Abstract

The internet has evolved from the "read-only" Web 1.0 to the current socially driven participatory Web 2.0. Today, we are gradually moving toward the next stage of the internet, Web 3.0, often referred to as "Web3" in the digital asset space. In the Web3 era, people are expected to own digital items, trade online with ease, and gain greater control over their personal data. The blockchain and cryptocurrency ecosystem has already created products suitable for Web3. For example, users can make peer-to-peer (C2C) payments and use cryptocurrency wallets to collect digital items. Many blockchain projects are decentralized and accessible to everyone.

Introduction

The new Web3 internet promises to address current online issues, such as the concentration of power in the hands of a few centralized social media platforms and the misuse of user data. Digital assets can become an inherent part of Web3. The decentralized and permissionless nature of blockchain helps distribute communication power rather than vesting it in central authorities.

Digital assets bring native digital payments to Web3 and can be programmed as tokens to play a broad role in the digital economy. Through decentralized autonomous organizations (DAOs), blockchain and cryptocurrency can make Web3 more community-centric.

How is Web3 Different from Web2?

The major evolution of the internet is often qualitatively divided into Web1, Web2, and Web3 stages. In the Web1 era, users could not modify online data or upload their own content to interactive websites. The internet at that time consisted of static HTML pages, enabling simple one-way experiences like browsing information forums.

Web1 allowed users to consume content and engage in simple interactions. Web2 gradually developed into a more interactive internet, where users could participate more in creating content. These online interactions were primarily driven by social media, and Web2 saw the rise of emerging centralized tech giants.

The flaws of Web2 are becoming increasingly apparent, and its ecosystem is undergoing transformation again. For instance, internet users are paying more attention to data tracking, ownership, and censorship issues.

Major centralized companies have begun intervening to prevent specific users and organizations from building their own platforms, revealing their centralized power. Web2 companies also use data to retain users and serve targeted ads that align with third-party interests. Driven by such economic incentives, these companies' actions may not necessarily serve users' best interests.

Web3's vision is to take a new step toward a better internet era, with core promises including decentralization, trustlessness, and permissionlessness for online platforms. Web3 may achieve digital ownership, native digital payments, and censorship resistance, setting new standards for online products and services.

Blockchain and cryptocurrency inherently possess decentralized characteristics, allowing everyone to record on-chain information, tokenize assets, and create digital identities. Therefore, they are fully capable of serving as key technologies for Web3.

How Can Blockchain and Cryptocurrency Integrate into Web3's Vision?

Decentralization: As mentioned earlier, one of Web2's core issues is the concentration of power and data in the hands of a few major players. Blockchain and cryptocurrency can promote the widespread distribution of information and power, decentralizing Web3. Web3 can leverage blockchain-powered public distributed ledgers to enhance transparency and decentralization.

Permissionlessness: Blockchain-based projects replace traditional companies' proprietary systems with open-source, publicly available code. Applications built on blockchain are permissionless, allowing unrestricted access and interaction for everyone worldwide.

Trustlessness: Blockchain and cryptocurrency eliminate the need to trust third parties like banks or individual intermediaries. Web3 users don’t need to trust any other entity—only the network itself—to conduct transactions.

Payment Channels: Cryptocurrency can serve as Web3's native digital payment infrastructure. Digital assets are truly borderless and intermediary-free, potentially improving Web2's expensive and cumbersome payment infrastructure.

Ownership: Cryptocurrencies already provide tools like self-custody wallets, enabling users to store funds without intermediaries. Users can also link wallets to decentralized applications to use funds or showcase digital items in various ways. Everyone can verify ownership of these funds and items through transparent, public ledgers.

Censorship Resistance: Blockchain is censorship-resistant, meaning no single party can unilaterally alter transaction records. Once added to the blockchain, records are nearly impossible to delete. This feature helps protect free expression from government and corporate censorship.

Are Blockchain and Cryptocurrency Essential to Web3?

Web3 may rely on technologies unrelated to blockchain or cryptocurrency. For example, augmented reality (AR), virtual reality (VR), the Internet of Things (IoT), and the metaverse will all be indispensable technologies for the new internet era. Blockchain will play a greater role in Web3's infrastructure, but these technologies and solutions will make the internet more immersive and connected to the real world.

IoT connects various devices via the internet, AR embeds digital visual elements into the real world, and VR creates computer-generated environments filled with digital asset items. Ultimately, these technologies will expand and integrate, making Web3 a truly unified metaverse.

Cryptocurrencies can provide native digital payment channels, while utility tokens can unlock a range of important use cases for Web3. Additionally, non-fungible tokens (NFTs) can effectively verify identity and ownership in the digital realm without compromising users' control over their personal data.

What Will Web3 with Cryptocurrency and Blockchain Look Like?

Blockchain technology will be a cornerstone of Web3, and users may not even notice it. As long as blockchain-based applications are intuitive and user-friendly, people won’t dwell on the underlying infrastructure—just as we rarely think about data servers and internet protocols as the foundation of everyday social media platforms.

Users can showcase NFT digital collectibles and use NFTs to create and maintain unique digital identities. NFTs can also serve other practical functions, such as underpinning key processes in online games.

Through DAOs, blockchain and cryptocurrency can change how Web3 users coordinate and execute collective actions. Without central decision-making bodies, DAOs help people organize around common interests. Token holders vote to determine the best course of action for the collective. All activities and votes are visible on the blockchain, making DAOs a way to advance Web3's decentralization, transparency, and community-centric nature.

Conclusion

Web3 promises to address major issues with today's internet and curb the power of tech giants. However, this remains largely a grand vision, not something achievable overnight. Nevertheless, the core technologies for the next internet iteration are indeed under development.

Blockchain and cryptocurrency aim to promote decentralized, permissionless, and trustless interactions, making them key technologies likely to lead Web3's transformation. Moreover, blockchain technology and digital assets do not compete with other critical components of the internet like AR, VR, and IoT. Instead, combining these technologies offers the most promising solutions.