What is Web3 and Why Does It Matter to You?

The moment the blockchain industry has been waiting for is finally here! Ethereum, the biggest blockchain network around, has completed the merge between its PoW and PoS networks. Like the single rock that starts an avalanche, blockchain – and by extension Web3 – is poised to be the technology of the future.

With a variety of innovative use cases such as NFTs, the  Web3 metaverse, DAOs and many more already in play, Web3 brings a lot of scope and potential for the modern world. It can bring scalability, efficiency and intrinsic value to modern processes and to the fast paced life that Web2 has thrust upon us.

What is Web3 – New Ways to Surf

You are probably wondering why Web3 is gaining so much traction! Well, understanding how it works can shed some light on its utility to the modern digital landscape.

Web3 is essentially a new digital frontier that blockchain has created for its users. A key factor to examine here is blockchain’s focus on decentralization. With ownership of content and digital spaces being in the hands of service providers with vested interests, Web3 brings a host of changes to the table.

A decentralized Web3 network puts control of its content, assets and even community changes in the hands of its users. Blockchain enables such a change by focusing on validating data at different points, typically at the user level, through “nodes” on the network. With each user acting as a validatory node, there is little to no chance of data tampering being undetected.

Moreover, the presence of Smart Contracts on blockchain networks brings another dimension to decentralization. They act as an additional layer of code working to ensure that terms agreed upon between two parties to execute a transaction are executed without interference. In addition, they function automatically, saving time, energy and resources for all of the parties involved.

These underlying mechanisms have allowed Web3 to become a force for change in a digital world that has become cluttered, stagnant and susceptible to malpractices.

Is Web3 An Upgrade Over Web2?

It most certainly is! With Web2, digital spaces are owned and controlled by a third party. Think of your Facebook Wall as a space in the real world. You are allowed to customize that wall as much as you like. You could get creative and paint it yellow. Or perhaps indulge in some great graffiti! It is your work on this wall, but that does not mean that you own it.

The wall, and everything on it, remains the rightful property of Facebook. And that includes your creative efforts as well. What is worse is that your content could be erased in the blink of an eye, and at the whim of its owners!

Web3 aims to place control of data and content in the hands of individual creators and organizations, allowing them to benefit directly from their work. With each individual in control of specific data points and through constant validation between nodes, Web3 is a leap forward in terms of the ownership and data transfer between two or more parties.

In addition to an improved ownership experience, the Smart Contract functionality makes it a whole lot easier for creators to monetize their work and benefit from it. That also extends to other use cases of blockchain such as NFTs and DAOs, whose utility is reliant on the automatic execution of Smart Contracts on a blockchain.

Another important feature for Web3 is the ability for users to interact directly with content. Web2 allows users to view content and perhaps edit it, providing a read-write format that feels static in comparison to Web3. This is because Web3 content is a dynamic, simulated experience that provides a read-write-interact format. It creates the scope for content that elevates user experiences to new heights!

Source: Google

Why Choose Web3?

Considering the revolutionary changes blockchain and Web3 are bringing to our digital worlds, it is important for current users and interested parties to know their strengths and weaknesses.

Scalability: This is an important advantage of a digital Web3 economy. This is where Ethereum’s shift to the PoS validation model comes into play.

Essentially, PoW validation requires systems that are able to run complex algorithms and code to validate data points on the blockchain. This is not only time-consuming but is also highly power-intensive!

A PoS-based blockchain, however, requires only a “stake” of cryptocurrency to be validated. Every user on the network thus stakes their tokens on the blockchain, and acts as a point of validation for all of its data.

Source: Google

Efficiency: Web3 networks are also more efficient as a result. This is not only in terms of energy consumption, but also in the way processes are executed. The presence of Smart Contracts introduces a level of automation to tasks on a blockchain that would otherwise require manpower and resources.

A PoS based blockchain consumes less energy, addressing one of the key criticisms leveled against the technology!

Security: This is another advantage that Web3 brings to the fold. With each user acting as a gatekeeper for sensitive data, Web3 blockchains can be quite the challenge for hackers or others with malicious intent.

The more users there are on the chain, the more solid its security becomes! This allows businesses and other organizations to scale effectively, without worrying about the additional infrastructure needed for both security as well as data validation on their networks.

Autonomy: This is another significant advantage of Web3. A Web3 economy is most certainly an empowering creator’s economy. Individual artists, musicians, content creators and writers would certainly appreciate the power to monetize their work on their own terms.

Without the need to rely on streaming services, publishers, producers and other third parties, artists are able to profit better from their work. They even enjoy the luxury of earning royalties every time their work is resold!

Innovations In Progress:

While the above benefits can make Web3 the future of internet browsing and usage, there are a few pitfalls to watch out for.

Regulatory mechanisms: Blockchain is a relatively new piece of technology that is in its early stages. Its varying use cases have created confusion over how it can be integrated into existing legal frameworks. It also challenges existing notions of owning intellectual property and enforcing regulations across borders in a comprehensive way.

The result of this uncertainty is that a determined hacker could find ways to access sensitive data such as user logins, thereby exposing that account to malpractices. Furthermore, in the absence of established legal protocols to address the issue, hackers can indulge in malpractices with little to no consequences for their actions. For users, this is a major concern as the safety of their digital assets is at stake!

However, this is set to change, with innovative solutions from a host of providers coming into play to secure as well as enable a seamless, hassle free Web3 experience. Like Web2, the never ending cycle of hackers versus security providers is certainly set to continue.

Adoption:. A Web3 economy works only if its users are engaged with the platform or product in question. It is reliant on an active community of users who not only engage with it, but also help it grow and scale. In the absence of this user base, a Web3 blockchain is severely limited in functionality!

Web3 Use Cases – More Power To You:

Web3 has already begun to change our lives in interesting ways. It is being used innovatively in a variety of sectors.

Finance: It might be hard to believe that there are other ways to secure a loan besides financial institutions. You could just hop on the blockchain and approach a Decentralized Autonomous Organization or DAO for it.

This eliminates the need for validating your credentials, processing paperwork and other such processes before disbursal. You just find someone willing to lend you the money, set up a Smart Contract with the terms of repayment and voila!

Entertainment: If you are an artist, a host of blockchain platforms allow you to mint your work as an NFT which you can sell to interested parties. Your Smart Contract lets you fix a fair price for the initial sale while also providing for royalties on subsequent sales!

A musician would find similar utility in a Web3 economy. They would be able to sell tracks, albums, event passes and so much more through NFT platforms. It also enables them to create a community of dedicated fans around their work, which can only result in more fame, popularity, success and money for them.

Real Estate: Perhaps you are looking to buy a house? Web3 has facilitated several inroads into efficient real estate sales, allowing important paperwork to be stored on the blockchain where it is accessible at all times if necessary. You would avoid all of the hassles associated with buying a house, such as long lines at government agencies, or the bank to arrange your finances!

Retail: Looking to do some shopping? The Web3 Metaverse has allowed retailers to tailor unique experiences for their customers in a completely virtual environment! You would essentially visit a store, check out what they have on display, make a purchase and give your feedback all from the comfort of your couch or bed!

Nike, for example, has a virtual space for its customers to peruse its catalog of sneakers, try them on in the Web3 metaverse, and purchase them as NFTs!

The possibilities and potential for Web3 are endless, and are limited only by the creativity of those who use it!

Looking Ahead:

If Web3 shares a similarity with its predecessor, it is that they both value data and information. They only differ in the manner in which data is handled, and in whose hands it stays.

With Web3 the future of the internet is sure to change in ways that are engaging and exciting. Early adopters are sure to find something that they like or find useful in their digital lives.

Having a trove of knowledge about Web3, its applications, benefits and pitfalls is important to anyone pondering the question of how to invest in Web3. It is important that you identify specific use cases for it, and to think about how you could maximize the value you gain from the new internet!

To that end, bitsCrunch has got you covered with our selection of blogs that dive into the latest news, events and developments in the blockchain industry! Head on over and get started with your foray into the new frontiers that Web3 has created for you and the world!