18 December 2023 | ZebPay Trade-Desk
Over the past two years, the concept of Web3 (sometimes incorrectly referred to as Web 3.0, the third generation of the Internet) has evolved from a new, vaguely defined digital utopia to a leading, all-encompassing driver. But still, a lot of us are confused about the distinction between Web3 and crypto assets in general. To make matters worse, it seems like every crypto project has switched to a Web3 rebrand seemingly overnight. One thing is for sure that web3 is considered by many to be the “killer app” that can popularize crypto thanks to a large number of high-potential use cases.
Although there is much confusion around the term, Web3 is something different than Web 3.0, which is the next generation of the World Wide Web, also known as the Semantic Web.
The term Web3 is used to represent the next generation of the Internet, which is being created to free Internet users from the need to depend on Web-2 companies ( centralized intermediaries who have a bad reputation because they exploited users’ rights to privacy and free speech for financial gain) by replacing them with decentralised service providers. This is similar to how Bitcoin and other crypto assets have eliminated the need for people, banks and others funds to use institutions when transferring or storing assets.
Read more: What is Web 3.0
Applications of Web 3 Technologies
Web3 cryptos are a new generation of crypto assets that power the building of a new decentralised Internet. These Web3 native tokens are distributed as a reward to network participants (such as users, validators, service providers, content creators, and so on) for their support. Web3 crypto assets combine smart contracts and blockchain technology. They promise artists and creative industries a much fairer distribution of revenue such as royalties and commissions compared to Web 2 companies such as Meta, Spotify and Youtube.
Web3 itself is not a specific blockchain or crypto, but a decentralised version of the internet that uses crypto to provide specific services to users. However, Web3 and crypto assets run on public, borderless blockchains and share important similarities such as, enabling decentralisation, lack of trust, open source technology and equal access for all users. Crypto assets and Web3 tokens are used to incentivize a decentralised offering of services previously provided by centralized technology companies. These critical services include data storage (e.g.Filecoin and Arweave), network infrastructure (e.g. Helium), bandwidth and processing power-sharing (e.g. Theta and Render), data indexing (The Graph), identification, web hosting, social networks and much more.
Read more: Web 3.0 vs Web 2.0
Some of The Most Popular Web 3 Tokens
Web3 projects provide a full range of decentralised web services, and the main Web3 cryptos will be familiar to crypto users. The five most popular Web3 crypto assets by market cap are Polkadot, Chainlink, Filecoin, Internet Computer and Theta Network. All are well-established and have been around for more than a few years. With only DOT, LINK, FIL, and ICP currently managing a market cap above of $1 billion, this nascent crypto sector has great potential for growth if Web3 can deliver on its promise.
Chainlink (LINK) is an oracle network that connects crypto networks to real data, making it one of the most hyped crypto projects. LINK uses smart contracts to connect to various off-chain data sources such as data feeds, events, APIs, bank payment networks and more. While its pricing doesn’t show this, Chainlink is finally starting to turn things around and recently launched LINK token staking, which will make it attractive as a passive income-generating investment.
Read more: 8 Ways To Earn Passive Income Through Crypto
Filecoin (FIL) leverages blockchain technology to enable decentralised storage of almost any type of data (audio/video/images, etc.), similar to centralised platforms like Amazon Web Services (AWS). Filecoin incentivizes participants to share hardware with their FIL coin.
Helium (HNT), also known as the “People Network”, is a decentralised, wireless P2P blockchain network serving thousands of “point-of-use” devices connected to the Internet of Things (IoT) access around the world to share data via radio wave technology freely from intermediaries who may censor, block or misuse that information. It uses its proof-of-coverage consensus algorithm to validate and reward participants with their HNT token as an incentive.
Audius (AUDIO) is a decentralized music streaming platform that aspires to become the blockchain version of Spotify, only with better distribution of artist royalties and attractive rewards for listeners and hub operators in the form of their native asset AUDIO. Audius is backed by some of the biggest names in music including Steve Aoki, 3LAU, Katy Perry and more.
Theta Network (THETA) is a powerful blockchain-based platform providing video streaming to Web3 businesses and traditional streaming media companies struggling to keep up with their users’ insatiable demands for higher resolution and higher bandwidth. Theta already has enterprise validation nodes from big tech companies like Google, Samsung, and Sony, and it keeps gaining importance thanks to its ability to customize and scale based on customer needs. Users share bandwidth, disk space, and processing power to earn THETA rewards.
It is not surprising that Polkadot (DOT) tops the list of the largest Web3 crypto assets by market cap as its founder, Gavin Wood, coined the term “Web3” in 2014 and later created the Web3 Foundation, which provides funds to developers. Polkadot (and its Kusama “Canary Network” used for early testing) is Wood’s realization of this vision of a decentralised web, an interoperable multi-chain platform that can seamlessly connect with public and private chains (called parachains) to their Relay chain to securely interact with each other in a transparent, immutable and trusted manner. DOT, its native asset, helps incentivize operations, security, network governance services and peg tokens for use across parachains.
Internet Computer (ICP), controversially developed by Dfinity, is building an ambitious “World Computer” blockchain capable of supporting a full range of fully decentralised end-to-end web services. Internet Computer enables the creation of projects to avoid the security and privacy pitfalls associated with traditional IT usage of cloud, database and web server providers and differs by using intelligent contract software (so-called “vessels”) and innovative blockchain applications such as key chain cryptography. Canisters can scale at speeds comparable to Web2 services, allowing users to leverage the internet and other blockchains without the need for bridges.