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Web3, also known as Web 3.0, is the newest thing on the internet. It's often called the 'money layer' or 'identity layer' of the internet. Web3 uses a technology called blockchain to give more power to regular people and take it away from big tech companies.
In the past, with Web2, a lot of people got on the internet, but big companies made a lot of money by collecting our data and showing us ads. With Web3, things are changing. Now, regular people can own their data and digital stuff, and they can help run internet apps without a big company controlling everything.
So, what exactly is Web3 and how does it work? In this article, we'll look at the basics of Web3 and what makes it special. We'll also talk about how the internet has changed over time and why it's important to learn about Web3 technology.
What Exactly Is Web3 Technology?
Bitcoin, non-fungible tokens (NFTs), and decentralized applications (dApps) all rely on advanced blockchain technology, which serves as the foundational layer for Web3. Blockchain is a groundbreaking technology that falls under the category of distributed ledger technology. But what does this really mean? Let's break it down into simpler terms.
"Distributed" - It works across a network of participants, rather than being controlled by a single central authority.
"Ledger" - It's like a record of financial transactions.
"Technology" - It uses cryptography (fancy math) to provide proof and validation of transactions.
Bitcoin is the original and biggest blockchain network out there. The second-largest one, Ethereum, introduced something called smart contracts. These are like self-running pieces of code that let developers create and launch cool web applications in a decentralized world. You can learn more about smart contracts and decentralized applications (dApps) below.
The Evolution of Web3 Technology
To grasp the incredible opportunities brought by Web3 technology, it's essential to understand the journey of the World Wide Web so far. In essence, this can be divided into three phases: Web1, Web2, and Web3.
Web1 - Read
The initial version of the World Wide Web in the 1990s was primarily a read-only platform. Users could browse and read information on websites but had limited interaction. Web1 mainly consisted of static websites, links, and homepages owned by companies that published content for users to read. However, there was little to no interaction or content sharing.
Web2 - Read/Write
The next stage in the evolution of the web, known as Web2, emerged around 2004. Web2 allowed users not only to read but also to become content creators. This read-write approach enabled users to generate and share their own content. With Web2, users could write and publish content on blogs, forums, and marketplaces. Additionally, social media platforms like Facebook, Instagram, and Twitter introduced user-to-user interactions as a mainstream feature.
Web2 operations were dominated by large corporations, introducing the advertising revenue model that generated billions of dollars in profits. However, these profits remained with the tech giants, along with ownership and control over user data.
Web3 - Read/Write/Own
Web3 represents the latest advancement in the internet's evolution, introducing a read-write-own framework for users. Web3 technology is characterized by trustlessness and permissionlessness, offering users the ability to own digital assets, content, and data rights. In a significant departure from the traditional advertising model, Web3 ensures that users receive value and profits for engaging with advertisements, rather than corporations using their data for marketing campaigns and retaining all profits. For example, Brave Browser rewards its users with its native BAT token for viewing ads and interacting with the browser.
Beyond cryptocurrencies, non-fungible tokens (NFTs) play a pivotal role in establishing digital ownership in unprecedented ways, especially in gaming applications. In Web2 gaming, assets and in-game items were owned by the gaming company. However, Web3 gaming allows users to truly own in-game items, facilitating trading across decentralized marketplaces. Importantly, these items remain under user ownership even if a user stops playing the game.
Characteristics of Web3 Technology
Web3 technology is characterized by three key principles:
Permissionless Access: It allows anyone with an internet connection to use Web3 applications, including vital services like decentralized finance (DeFi).
Decentralization: Web3 applications are owned and controlled by users rather than centralized entities. Profits are often shared among users through tokens and cryptocurrencies.
Trustlessness and Censorship Resistance: These applications rely on blockchain technology to eliminate the need for costly intermediaries, using cryptography and economic incentives instead.
What Are the Applications of Blockchain Technology?
Blockchain technology, at the core of Web3, serves various purposes:
Cryptocurrencies: Power decentralized payment networks, speeding up transactions without banks.
Non-fungible Tokens (NFTs): Tokenize unique digital or real-world assets.
Decentralized Applications (Dapps): Enable innovative, censorship-resistant apps, including DAOs and user-centric social media.
What's the Mechanism Behind Blockchain Technology?
Web3 tech, like blockchain, relies on nodes that validate transactions and maintain the network through mining. They use consensus mechanisms (like Proof-of-Work or Proof-of-Stake) to agree on transaction validity. All transactions are publicly recorded, preventing manipulation. In Proof-of-Work networks like Bitcoin, miners use computational power to verify transactions and create blocks mathematically linked to the blockchain. Miners earn rewards, making it more profitable to be a miner than to attack the network. A larger node network enhances security.
How Does Cryptocurrency Differ from Blockchain?
Many wonder about the distinction between cryptocurrency and blockchain. It's quite straightforward: blockchain serves as the foundational technology behind cryptocurrencies. Creating a cryptocurrency is akin to creating a website, with the value of a cryptocurrency stemming from its utility and tokenomic design.
Why Should You Learn the Basics of Web3 Technology?
Web3 technology represents the cutting edge of internet evolution, offering fresh and progressive possibilities. By understanding Web3 technology, you position yourself at the forefront of technological innovation, gaining access to new social and financial applications.
The Web3 industry is renowned for investment and profit-making opportunities involving digital assets like cryptocurrencies and non-fungible tokens (NFTs). Exploring Web3 technology and its history can be a lucrative pursuit, covering diverse subjects such as macroeconomics, trading, and web development.
For developers, delving into Web3 technology unlocks opportunities for innovation and creativity when building applications. Web3 technology is open-source, fostering censorship-resistant and peer-to-peer development of exciting web applications.
In summary, unlike the earlier Web1 and Web2 eras, Web3 technology empowers users with control and ownership over their content and data through blockchain. It also provides investment opportunities in digital assets like cryptocurrencies and NFTs, enhances peer-to-peer transactions by eliminating intermediaries, speeds up confirmation times, and reduces fees. The internet's read-write-own interaction enables decentralization and permissionless access to decentralized applications (Dapps). Moreover, users can influence application operations through decentralized governing protocols, involving token rights and decentralized autonomous organizations (DAOs). In conclusion, Web3 technology transforms internet users from mere customers or products into shareholders and active participants.
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This article is intended for educational purposes and is not financial advice.
Disclaimer
The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.