The word Web3 is heard more and more often, usually in the same sentence as cryptocurrencies and blockchain. Yet few can clearly say what it actually is. Let us explain it from the basics, simply and without jargon, with an honest look at what is reality and what is hype.

What Web3 is

Web3 is a vision of the next generation of the internet, built on the blockchain and decentralized. The main idea is: instead of big companies controlling your data, identity and content, you should own and control them yourself.

It is not one specific technology or a finished product, rather a direction and a vision of what the internet could look like.

Web1, Web2 and Web3: read, write, own

You understand it most easily through the evolution of the internet:

  • Web1 (read only). The early internet, static pages. You mostly just read what someone published.
  • Web2 (read and write). Today’s internet. You create content yourself (social networks, videos, comments), but platforms like Google or Facebook own your data and decide about it.
  • Web3 (read, write and own). A vision where, besides creating content, you also own your data, identity and digital assets, and that without a central middleman.

In short: Web3 wants to add ownership and control to creation.

What Web3 is made of

Web3 rests on several building blocks you may recognize:

  • Blockchain as the foundation (a public ledger), more in the article cryptocurrencies from A to Z.
  • Cryptocurrencies as a means of payment and reward in the network.
  • A crypto wallet as identity. Instead of logging in with Google, you connect a wallet.
  • Smart contracts (self-executing agreements in code).
  • NFTs as proof of ownership, more in the article NFTs from A to Z.
  • dApps (decentralized apps running on a blockchain).
  • DAOs (decentralized organizations run by a community through voting, not a boss).
  • DeFi (decentralized finance, that is financial services without a bank).

How it differs from today’s internet

  • Signing in. Instead of a Google or Facebook account, you connect a crypto wallet, which is your identity across applications.
  • Where the apps run. Not on one company’s server, but on a decentralized network and a blockchain.
  • Ownership. Your digital assets (coins, items) are yours and you can, in theory, move them between services.

What Web3 promises

  • Ownership of your data and content instead of handing it to big companies.
  • Resistance to censorship, since there is no single off switch.
  • No middleman, people trade and cooperate directly.
  • A share in the value that the users themselves create in the network.

Reality and criticism: a sober view

To be fair, Web3 also has many question marks and should be taken with a pinch of salt:

  • A lot of hype and speculation. Many projects went bankrupt or were outright scams.
  • It is not as decentralized as it claims. In practice many things rely on a few companies and large exchanges.
  • Complex and inconvenient. Wallets, fees, recovery phrases. For an ordinary person it is hard and easy to get wrong.
  • Scams. The same risks as with cryptocurrencies and NFTs, just in a new wrapper. This relates to the articles social engineering and AI scams and fraudulent messages.
  • Critics say that part of Web3 is a solution looking for a problem, or just rebranded crypto.

Still, some ideas (data ownership, decentralized identity, community organizations) are interesting regardless of the hype.

Practical for a layman

  • You do not have to do anything. Web3 is not yet a necessity for everyday life.
  • Understand the principle so you know what people are talking about and do not fall for nonsense.
  • Beware of “Web3 investments” with guaranteed profit. That is almost always a scam.
  • If you do try something, protect your wallet and risk only what you can afford to lose.

Conclusion

Web3 is a vision of an internet built on the blockchain, where users should own their data, identity and digital assets, without depending on big companies. It builds on cryptocurrencies, wallets, smart contracts, NFTs and community organizations. It is an interesting direction with a real core, but at the same time full of hype, complexity and scams. It is worth understanding, but approaching soberly.

Need advice on securing accounts and a wallet, or finding your way around new technologies? Get in touch, we will be happy to help.

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This article is part of our Software and system overview.