Getting started with Web3

We need to understand Web1 and Web2 to understand Web3. Let us understand what Web1 stands for first.

Web1, or the first generation of the World Wide Web (W3), refers to the earliest stage of the web, which was primarily used to access and share information. It was characterized by static HTML pages that could be linked using hyperlinks. Web1 focused on the dissemination of information, rather than on interactive and dynamic content. It was also limited in terms of the types of media that could be shared, as it was primarily text-based. It is important to know that Web1 is the foundation for many modern technologies and frameworks that we have in the world today.

So, Web2 is simply the next generation of technologies that evolved from Web1. Web2, or the second generation of the W3, refers to the stage of the web that focuses on the development of interactive and dynamic content, and on improving the user experience. Some key features of Web2 include the following:

• Social media: Web2 saw the rise of social media platforms, which enabled users to connect with one another and share content
• Collaboration: Web2 technologies such as wikis and blogs made it easier for users to collaborate and work together online
• Personalization: Web2 technologies enabled personalized experiences for users, such as recommendations based on their browsing history
• Mobile access: Web2 technologies made it easier for users to access the web from their mobile devices

Overall, Web2 was characterized by the shift from a web of static pages to a web of dynamic and interactive content, and by the increasing centralization of the web as large companies emerged as key players in the industry.

While serving content and data in a centralized web has many advantages, the birth of cryptocurrencies and blockchain technology proved how decentralization can improve data availability and content served on the internet, which we call Web3.

Web3, also known as the decentralized web or the decentralized internet, refers to the use of blockchain technology to create a more secure and decentralized internet. It is a set of protocols and technologies that aims to give users more control over their online data and interactions, making the internet more resistant to censorship and interference.

Figure 1.8 – Understanding Web1, Web3, and Web3

Web3 technologies, such as Ethereum and other smart contract platforms, enable the creation of dApps, which can operate on a blockchain and are not controlled by any single entity. These dApps can be used to create a wide range of applications, from social networks and marketplaces to voting systems and supply chain management tools.

Web3 also includes protocols for secure peer-to-peer communication, such as Inter-Planetary File System (IPFS), which can be used to store and share data without the need for a central server.

Newer business ideas that originated based on the decentralization and tokenization of real and virtual assets are now commonly called digital assets. With new financial digital assets and blockchain, the world was introduced to a completely new set of financial services called Decentralized Finance (DeFi).

DeFi refers to financial applications and services that are built on decentralized networks, such as blockchain. DeFi aims to provide the same financial services as traditional finance but in a decentralized and trustless manner.

Some of the key features of DeFi include the following:

• Decentralization: DeFi applications are decentralized, meaning that they are not controlled by any single entity
• Trustless: DeFi applications are designed to be trustless, meaning that users do not need to trust a third party to handle their transactions
• Interoperability: DeFi applications are often built on open protocols, which enables them to work together and exchange information seamlessly
• Permissionless access: DeFi applications are often open and permissionless, meaning that anyone can use them without the need for approval from a central authority

DeFi applications include DEXs, lending and borrowing platforms, Stablecoins, and more.

With regard to non-financial services, creating digital assets based on real-world objects created a new economic model for humans. This kind of tokenization is called Non-Fungible Tokens (NFTs). Creators and artists gained a new monetization model with NFTs. This new model led to the rapid development and adoption of Web3 technologies and completely changed the way we look at arts, collectibles, fan clubs, ticketing systems, royalties, music, movies, gaming, and the travel industry.

Overall, the goal of web3 is to create a more open and decentralized internet, where users have more control over their data and interactions, and where the power and control of the internet is distributed more evenly among users, rather than concentrated in the hands of a few large companies.

Stablecoins

Stablecoins are digital assets that are designed to maintain a stable value relative to a specific asset or basket of assets. One of the primary goals of stablecoins is to provide a more stable store of value compared to cryptocurrencies such as Bitcoin, which can be highly volatile.