Is Web3 the Key to Mass Crypto Adoption?
Web3 is one of the most bandied-about buzzwords in the tech sphere right now, especially in the crypto space. If you believe the hype, this upcoming blockchain-based upgrade of the Internet is what will move cryptocurrencies, NFTs, DeFi and VR from niche environments to mainstream adoption. Web3 is being promoted not only by forward-thinking startups but by big tech giants such as Meta. Although we're still in the conceptual stage, the involvement of major players confirms that something is definitely developing in this area. So, what exactly is Web3, and why is crypto essential to it?
What even is Web3, anyway?
The Internet as we know it now, or Web2, has certain issues, especially with privacy and the undue influence of huge, near-monopolistic companies. It's a far cry from the anarchic early days of the technology's conception, which was a vehicle for largely anonymised free sharing of information and user-generated content (as in, users would make their own websites, communities and platforms, not provide content for existing social media platforms). Today, a large section of the Internet is captured by platforms that extract value from the data and content made by their users.
Web3 can be seen as an attempt to break the control of mega-platforms and empower individual users and organic communities. Effectively, we're talking about building a decentralised Internet based on privacy, peer-to-peer sharing and democratic governance outside of powerful platforms or intermediaries. Does that sound familiar?
Where crypto comes in
The crypto space already provides models for this kind of organisation, made possible by blockchain technology. For example, the use of crypto tokens for governance used in DeFi and DAO projects, smart contracts for collaborations and encrypted but publicly-accessible blockchains for security and privacy. Blockchain provides the necessary tools to build trustless, direct peer-to-peer collaboration and democratic control of platforms. It's also impossible for a single entity, even a large one, to completely take it over.
Add to that the fact that Web3 also includes the development of 3D digital environments and VR/AR interactivity, and crypto becomes even more useful for Web3. NFTs can track ownership and rights to digital objects and let users conduct business with them. In a truly free Internet, even crypto tokens as currency can limit the influence of governments and banks, making the Internet less vulnerable to, for example, political crackdowns and sanctions. This scenario lines up neatly with the ideology behind the creation of Bitcoin (BTC): to create a digital peer-to-peer medium of exchange outside institutional control.
With the transition to Web3, the use of crypto will have evolved far beyond the limited capability of Bitcoin today. Almost 5 billion people use the Internet every day, and in the 10+ years it would likely take to implement Web3, this would mean billions of people using blockchain and crypto as part of their daily lives. This can include the use of crypto as payment to peers around the world, for governance in online platforms or as NFTs for the metaverse avatars and lands.
Can mainstream crypto adoption happen without Web3?
Crypto has reached a new wave of popularity since the COVID-19 pandemic, but there are only so many people who will be attracted to crypto for pure speculation, and this interest will eventually peak.
To truly go mainstream, crypto needs to offer the masses a use case beyond trading for profit. As it currently exists, crypto also suffers from serious scalability issues, a problem that most new blockchain projects cite as one of their major goals to solve.
To overcome the issues of adoption and scale, a large number of resources, both monetary and human, need to be applied to the problem, and that will only happen with a desirable end goal, such as Web3.
These are still the early days, and there will be many competing visions of Web3s development, including from Meta and other big tech platforms that the more privacy-oriented elements of the crypto community will be wary of. Governments that wish to foster the development of the tech sector in their own countries while seeking to regulate crypto operations will also play a part. Whatever the eventual result, all agree that blockchain and crypto will be at the centre of the project.
How to prepare for Web3
The long-term investor should ask themselves, "What will the crypto ecosystem look like in the next decade? Which projects are likely to survive and develop promising use cases?" It will be important to keep an eye on the crypto market, tech industry news and governmental regulation to judge the changing situation and make trades accordingly.
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