Web3 is the next Internet generation, built on decentralised technologies, particularly blockchain. While Web1 was a static space of pages and Web2 was an interactive space of social networks and platforms (like Facebook), Web3 aims to return data control and digital identity to users.

Rather than relying on centralised servers and companies, Web3 uses smart contracts, tokens, and decentralised applications (dApps) that operate without intermediaries.

Web3 technologies

These technologies are forming the basis of a new version of the Internet, which aims to transfer control from centralised companies to users. Several key components are used to achieve this.

• Blockchain: It is a decentralised database in which all information is stored as a chain of blocks. It guarantees transparency and the immutability of data, as well as protection from censorship. Popular networks include Bitcoin, Ethereum, Solana and Polkadot.

• Smart contracts: These are software algorithms that automatically execute the terms of transactions. They replace intermediaries in finance, logistics, and gamification. In DeFi protocols, for example, a smart contract can automatically issue a loan or distribute profits.

• Tokens (fungible and NFT). These are digital assets issued based on a blockchain. In Web3, anything can be tokenised, including money, access rights and digital art.

• Wallets and identities (MetaMask, Phantom, etc.) act as your digital key to Web3, allowing you to sign transactions, manage assets and participate in DAO voting.

• DAOs (Decentralised Autonomous Organisations) and decentralised applications (dApps) are also key features of Web3. Rather than relying on centralised services, Web3 offers a community-managed ecosystem of dApps. A DAO allows users to collectively decide on the development of a project.

Features of Web3

Web3 is a new model for the Internet that changes the way ownership, governance and value are viewed in the digital world. Here are the key features that differentiate Web3 from traditional Web2.

Benefits of Web3

Web3 offers many benefits that fundamentally change the way we approach digital interaction, ownership, finance, and governance. Its primary value lies in returning control to the user.

• Decentralisation. In the traditional internet, power is concentrated in the hands of a few giants, such as Google, Meta, and Amazon. In Web3, however, decisions are made by the community, and data is stored on distributed networks, providing resistance to censorship, disruption, and manipulation.

• Transparency and trust. Every transaction or action in Web3 is recorded on the blockchain and is available for verification. This creates an unprecedented level of transparency, particularly in finance (DeFi), voting and philanthropy.

• Financial inclusion: Web3 opens up access to financial services for the millions of people without a bank account. Participation in global markets no longer requires authorisation — all that is needed is a smartphone and a digital wallet.

• Earning opportunities: In Web3, users can be rewarded for being active, participating in communities, creating content, staking, managing DAOs, and contributing code, as well as consuming content.

• Management innovation: DAO mechanisms are creating a new type of organisation — one that is transparent and efficient, and has no governing centre. This could be the future for startups, non-governmental initiatives and even municipal governance.

Challenges of Web3

Despite its impressive potential, Web3 faces several serious challenges that hinder its widespread adoption and cause scepticism among investors.

Blockchain scaling and bandwidth issues

Scalability is one of the major technical challenges of Web3. Blockchains such as Ethereum and Bitcoin can only process a limited number of transactions per second (TPS). Ethereum, for example, can process up to 30. By comparison, Visa can process over 24,000 TPS. This creates a bottleneck when the load increases: transactions slow down, and gas fees can increase by tens or even hundreds of times.

Why is this a problem? For Web3 concepts, such as decentralised finance (DeFi), gaming and non-fungible token (NFT) marketplaces, to become mainstream, blockchains must be able to handle millions of users in real time. Otherwise, there is no way to compete with Web2.

Energy consumption in blockchain networks and its impact on the environment

Web3 projects, especially those built on Proof of Work (PoW) blockchains, have long been criticised for their excessive power consumption. The most famous example is Bitcoin, which, at certain times, consumed more electricity than entire countries.

This is why it happens. In PoW systems, thousands of miners around the world compete to confirm a block, using enormous computing resources in the process. This is not only expensive, but also environmentally damaging, as most of the energy used is generated from fossil fuels.

The legal and tax regulation of Web3

One of the most challenging aspects of Web3 is the lack of a clear legal framework. Blockchain and crypto assets do not fit into traditional legal models. This creates legal uncertainty for both start-ups and users.

Key challenges:

• The uncertain status of tokens. In some countries, they are considered securities; in others, digital assets; and in others, something else.
• Taxes. In many countries, it is unclear how to account for profits from cryptocurrency, NFTs or DeFi protocols.
• KYC/AML: Decentralised services often have no user identification mechanisms, contradicting financial monitoring requirements.

The application of Web3 in various fields

Web3 is a universal tool that is transforming dozens of industries. It is based on blockchain technology, smart contracts, decentralised applications (dApps) and tokenisation.

Finance (DeFi)

Decentralised finance (DeFi) is a major application of Web3, with platforms enabling users to borrow, exchange currencies or stake tokens without the need for banks, brokers or central intermediaries. This is particularly important for countries with unstable banking systems.

Digital art and NFTs

Web3 has allowed artists to monetise their digital creativity directly, without the need for galleries or agents. NFTs enable artists to create unique digital assets that can be collected, sold, or used in games, the metaverse, and music platforms.

Gamification

Web3 games (e.g. Axie Infinity and Illuvium) offer a play-to-earn model whereby players earn tokens simply by playing. Game assets in the form of NFTs can be bought, sold or transferred freely between games.

DAOs and digital governance

Decentralised autonomous organisations (DAOs) are a new type of community that makes transparent decisions through voting by token holders. They are used by startups, foundations, and even city initiatives.

Education and certification

Web3 enables the creation of diplomas, certificates, and portfolios that are guaranteed to be authentic, which is useful for higher education, online courses and HR.

Logistics and supply chain

Thanks to blockchain technology, you can track the origin of products, the movement of goods, and storage conditions — from farm to supermarket.

Electronic voting

Smart contracts and blockchain-based identity enable the development of secure, transparent e-voting systems for use in politics, community initiatives and corporations.

The future of Web3

Predictions and trends

Web3 represents the long-term transformation of the digital world. Although Web3 is still taking shape, we can already identify key trends and predictions that will influence its development over the next 5–10 years.

• One such trend is mass tokenisation. In the future, almost every digital or physical asset will be able to be tokenised, including real estate, energy contracts and cultural objects. This enables ownership to be fragmented, assets to be traded on global marketplaces, and the barriers to entry for investors to be lowered.

• The evolution of DAOs and community economies is another key trend. Decentralised Autonomous Organisations (DAOs) are gradually moving out of the experimental stage. Prediction: DAOs will evolve into business models that can compete with traditional corporations. Rather than just buying the product, users will become co-owners and participants in decision-making.

• Regulatory clarity. Gradually, regulatory chaos will diminish. Similar to Europe's MiCA, countries will implement legislation paving the way for institutional investors and banks to enter the Web3 space en masse. This will make the industry safer and more predictable.

• Web3 social networks: The next generation of social networks will operate according to Web3 principles, offering users control over their data and rewarding them for their content, while eliminating censorship. Prediction: the ‘user-as-product’ model will be superseded by the ‘user-as-owner’ model.

• Merger with meta-universes: Without Web3, a meta-universe is just a virtual game. Thanks to NFTs, cryptocurrencies, and smart contracts, meta-universes can have their economies, ownership, and identities. In the future, digital cities will have real markets, property, and jobs.

Web3 and artificial intelligence

The combination of Web3 and AI is one of the most interesting technological trends of the future. Together, these technologies open up a whole new level of decentralised, intelligent systems.

• Decentralised AI networks. Currently, AI models are owned by large corporations. However, Web3 enables decentralised AI platforms where models are trained, stored and managed by the community.

• Data control. AI requires data, which is currently owned by large corporations. In Web3, however, users can take ownership of their data and grant access to it in exchange for a tokenised fee. This gives users control and privacy, as well as a new type of digital economy.

• AI-driven DAOs. In the future, it will be possible to have DAOs that make decisions with the help of AI analysing community data, market sentiment, and project performance. This would significantly improve management efficiency, avoid human error, and enable real-time action.

• Interactive digital objects: Combining AI and NFTs enables the creation of smart avatars, art, and characters in metaverses that can learn, react and remember users' actions. This opens up new possibilities for gamification, education, entertainment and personalised learning.

How can you become part of the Web3 community?

The new generation of the internet promises users control over their data, transparent interaction, digital ownership, and genuine participation in the development of online projects.

But how can you become part of this trend? Where should you start if you're neither a programmer nor a Wall Street investor? It turns out that anyone can join the Web3 space, and it's much easier than it seems.

Start by understanding the basics

Before becoming an active participant, it's important to understand what Web3 is and how it differs from Web2, as well as the basic concepts of blockchain technology.

• Blockchain technology and how it works.
• Cryptocurrencies and tokens.
• NFTs (non-fungible tokens).
• Smart contracts and decentralised autonomous organisations (DAOs).

Create your own Web3 wallet

A Web3 wallet is the digital key to interacting with protocols. It allows you to store crypto-assets, log in to applications, and participate in DAO voting.

Once you have installed it, you will receive a seed phrase — a set of 12 or 24 words. Make sure you save it offline, don't share it with anyone, and remember where you stored it. One common cause of losing digital assets is losing access to wallets.

Explore Web3 applications

It's now time to dive into the world of Web3 and try using decentralised applications (dApps) that run on the blockchain. For example:

• Uniswap: a bankless token exchange.
• Aave/Compound: decentralised lending.
• Mirror.xyz: publish articles and tokenise them.
• OpenSea is a marketplace for NFTs.
• Lens Protocol/Farcaster: new-generation social networks.

These services allow you to receive rewards (airdrops) for your activity, such as free tokens from new projects.

Become a creator or investor

At Web3, you can be:

• An NFT creator of digital art, music, or even memes.
• A participant in a DAO (decentralised autonomous organisation), where everyone has a voice.
• An investor owning tokens of early-stage projects.

Join Web3 communities

One of Web3's greatest strengths is its communities. They shape the future of projects. Join Web3 project Discord servers, DAOs (e.g. Gitcoin and Developer DAO), and Telegram groups, as well as taking part in hackathons.

Security rules

Key and wallet security. Use hardware wallets or reliable software wallets with multifactor authentication. Never store seed phrases online or in unencrypted files. Update your software regularly and check your system for phishing attempts.

Risk diversification: Don't invest all your capital in one asset or project. Set loss limits and avoid succumbing to emotional FOMO. Avoid high leverage at the start.

Control commissions. Estimate transaction costs on different networks. Choose times of day with low traffic to reduce commissions. Compare the cost of transferring funds on different blockchains.

Plan your taxes and legal affairs. Keep a record of the cost of assets for tax reporting purposes. Learn about the local legal requirements for crypto transactions. Consult a tax professional if necessary.

Exercise caution with airdrops, farming, and NFTs. Check the token distribution model and the project's liquidity before participating. Avoid yield schemes that are overly attractive without clear token economics. Assess the potential downside risks of governance token prices.

Maintain mental discipline. Develop a clear investment strategy and stick to it, regardless of market fluctuations. Keep a transaction log detailing the reasons for entering and exiting positions. Analyse your decisions to avoid making the same mistakes again.