Decentralization and token-based economics may soon be making their way into the larger Internet community thanks to a much-anticipated World Wide Web iteration known as Web3. What does this concept entail and more importantly, how might it push cryptocurrencies into the mainstream marketplace?
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What Exactly is Web3?
Before moving on to discuss the relationship between Web3 and cryptos, it’s wise to define this concept from a more down-to-earth perspective. Web3 is a type of Internet protocol that involves several core principles including:
- Machine learning
- Security and anonymity
- Blockchain technology
If you notice that all of these sound somewhat familiar, you’re not alone. The principles above also serve to define cryptocurrency fundamentals.
One of the main goals is to provide a more ‘democratic’ tone to the internet. As opposed to being controlled by a handful of large conglomerates, Web3 promises to prevent potential monopolies through decentralization. In other words, it should place a fair amount of power back into the hands of individuals.
On a final note, Web3 has been engineered with higher degrees of privacy in mind. This is an obvious concern for those who wish to keep their personal information hidden from prying eyes and big businesses.
The Relationship Between Web3 and Cryptocurrencies
It’s now easy to see that Web3 and the crypto markets share a number of traits in common. So, how might the introduction of this new protocol impact traders and the movements of these digital assets? Let’s see what the experts at Crypto Lists have to say.
The Notion of Cecentralized Finance
Sometimes known as “DeFi”, decentralized finance will be one of the pillars of Web3 technology. This is once again based around the very same blockchain protocols that have already been embraced by the crypto markets. The main benefit here is that even average users will be employing such methods when Web3 is implemented (even if they don’t happen to be actively aware of it, and that’s key).
When DeFi is combined with payment methods such as NFTs, the benefits suddenly become clear. If these types of transactions become commonplace within the Web3 ecosystem, cryptocurrencies could very well become the payment method of choice. This is obviously great news for market makers and individual investors alike.
Keeping Big Brother at Bay
One of the most contentious issues in recent times revolves around government oversight. We’re not only talking about big business in this sense. Even the average consumer has become wary about privacy issues. A growing number of individuals are viewing cookies and the gathering of personal data for marketing-related purposes as intrusive. Web3 promises to set stringent limits on these strategies. This brings up another interesting point.
According to recent data gathered by Statista, the number of blockchain wallet users has begun to level off in recent times (1). Some feel that this could be due to those who are understandably concerned about the anonymity of their online transactions. Assuming that Web3 becomes mainstream, such hesitance could be dramatically reduced. This might enable cryptocurrencies to gain a massive digital foothold.
The Slippery Subject of Government Oversight
Let’s now imagine for a moment that this new iteration is adopted. In such a case, there’s no doubt that regulations will need to be put into place. We’re not talking about rules outlined by a handful of digital demagogues in this sense. It would be much more likely that a set of decentralized (yes, that word again) protocols will be adopted in order to ensure transparency and stability.
Some experts feel that one of the reasons why cryptocurrencies have not enjoyed large-scale adoption involve perceptions of volatility and complexity. Things have already begun to change thanks to the introduction of consumer-friendly products such as stablecoins and crypto-friendly debit cards. It is likely that Web3 will enable these and similar utilities to become even more accessible to the mainstream marketplace; leading to an uptick in the number of transactions.
A Not-so-Distant Future
To be clear, it is not yet certain when Web3 will be implemented and what it would even look like. There is still no doubt that this protocol is looming ever closer. The crypto markets are therefore set to benefit from mainstream exposure and from the simple fact that more users will become aware of their existence. Similar to the rise of e-wallets during the early 2000s thanks to Web2 technology, Web3 could very well redefine the entire cryptocurrency landscape.