What is Web3

Web3, also called Web 3.0, marks the next stage in the development of the Internet. Unlike Web 2.0, which is dominated by centralized organizations that control user data and digital interactions, Web3 is built on the principles of decentralization, transparency, and user empowerment. Blockchain technology plays a key role in enabling this transition by providing a secure and transparent platform for transactions.

Blockchain ensures that all web3 transactions and interactions are transparent, secure and trustless. The integration of blockchain and Web3 technology enables the creation of decentralized applications (dApps) that operate without intermediaries, giving users greater control and autonomy.

Web3 and cryptocurrency

The relationship between Web3 and cryptocurrency is fundamental as blockchain technology underpins both concepts, enabling a new paradigm for online transactions and data management.

Cryptoassets act as native currencies in Web3 industry, facilitating the exchange of value and incentivizing network participants. 

Cryptocurrency represents digital  currency that uses cryptography for security and operates independently of central authorities. Cryptocurrency is built on blockchain technology, offering enhanced security, transparency, and efficiency. 

While cryptocurrencies such as bitcoin are often seen as the primary use case for blockchain, Web3 extends this vision. Blockchain provides secure, transparent transactions and data storage that are essential to the functionality of Web3 applications. It serves as the infrastructure to enable decentralized finance (DeFi), non-fungible tokens (NFT), and other types of assets.

In the Web3 space, users can own their crypto, digital assets and identity. Empowerment is facilitated by cryptocurrencies, which act as a medium of exchange in decentralized networks. Users can engage in peer-to-peer transactions without relying on traditional financial institutions.

Cryptocurrencies in Web3 are more than just digital currencies; they are an integral part of access to various decentralized platforms. They allow users to participate in governance, finance, and social interactions within these ecosystems.

Transactions made using cryptocurrencies benefit from the security advantages of blockchain technology. This reduces the risks associated with fraud and hacking compared to traditional systems.

Web3 Wallets

Web3 wallets are essential tools for interacting with decentralized applications (dApps) and managing digital assets in the blockchain ecosystem. Unlike traditional wallets that hold physical currency, Web3 wallets store the private keys necessary to access cryptocurrencies and NFTs, allowing users to engage directly with blockchain networks.

Web3 Wallets must be non-custodial and open source, meaning users retain full control over their private keys and funds without relying on third-party services.

 Web3 wallets facilitate seamless interactions with dApps, allowing users to execute smart contracts, participate in DeFi, and engage in peer-to-peer transactions without intermediaries.

Web3 Applications

Web3 applications, commonly referred to as decentralized applications (dApps), operate on blockchain technology.

Key categories of Web3 apps include. 

• Decentralized Finance (DeFi)
    -  Uniswap: A decentralized exchange that allows users to trade tokens directly from their wallets using liquidity pools.
    -  Aave: A lending and borrowing platform where users can earn interest on their crypto assets or borrow without traditional banks.
• NFT Marketplaces for buying, selling and trading non-fungible tokens 
• Social Media Platforms like Hey is a decentralized and permissionless social media app built with Lens Protocol.
• Metaverse Projects like Decentraland: A virtual world where users can create, explore and trade virtual real estate properties.
• Decentralized Storage Solutions like Filecoin.

Advantages of Web3 Applications

• User Control. Users retain ownership of their data and digital assets, reducing reliance on centralized platforms.
• Enhanced Security. Built on blockchain technology, these applications are less vulnerable to hacking and fraud.
• Transparency. Transactions are recorded on a public ledger, ensuring accountability and trust among users.