.

Privacy by Default

In the world of Web3, we can choose between near-anonymity (pseudonymity) and full exposure, and we are all in charge of our names. The result is a web that can’t be censored and that everyone can view. There may be other new blockchain technologies, like zero-knowledge proofs, that are also very important for keeping exchanges private.

To fully grasp web3, it is important to know that a fake wallet address that you manage turns into your online identity, giving others fair access to and control over your data.

It is not the same as web2, where a site administrator or company controls who can use the site or app and collects huge amounts of user data for marketing and other uses. Now you’re the captain.

Comparing Web 1, Web 2, and Web 3

Controlling data in Web3 apps might one day be like setting rights on a computer file. This way, we can be in charge of our names and decide which data is shared with whom at a very specific level.

Key Terms You Need to Know to Understand Web3

Like other new technologies, web3 has its language. Here are some of the most important words you’ll see.

Blockchain is a way to store information and deals in a way that makes them impossible to change or mess with. Transactions are put together into blocks, which are then linked together with encryption to make a chain. Tens of thousands of computers around the world can connect to blockchain networks.

Smart contracts: A smart contract is a piece of software that works on a blockchain network. In a way, they’re like switches: if this happens, do that.

Crypto: Cryptocurrencies, or digital money, are what make blockchain networks work. Crypto is an umbrella term for the whole business and field of technology. It comes from the cryptography that links chains and keeps track of transactions.

Crypto wallet: The secret keys that control your assets on the blockchain are made and stored in a crypto wallet. Software apps that are open to the internet are called “hot wallets.” Hardware wallets that can’t connect to the internet are called “cold wallets.”

Pseudonymous: A lot of people think crypto is private. Crypto, on the other hand, is pseudonymous, which means that crypto wallet names are used as identities in deals.

NFT: It is a blockchain asset that proves ownership or authenticity. In web3, NFTs can be used for many things, from owning digital art to financial interests.

Decentralization: When management is decentralized, there is no one place where everything is run from. In the context of Web3, “decentralization” refers to how apps or blockchains are managed, who controls names, and how everyone can access them.

DAO: A decentralized autonomous organization (DAO) lets the community use tokens to vote on how to run blockchains or apps.

DeFi: Decentralized Finance, or DeFi, is a new way to use money markets or trade assets without going through a bank, payment service, or cryptocurrency exchange. Some of the best apps for DeFi are web3 apps.

Signatures: Web3 signed in to independent apps with crypto wallets. Private keys in a crypto wallet are used to confirm your fake identity when you sign in to apps or confirm transactions.

What are the Opportunities in Web3?

The number of web3 sites is rising, which is good for users, entrepreneurs, and people looking for work.

Best Jobs at Web3

There are jobs available for web3 developers that are similar to those for web2 developers, but the technology and skills needed for back-end developers are different. It’s also different because it focuses on blockchain, which is not something that most web2 jobs need.

Smart Contract developer: The computer language Solidity is built on C++, Python, and JavaScript, and it is used by smart contracts that run on the Ethereum Virtual Machine (EVM). Solana smart contracts, on the other hand, use Python, C, C++, and Rust. Cardano uses Haskell.

Front-end developer: On the front end, a decentralized application (dApp) looks like any other website. On the back end, however, it uses smart contracts. On the other hand, dApps tend to use the same design language, which makes switching between apps easy for web3 users. Front-end engineers need to know how to code in HTML, CSS, and JavaScript.

UX designer: How the user feels is a big part of how many people use something. Some of the best web3 standards have clean user interfaces that make it easy to get to more powerful features. The finishing touches that an app needs can make it a hit or a miss.

Full-stack developer: A full-stack developer is a jack-of-all-trades who works on all parts of building and maintaining dApps, from writing smart contracts in Solidity to HTML and CSS.

Web3 Gaming

Web3 gaming opens up more options, from making games to playing “play-to-earn” crypto games. A lot of web3 games today have economies built right into them. In NFT games and standard games that run on blockchains, NFTs are used to keep track of property.

Metaverse worlds are a mix of game and social events that are very immersive. But there is also a way to make money in the metaverse, thanks to the value of web3 coins, virtual real estate, and jobs that can be done there.

Web3 Wallet Apps

Crypto wallets are very important to web3 because they store the secret keys that are needed to log in and make deals. It gives coders, back-end writers, and UX designers who want to help the web3 space a chance to do so. A lot of web3 wallets, like MetaMask, use browser plugins to make wallets that are always ready and work on any device. The Frame wallet, on the other hand, comes as an app that you can put on your phone. Others offer wallets that can only be used on smart devices.

Users can get into the open world through web3 wallet apps. Many wallets allow staking, which is a way to make a return by helping to keep the blockchain safe, and swaps, which are an easy way to switch from one cryptocurrency to another.

Web3 Marketing

Users can make money with Web3 marketing through things like airdrops and promotional gifts.

Airdrops are when tokens are given away to people who use an environment. One example is the biggest airdrop of 2023, which was worth almost $2 billion and helped the Arbitrum community. Key systems on the Arbitrum blockchain got the ARB coins that were given away. They then used them to reward or incentivize users, as well as users who met the requirements.

As part of a promotion, Coinbase is giving away wallet quests, which are easy DeFi jobs like minting an NFT that pays off in Bitcoin. Another example is Debank, a crypto portfolio tracker, which has Activity awards and “Hello” payments. “Hello,” payments let projects send direct messages to users to raise awareness.

Why is Crypto so Foundational to Web 3?

Cryptocurrencies are used in blockchain, smart contracts, and crypto wallets, which are the main parts of Web3.

Because they are autonomous, blockchains are an important part of web3. Centralized sites with managers would go against what Web3 is trying to do and its goals of equal access. However, blockchains don’t need a supervisor to store data or agree on what the state of the blockchain is.

• Web3 is built on smart contracts, and actions and logins on web3 sites are controlled by code that runs on the blockchain network.
• Crypto wallets give users control over their secret keys and, by extension, how they log 

in and connect with other people using their public wallet address.

Cryptocurrencies are also an important part of web3. For instance, ether (ETH) is the coin that powers the Ethereum network. ETH is used to pay for the computing power that smart contracts use. Transactions that are more complicated cost more. You have to pay a transaction fee in ETH to send an asset from one wallet address to another, like an NFT or a token. It’s important to remember that web3 logins don’t cost anything to use. A secure hash proof is used to make sure that the owner of a wallet address is who they say they are.

How Does Web 3 Affect the Real World?

Even though it has some problems that we’ll talk about later, web3 looks like it will change the way we connect every day. The digital world is the real world in Web3, but there are new ways to do business and talk to each other.

NFTs and tokenization of real-world assets: NFTs show that someone owns or has the right to something. A lot of people think that real-world assets (RWA) will be tokenized in the blockchain in the future. Right now, the NFT market is all about collecting digital art. This change could bring a level of liquidity, trade opportunities, and chances to use collateral that has never been seen before in regular markets.

Privacy: Your wallet address acts as your name when you deal with Web3, which makes it more private in many ways.

Financial Freedom:  cryptocurrencies offer an alternative to standard currencies as a way to keep value. Early buyers of Bitcoin and Ethereum, for example, have gotten profits that are much higher than those from standard investments. Web3 also lets you do banking deals without a bank or other middleman. Do you need a loan? With a web3 site like Aave, it only takes a few clicks to borrow money against your coin.

Immutability: Blockchains are designed to create records that can’t be changed. It makes them a great way to keep track of events like financial deals or scientific studies. These types of facts are easier to change in the real world. As an example, a bank can change your amount, which will require a long conversation to fix.

Social networks: Protocols like Farcaster could change how we talk on social networks. The protocol is a way to build social networks where users have full control over their data, and a decentralized ID can be used on more than one site.

What are the Key Issues that Web 3 Aims to Tackle?

Web3 is based on the idea of sovereignty, which means that users have power over their data, privacy, and transactions. A lot of important parts of Web3 work together to make this happen.

Pseudonymity: People can use a fake name to handle web3 protocols, or they can use more than one, each with its wallet address.

Transparency: Users can see transactions on blockchain explorers, which lets them check DAO funds, smart contract exchanges, and more.

Censorship resistance: Web3 provides resistance to censorship by getting rid of centralized decision-making. With smart contracts or platforms, anyone can do business without going through a middleman or getting permission first.

Data ownership and data portability: Platforms like Farcaster claim that you will have fine-grained control over your user data, including who sees it and when.

Open-source code: Closed-source code lets companies use tracking features that might not be clear in everything from operating systems to websites. Web3 smart contracts, on the other hand, are open source, and the contract address can be found on the blockchain.

Decentralized storage: If you want to store data on a blockchain, you can use protocols like Arweave and Bluzelle. Grouped protocols like the Interplanetary File System (IPFS) let you run Web3 sites by using peer-to-peer storage.

What are the Biggest Problems With Web 3?

As exciting as Web3 is, it also has some problems that need to be fixed. Blockchains are not as fast as controlled computers. But the business also has to deal with some other problems.

Transaction Costs

There are fees for many things you can do on web3 sites. Pay a network fee to send an NFT. You have to pay a network fee and change a setting on a DeFi platform. Many things we do every day don’t cost anything in the real world. For new crypto users, the rush to charge transaction fees can be scary.

The Learning Curve

Web3 needs you to know how to use crypto wallets. Wallet signing numbers don’t cost gas, but some extra features might cost network fees. Crypto wallets also require a basic understanding of how to keep your wallet safe and how important it is to keep your secret keys safe.

Privacy Concerns

In web3, you can’t be sure of your privacy. Crypto wallets send IP addresses to nodes by design. There are different things that these nodes can do with that data.

Here is what MetaMask says about the Infura nodes that are used by default by the most popular cryptocurrency wallet.

Regulatory Risk

 The assets on a web3 platform and the tokens themselves may lose value if one or more government bodies take action against the company. There is a real risk. The US stocks and Exchange Commission (SEC) won a case against LBRY, Inc. in 2022. LBRY, Inc. launched the decentralized LBRY file-sharing system, and the SEC said that the company offered unknown stocks.

Tax Considerations

 The recent success of Bitcoin ETFs may have something to do with the fact that ETFs are easier to tax than Bitcoin trades. Well-known tax software makes it easy to trade ETFs. To report capital gains, blockchain transactions, on the other hand, need the value of each transaction to be converted to its dollar value at the time of the transaction. It might not seem so hard if you only do a few deals a year, but web3 may involve dozens of crypto transactions every day. 

Hacks and Rug Pulls

Hacks and Pulls on Rugs Smart contracts are made up of code that people (or AI) write. People make mistakes, and AI isn’t much better yet. If there is a bug in a smart contract, it could be used to harm, putting users at risk. Rug pulls are when you quit a job on purpose or by accident. Imagine a group building up around a Web3 project, putting time and money into it, only to see it end or, even worse, have all of its funds taken away. Your property can lose all of its value suddenly, just like when you spend in real life.

 Adoption Rates Are Slow:  There aren’t that many web3 systems because they aren’t widely used. It makes investments and people who buy tokens to join a Web3 community risky. Without a critical number of people and the money they bring in, that platform might not be able to stay open.

What’s the Difference Between Web 3 and the Metaverse?

Metaverse projects that use blockchain are part of web3, but web3 isn’t just metaverse projects, and not all metaverse projects use blockchain. 

What Is The Metaverse?

 It’s the term for virtual places where people can meet and talk to other people, own things, and even do normal things like going to the doctor virtually. The word “metaverse” is often used to talk about the idea of metaverse worlds, but there isn’t just one.

How Do Blockchain-Based Metaverse Worlds Interact Using Web3?

Crypto wallet addresses are used to get into blockchain-based metaverse worlds like Decentraland. These worlds are also sometimes known as Virtual Blockchain Worlds (VBW). NFTs and other metaverse goods are also kept in the wallet. To bring 3D places to life in Decentraland, you can download an app and run it. The users own the project, and the Decentraland DAO runs it. The Decentraland DAO is a decentralized autonomous organization that lets users use MANA, the project’s cryptocurrency unit, to decide on changes and improvements. 

How Can I Invest in Web3?

Web3 projects offer a variety of ways to spend, from standard investments like stocks to coins that are only used on the web3.Publicly traded companies have some exposure to Web3, but their income streams may be too varied for price changes to be caused by Web3 developments. People who think crypto will have a bright future often choose to invest in Coinbase (COIN), which is the world’s biggest publicly traded crypto market.

Unity (U): A lot of mobile games are made by Unity, and the company is likely to be involved in future web3 games as well.

 Amazon (AMZN): The web store Amazon is what the company is best known for, but 70% of its profits come from Amazon Web Services. AWS and other cloud service companies host more and more Ethereum validators. As a result, most web3 apps run on Ethereum and EVM-compatible blockchains.

Cryptocurrencies

If DeFi becomes widely used, the prices of some cryptocurrencies may change based on the growth of Web3.

ETH: Being the best smart contract blockchain network, Ethereum’s coin, ether, is a popular choice for investors.

MATIC/POL: A number of web3 apps are also hosted on the Polygon network. The default currency for Polygon is changing from MATIC to POL, which has more features. Once the change is complete, users can switch from MATIC to POL 1:1.

SOL: Transactions on the Solana blockchain are fast and don’t cost much. More and more web3 dApps, like the DeFi and NFT systems, are based in Solana. 

Platform-Specific Tokens

To get a more targeted return on your investment in Web3, you can look at tokens for specific Web3 sites or tokens that are expected to do well with Web3.

AAVE: The AAVE coin is used to run the Aave system, which is a popular tool for giving and borrowing money. People who own AAVE tokens can also stake them to earn a return by setting up an insurance fund for the system.

MANA: Decentraland, the most important web3 metaverse project, uses MANA as both a government ticket and a payment in the virtual world

NFTs and Tokenized NFTs

NFTs and NFTs that have been tokenized big part of web3 is non-fungible coins. The value of top sets like Pudgy Penguins has grown by a huge amount. NFTs, on the other hand, are less liquid than other risky web3 assets. When people buy tokenized NFTs, they own a small piece of a valuable NFT. It may make trade more possible. First do some study, and then make a smart choice.

Is Web3 Here Already?

Yes, DeFi is currently the best web3 site, but some other areas have very strong communities.

Aave: Lending and borrowing are decentralized with the Aave system. You can earn a return on assets you give or borrow against your crypto security.

Uniswap: The Uniswap system lets people use liquidity pools to trade cryptocurrency. Users can also add tokens to liquidity pools so that other users can trade them. In exchange, users make a fee based on how much of the pool they own. Uniswap uses NFTs to show who owns a pool spot.

Lido: The Lido protocol is the best Ethereum liquid staking tool, and it also works with Polygon staking. Users can stake their ETH or MATIC using smart contracts and get a live staking token that earns interest that they can hold, trade, or use as collateral.

 MakerDAO: The Maker Protocol backs up the creation of DAI, a stablecoin tied to the US dollar, with top cryptocurrencies like ETH and USDC. People like stablecoins because their value stays the same

 Want an NFT game? Check out Hunters On-Chain. Magic Solana, Polygon, and Ethereum can all be used with Eden’s Hunters On-Chain. 

Decentraland: The Decentraland DAO owns the virtual world Decentraland. Users can own things in the world and have power over the Metaverse.

Steemit: Steemit is a platform for blockchain-based writing. Users can make STEEM by sharing material or leaving the best comments.

Brave Browser: The Brave Browser is based on Chromium and is ready for Web3.It has a Builtin crypto wallet and can open IPFS pages directly.

 Storj: The Storj network, which lives up to its name, provides autonomous storage. People who have extra room on their computers, computers that are always on, and a good internet connection can get paid to run a node.

 OpenSea: OpenSea is one of the biggest places to buy and sell NFTs. You can see market trends for the best sets and trade them there.

 Farcaster: The Farcaster system wants to make social media less centralized while still giving users full power over their info. User signups went through the roof. 

FAQs

Conclusion

Web3 is about giving people back control of the web and making it more open. Making use of addresses for wallets as an alias, web3 makes sure that everyone has fair access and can’t be censored. The idea includes a lot more than just viewing the web. It includes decentralized banking, games, storage, and metaverse worlds.

In the end, real world goods might be added to the blockchain. Web3 will be at the centre of it all, letting people trade privately and without going through middlemen. With Web3, the balance of power shifts to people instead of companies. It is a huge departure from standard methods. There are big problems that the business needs to solve, but open processes and the desire of people to make the world a better place will help it.