In this age of information technology, you’ve probably heard the terms Blockchain and Web3. They have been the most promising transformative developments in recent years, that are in fact closely related and interconnected.
The total market size of Web3, which includes various technologies such as Blockchain, Metaverse, and NFTs is projected to reach 81.5 billion dollars in 2030.
While blockchain technology helps you to securely store and manage data without the need for a central authority, Web3 is a decentralized web that enables the creation of decentralized apps and services. There obviously are differences, but they still fall in the scope of the same cryptography.
So, what is the relationship between Blockchain and Web3?
We’ll first take a look at how every technology works individually, so we can later understand how they work together.
Let’s delve into it!
Blockchain is a digital ledger that has the power to record every data transaction across a network of computers. It was first introduced as an essential part of Bitcoin, but fast forward to today, and private blockchains have many more potential use cases.
From block-chain based social platforms to authentication of provenance, Blockchain technology is already revolutionizing our everyday lives. The concept is all about creating secure and transparent systems without the need for a central authority.
Web3 on the other hand, refers to the next decentralized generation of the internet, allowing users to gain more control over their data and online identities. Through technologies such as Blockchain and distributed ledger technology, Web3 strives to create a more secure and transparent Internet.
Web3 will allow you to interact with decentralized apps (dApps) and smart contracts, meaning the need for a third-party authority will be completely eliminated.
We don’t have an official launch date for Web3 just yet. However, much of it is already here, as the emergence of blockchain and its practical use cases are already a part of our reality.
The architecture of Web3 is mostly built on the principles of decentralization, distributed computing, and peer-to-peer networking. That’s exactly why Blockchain is a key feature of the next generation of the internet.
Its decentralized, immutable, and secure nature makes it the perfect fuel for building decentralized apps such as non-fungible token marketplaces, social media networks, and decentralized finance (DeFi) platforms.
Blockchain enables all Web3 applications to work without a central authority, which is why you can expect increased transparency, security, and user control. For example, a decentralized social media platform built on both Web3 and Blockchain will allow you to control your data and privacy, during which no centralized platform can control your data.
To put it in a nutshell, blending both Blockchain and Web3 allows businesses to build more efficient, secure, and transparent applications. Such a combination will most probably reshape the way businesses interact with customers, suppliers, and other stakeholders, which will result in a potential transformation of the traditional business landscape.
So, is Blockchain essential to Web3?
All things considered, Blockchain plays a huge role in Web3. However, it’s not the only technology crucial for its existence. For example, technologies such as virtual reality ((VR), augmented reality (AR), Metaverse, or the Internet of Things (IoT) can become a key component in enabling Web3.
Blockchain and Web3 are perfectly capable of providing benefits on their own, but bringing them together is a whole different level of synergy. Let’s take a look at some of the key benefits they can provide:
- Decentralization. While Web3 is built on the concept of decentralization, Blockchain enables trust and transparency for all Web3 applications without the need for a centralized authority.
- Improved security. Blockchain is widely known for its ability to provide great security without the need for an intermediary, meaning all of your data will be better protected from cyber-attacks and fraud.
- Faster transactions. The days of using traditional methods for transferring money and waiting for them to arrive for days are over. Blockchain can process payments much faster, making it perfect for the ever-evolving e-commerce industry.
- Increased trust. With the help of smart contracts, trust between parties that didn’t have a pre-existing relationship can be enabled.
- Payment infrastructure. For some time now, cryptocurrencies have been used as a way of payment. Even though they’re not fully adopted, they still have the potential to overcome the limitations of traditional payment systems and become the native digital payment infrastructure for Web3.
Blockchain and Web3 have the potential to disrupt various industries due to their decentralized, transparent, and secure infrastructure. We’re already witnessing some real-world examples of how combining both rapidly evolving technologies can lead to innovative solutions.
DeFi can be considered a product of Blockchain and Web3. These types of financial applications and services are powered by blockchain networks such as Ethereum and can operate without a central authority.
Web3 is striving to allow users to access financial services in a decentralized and transparent manner, which is why DeFi applications are the perfect example of Web3. With their help, you’ll be able to access various financial services such as trading and investing, as well as lending and borrowing without the need for an intermediary.
The most famous cryptocurrency uses Blockchain technology in order to enable secure and transparent transactions, whilst eliminating the need for a central authority such as banks. While many of you have heard the term Bitcoin in terms of making money, it also has other use cases such as digital payments, store of value, and smart contracts.
As a part of the Web3 ecosystem, Bitcoin allows peer-to-peer transactions without you needing to rely on traditional financial institutions. Additionally, you can buy btc with a debit card through an exchange that utilizes Web3 technology, and rest assured your financial and personal information is secured.
The use of Blockchain in social media is a rapidly growing sector that involves integrating the decentralized network of blockchain into platforms designed to facilitate connection and content sharing among users.
That said, Blockchain integrated social media platforms use blockchain technology in order to enable decentralization, transparency, and security without relying on a central authority. Some examples of blockchain-based social media platforms are Steemit, Voice, Sapien, Minds, etc.
NFTs exist on the Blockchain and cannot be replicated, making them perfect for representing one-of-a-kind items such as music, art, or collectibles. Combining both Blockchain and Web3 is a perfect way to ensure NFTs are transparent and secure.
On the other hand, Metaverse refers to a virtual world enabled by both Blockchain and Web3, where you can create, own, and transfer digital assets. Like with NFTs, both Blockchain and Web3 make sure these transactions are secure, transparent, and decentralized.
Web3 is the next evolution of the internet that has the potential to change the Internet as we know it. Like with every other non-traditional technology, a few challenges lie in the way of adopting Web3.
- Interoperability. There is a huge lack of interoperability between Web3 concepts which can seriously affect the adoption of Web3. There are hundreds of Blockchains currently, but as a result of the lack of interoperability the assets created on one Blockchain cannot be fully utilized on another.
- Scalability. As more people adopt Web3, the number of transactions processed on the blockchain will increase, which can seriously hinder the system’s capacity. As a result, we can expect higher fees, slower transaction time, as well as decreased user experience.
- Development. Developers will most likely run into a problem with the increase in the number of Blockchains with various purposes. Every Blockchain has its own unique specifics, and every developer needs skills related to the particular Blockchain they’re working with.
- Complexity. While we’re slowly getting used to many digital technologies, they’re still very different compared to traditional methods. For example, Blockchain has been with us for a few years now and it’s still considered to be in its infancy. Considering that, who’s to say how fast we’ll understand and adopt Web3?
The combination of Blockchain and Web3 obviously has a lot of benefits. Most importantly, it plays a huge role in developing a more secure and decentralized Internet.
Even though Blockchain and Web3 can function perfectly on their own, we cannot dispute the fact that combining them creates a synergistic relationship between them.
Is Web3 the future of the Internet?
It’s too early to say, as there isn’t even a universally accepted definition for Web3. However, its core is solid, and the hype around it isn’t baseless, so we’ll have to wait and see what lies ahead.
Makedonka Micajkova is a freelance content writer and translator, always bringing creativity and originality to the table. Being multilingual with professional proficiency in English, German and Spanish, it’s needless to say that languages are her biggest passion in life. She is also a skilled communicator, as a result of having three years of experience as a sales representative. You can find her on Linkedin.