A Beginner’s Guide to Web3

The term "Web3" has been gaining a lot of attention lately, especially among tech enthusiasts, investors and those interested in the future of the internet. But what exactly is Web3 and why is it important? This guide has been designed by the ADEX team to help you understand the basics, how Web3 differs from the earlier versions of the web and what potential it holds for the future.

First up, what is Web3?

Web3 represents the third generation of the internet as we know it. It’s an evolution from the previous versions of the web. I bet you didnt even realise there were different versions of the web…

Web1 (The Static Web): The first version of the internet, which emerged in the 1990s, was largely a collection of static pages. It was read-only, meaning that users could view content but had little to no interaction with it.

Web2 (The Social Web): The second generation of the web, which began in the early 2000s, introduced interactivity and user-generated content. Platforms like Facebook, Twitter and YouTube allowed users to create, share and interact with content. However, in Web2, control over data is centralised. Large corporations like Google, Meta and Amazon hold the majority of user data and have significant power over how it’s used, you as the user do not.

Web3 (The Decentralised Web): Web3 is the next stage in the evolution of the internet and it’s built on blockchain technology. The key difference in Web3 is decentralisation. Instead of large corporations like Meta and Google controlling data and services, Web3 aims to distribute control across a network of users, giving individuals more control over their data and online interactions.

Key Concepts in Web3

To understand Web3, it’s important to grasp some of its foundational concepts:

Blockchain: The backbone of Web3, blockchain is a decentralised ledger that records transactions across multiple computers or servers. This technology ensures that data is stored securely and cannot be altered (immutable) without consensus from the network.

Cryptocurrencies: Digital currencies such as Bitcoin and Ethereum are integral to the Web3 ecosystem. Beyond their role as currencies, they also power applications on the blockchain. For instance, Ethereum’s blockchain enables smart contracts—self-executing agreements with the terms encoded directly into the software. These contracts automatically trigger specific actions when certain conditions are met, offering a high level of security and addressing many challenges associated with traditional transaction methods when implemented correctly.

Smart Contracts: These are programmes that automatically execute, control, or document legally relevant actions according to the terms of a contract or an agreement. Smart contracts remove the need for intermediaries like banks or in fact humans.

Decentralised Applications (dApps): Unlike traditional apps that run on centralised servers, dApps run on a blockchain. This means they are open-source, provide more privacy and are less vulnerable to censorship.

Decentralised Finance (DeFi): DeFi encompasses financial services that function without central authorities, such as banks. Through DeFi, users can lend, borrow, trade and earn interest on cryptocurrencies without relying on traditional financial institutions. In the case of ADEX, this is combined with the backing and compliance of a centralised bank, while still offering the freedom and decentralised advantages inherent to DeFi.

Non-Fungible Tokens (NFTs): NFTs are unique digital assets stored on a blockchain, representing anything from art to music to in-game items. They have become popular as a medium for buying and selling digital art. NFTs also provide proof of ownership and will play a key role in obtaining different tiers of revenue share within the ADEX ecosystem.

Self-Sovereign Identity (SSI): In Web3, users can own and control their digital identities without relying on a central authority. This is a significant shift from Web2, where platforms like Meta or Google often manage user identities. This has recently been used by the Government of Palau in a very forward thinking manner, check it out for yourself!

Why Does Web3 Matter?

Web3 is important because it promises to address some of the biggest issues with the current internet (Web2):

Data Ownership: In Web3, users have control over their data. Instead of giving away personal information to centralised platforms, individuals can choose what to share and with whom.

Censorship Resistance: Since Web3 is decentralised, it is harder for governments or corporations to censor content. This is particularly important in countries where free speech is limited.

Economic Opportunities: Web3 opens up new economic opportunities by allowing anyone with an internet connection to participate in the digital economy. Whether through creating and selling NFTs, participating in DeFi, trading RWA assets or earning cryptocurrencies, Web3 is democratizing access to wealth creation.

Interoperability: Web3 applications can work together seamlessly, thanks to the shared infrastructure of blockchain technology. This means users can move assets or data across different platforms without friction.

The Challenges of Web3

While Web3 holds great promise, it’s still in its early stages and faces several challenges:

Scalability: Blockchain networks can be slow and expensive, especially as more people use them. This has led to ongoing research and development in scaling solutions.

User Experience: Web3 applications can be complex and difficult for the average user to navigate. Simplifying the user experience is a priority for the team at ADEX, we are designing our DEX to be accessible to noobs and degens alike, without the fear factor.

Regulation: Governments around the world are still figuring out how to regulate blockchain and cryptocurrencies. This creates uncertainty for users and developers. By working with our banking partner and creating a product which is both compliant but also decentralised, we seek to bridge this gap and create the perfect blend of products and services.

Security: While blockchain technology is secure by design, the surrounding ecosystem (like wallets, exchanges and dApps) can still be vulnerable to hacks and scams, whichis why we have selected IDCrypt as a partner and are working closely with them to ensure confidence for all ADEX customers.

What’s Next?

Web3 is set to revolutionise how we engage with the internet, offering users greater control, enhanced privacy and new economic opportunities. Although it’s still in its early stages, gaining an understanding of Web3 and its potential can prepare you for the future. As we strive to be at the forefront of DeFi services in the UK and beyond, we invite you to join us on this exciting journey.

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