March 17, 2022

What is Web3?

Web3 refers to a decentralized online ecosystem based on blockchain technology. Platforms and apps built on Web3 won't be built on a single server or database.

What is Web3?

What’s up everyone? We’re SquareWon, your go-to place to learn crypto. 

You might be here because you want to know how to trade crypto, or perhaps you’re just curious about all the ETH and bitcoin your friends keep bragging about buying. 

How do I learn crypto?

Good news! We’re here to help. Let’s get you up to speed by starting with an overview of the Web3 ecosystem (you’ll soon learn ‘crypto’ fits into ‘Web3’ in a huge way, so stick with us through all of the jargon, and it’ll make sense soon enough).

We recommend doing a once-over scroll of this article, then reading through more comprehensively and clicking on links in order to dive in and learn more. 

What is Web3 anyway?

Have you ever felt like there’s a chunk missing from the internet? One that’s just beyond the daily Facebook feed or Google search? The good news is that your hunch is right - there is a piece missing and it’s called Web3. Web3 is a version of the internet where you can be compensated (hello cryptocurrency) for your effort in creating, consuming and owning the work you do online. 

In Web3, you can connect your digital identity to various online resources, build things to your heart’s desire and even receive money in the form of crypto - with no intermediary standing in your way. This might seem like a trivial concern in some parts of the world, but with many governments restricting online access and compensation, Web3 is imperative to all global citizens. 

If you’re saying to yourself - “wow, that went way over my head,” no worries, keep reading and we’ll break it all down for you below.

Another way to conceptualize the phases of the web is through time period and function. Web3, as its name suggests, is just the third iteration of the internet as we know it.

Web1 - Read

We’ll call the early internet Web1. And we mean really early. This early phase was about democratizing access to information. In most cases you could consume (or “read” in programmer terms) info on the web. Web1 was made up mostly of hyperlinks and static web pages, in their most rudimentary form. Think Yahoo, for example. You could use Yahoo to search for articles or information on topics you were interested in. 

Web2 - Read, write, share

Eventually, we got tired of just consuming content and wanted to interact with it. Enter the next phase of the internet, Web2. This phase, where most consumers are currently at, is a place where you can both consume (“read”), interact or create (write), and share content. 

Take Reddit for example - here you can both check out other people’s esoteric questions and also craft your own replies. Another example is Medium, or Pinterest, or Facebook, or…we could keep going. Almost every brand you’ve ever heard of has a Web2 presence. 

Sharing content is critical to Web2 - possibly even more so than reading or creating. The social networking element of Web2 is what made it so global - and also so exploitable, because people (you and me) do the work of advertising on behalf of the tech companies.

In other words, you create value for them but don’t actually receive any financial benefit. In fact, you sometimes suffer the consequences of Web2; that happens whenever we hear about a data breach that leaks our private information to the hands of unknown hackers.

Web3 - Read, Write, Own

Enter the present future. This ecosystem uses the bones of the internet to enable the read, write, and “own functions. This means that you’re both able to consume and contribute information online while also receiving compensation for your participation. Sharing is still a part of this ecosystem, but the ability to directly benefit from each share is now built in. Interestingly, the original infrastructure of the web was actually set up for a payments network already (just google “HTTP 402” to fall down the rabbithole).

This piece about ownership in Web3 is really important

(So important that we bolded it). With ownership comes great responsibility. Web3 is the future and will come with some massive changes to our current financial, social and overarching day-to-day infrastructure. It’s super important to begin the learning process now, so that when this change comes you’re already ahead of the game.

What is blockchain?

The technology that underpins the new Web3 world is called blockchain. A blockchain is essentially a database (a digital storehouse of information) that is shared across a computer network.  

One crucial difference between a typical database and a blockchain is how the data inside it is structured. Where a database is generally one giant compendium of information, a blockchain collects information together in smaller groups. These groups are known as blocks, and as time marches forward new blocks are created with the newest pieces of information. 

This means that just like beads on a string you can go back from the most current block to the next oldest, and so on back to the very beginning — or “genesis” — of each blockchain. All of this is made possible by badass cryptography, but that’s for another day.

The second crucial difference between blockchain tech and centralized databases is where the information is stored. In blockchain, there is no supercomputer or centralized monolithic computer that holds the one true copy. Instead, the blockchain is stored on a network of individual computers across the globe. All of this data is then secured by something called ‘cryptography,’ but that’s a whole different blog post.

Are you yawning? Eek, take a sip of your beverage because this is the crux of it all!

The innovation with blockchain technology is that because of its unique architecture, it guarantees the truthfulness and security of all of this data without the need for a trusted third party

TL;DR —> Because of blockchain technology, you get to interact, create and get paid in Web3 without worrying about a middleman selling your data or collecting fees; no bank, no creepy Facebook ad, no omniscient Google, just you and your badass heart. 

Holla back. 

Let’s lay out a few more thoughts and definitions. 

What are cryptocurrency  wallets?

Wallets are your new digital identity in Web3. Think of it as your single sign-on to the web. Instead of using Google or Facebook to authenticate or sign into websites, you can now use your unique wallet address. There’s more to dig into here, but suffice to say that since you’ll be accessing your crypto assets through your wallet, it’s a thing you’ll want to keep very safe. 

What are tokens and what are coins?

We’re so glad you asked. A digital wallet (see above definition) holds both coins and tokens which are both types of cryptocurrency. 

Coins exist mainly for the purpose of digital value transfer - aka money - something you can spend, receive or hold. Coins exist on their very own blockchain. Bitcoin is a great example of a coin. 

Tokens are created on pre-existing blockchains and allow you to do specific tasks depending on where you use them (see What are Web3 apps or “dapps”? below). On the Ethereum blockchain for example, there are literally thousands of tokens such as Chainlink, Tether, Shiba Inu, and many more.

Note:  The above definitions are technically accurate, but in the blockchain ecosystem today, ‘token’ and ‘coin’ are often used interchangeably. ‘Crypto’ and ‘cryptocurrency’ are both used as umbrella terms to refer to both tokens and coins. Don’t let that trip you up!

Fungible vs. Non-Fungible assets

Alas, fungible does not mean mushroom money. Fungible means that something is mutually interchangeable. Put 10 copies of the same book on the table and you could choose any single one and be able to read the same story - this is fungible. Put your 10 favorite celebrities in a line-up and you’d immediately be able to tell the differences between them - this is non-fungible. 

The takeaway here is that when talking about blockchain assets, with a fungible asset, each one is valued the exact same way as the next. With non-fungible tokens (NFTs) each item is unique. We’ll talk about fungibility, non-fungible tokens (NFTs) and cryptocurrencies in our fundamental series, so stick around.

Ok, last quick topic before we put you to sleep for good:

What are Web3 apps or “dapps”? 

You’re not going to use your wallet to sign onto any old internet site, though. You’ll want to use it for specific purposes. Say you’re writing an article on the web using a site called Mirror. With this Web3 site you can actually plug your wallet in and receive direct and instant compensation from anyone who reads your article.

Pretty neat right?

This site is a Web3 app or dapp. It is a decentralized application (dapp) that allows anyone, anywhere to monetize their actions. There are thousands of Web3 apps  out there, with every function under the sun. 

Common Web3 tools

Commonly used Web3 ecosystem tools

  • Discord - A server/community forum
  • Twitter - The pulse of community knowledge 24/7/365
  • ETH - token that powers transactions on the Ethereum blockchain
  • Wallet - where you hold your ETH/other crypto (a new digital identity)
  • ENS - the “new url” that doubles as your wallet and pointer to your digital identity

Commonly used Web3 apps

  • Juicebox - community and project funding (kickstarter 3.0)
  • Mirror - a one-stop-shop for sharing knowledge and funding

Thanks so much for coming along on our Web3 overview! 

We know that was a lot — but fret not! At SquareWon our mission is to help you learn about crypto and blockchain in a simple, fun and easy to understand way. We believe that there shouldn’t be a barrier of entry when it comes to the adoption of this incredibly technology that we believe will change the way we interact with each other. 

We’ll have many more articles and explainers diving into each of the concepts above that will take you from zero to crypto-hero in no time.

Want to learn more about crypto and blockchain? Join our Discord community! This is also a great place to hop onto the whitelist to be a part of our upcoming token sale. If you’re thinking “WTF is a token sale?”, you’re not alone. We told you Web3 had a lot of jargon and have you covered right here.

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