Web3 – What To Know
Web3 is the new era of the world wide web. So, for Web3 – what is essential to know? Soon, experts predict that Web3 will be one of the most significant technological innovations. The Web3 revolution will change everything from communication to business operations and more. This article will discuss what you need to know about Web3.
What Is Web3?
Web3 is a term used to describe the next generation of the internet. The Web3 Foundation provides information on the technology stack and new developments. It refers to all the technologies being developed to make the web decentralized and accessible to everyone. Web 1.0 were static web pages for consumers from 1991-2004. Subsequently, Web 2.0, where data and content are centralized in a small group of companies referred to as “Big Tech,” has been used from 2005 to today. It is time to rebuild our website presence using modern technologies. These technologies include blockchains, smart contracts through non-fungible tokens, decentralized applications (dApps), and decentralized finance (DeFI). Licensing and control are overseen by an emerging legal structure called Decentralized Autonomous Organizations (DAOs) with no central governing body.
Blockchain
In recent years, blockchain has exploded in popularity. You may have heard of blockchain technology because of cryptocurrencies like Bitcoin. Many people have heard of Bitcoin, but few know much about blockchain technology.
Bitcoin uses blockchain technology as well as cryptography to create secure transactions. Every transaction on the Bitcoin network is recorded into a public ledger known as the blockchain. We encourage you to take courses such as K2’s Emerging Topics on Blockchain for more in-depth background, including tax and audit implications. Tools such as the Legible Integrated Crypto Tax Tools can accurately report cost basis.
As a result, people who use the Bitcoin network can see all the transactions that occurred without needing to trust any one entity or government. Instead, they can rely on the security of the blockchain to protect them from fraud.
Smart Contracts
A smart contract is an agreement between two parties where one side agrees to perform some action if certain conditions are met. Smart contracts allow both sides to agree upon terms without needing to go through a trusted third party.
A smart contract could automatically transfer ownership once payment is made. This automation eliminates the need for intermediaries, making it possible to conduct transactions at a fraction of the cost compared to traditional methods.
In Web3 implementations, non-fungible tokens (NFTs) have become prevalent smart contracts that allow participants to hold assets. Marketplaces may charge a transaction fee, also known as a “gas” fee. Popular NFT marketplaces include NBA Top Shot, OpenSea, Mintable, Nifty Gateway, and Rarible.
Decentralized Applications (dApps)
A decentralized app (dApp) is a program built using blockchain technology. Unlike regular websites, dApps are not hosted by a central server. Since these apps run on top of the blockchain, they are inherently decentralized.
One of the main benefits of dApps is that they provide better data security than centralized apps. Users do not need to submit personal information to access dApps. They can remain anonymous while still conducting sensitive activities.
Why Should You Care About Web3?
As mentioned earlier, Web3 is the next generation of the internet. It will change everything from how businesses operate to how we interact. Here are just a few reasons why you should care about Web3:
Decentralization
The first reason you should care about the Web3 revolution is decentralization. Centralized servers store your data, process payments, and even control your identity. Unfortunately, centralization has led to the current security breach issue since much data is concentrated in a specific location, making it a rich target for bad actors.
In contrast, decentralized systems like the ones found in Web3 eliminate the need for centralized servers. Decentralization means that no company or government entity controls your data. Users also own their identities instead of relying on centralized databases, referred to as self-sovereign identity.
Permissionless
Web3 is permissionless. With permissioned networks, only approved entities can participate. For example, when you visit Facebook, you must give the social media giant permission to access your data. In contrast, permissionless networks do not require approval from anyone. Anyone can join the network anonymously and contribute resources.
Further, self-sovereign identity is a crucial benefit of Web3. The vision is to be able to disclose only the data you wish to reveal to others – such as:
- Just your name, height, eye color, gender, photo, and city in an online dating application
- Your address, city, state, birthdate, signature, and veteran status when applying for a loan
- All available data to a police officer in a traffic stop
Data would be stored in a third-party blockchain-based ledger and could be constantly controlled by the end user.
Security
Security is another significant advantage of Web3. The blockchain provides a tamper-proof system that prevents fraudulent activity. In addition, all transactions on the blockchain are immutable.
Immutable means that all actions performed on the network are permanent and cannot be reversed. Web3’s decentralized nature also allows users to remain anonymous. Unfortunately, it also means that it is difficult to track down individuals’ identities.
The Future of Web3
Web3 is still a new concept, with the Web3 term coined in 2014 by Gavin Wood, the Ethereum co-founder. However, it has already started making waves in the tech world. There are also Web3 communities that focus on specific aspects of this technology and its applications. Regardless of what happens, Web3 is here to stay. It will continue disrupting industries across the globe.
Here is how you can expect Web3 to change the future:
- Personalization: The use of machine learning and artificial intelligence will allow people to customize content based on their preferences. Web3 will also be “smarter” in interacting with its users. Instead of asking for explicit permissions, it will learn what interactions make sense for the user.
- Data Privacy: The rise of Web3 will lead to greater privacy and cybersecurity. Individuals will have more control over their data and will not have to worry about third parties collecting their confidential information.
- Ubiquity: As Web3 becomes more popular than our current Web2, it will become easier to access. Web3 will soon change the way people access and share data. With more devices connected to the internet, we will see more secure internet usage compared to its current state.
- Wealth Creation: Web3 promotes ownership. Compared to Web2, where most creators do not get additional revenue for their work, Web3 will create marketplaces that individuals or companies can own.
Conclusion
Web3 is the next step in the evolution of the internet. Hopefully, we have outlined for Web3 what is essential to know. It eliminates the need for central servers and gives power back to the individual. Although Web3 is new, it has already made considerable strides in the tech industry. As such, we can expect more developments in Web3 in the coming years.
Need help learning how to solve your business’s technology needs and selecting the right software for blockchain or accounting? Visit us at k2e.com, where we make sophisticated technology understandable to anyone through our conferences, seminars, or on-demand courses.
