Why Isn't Blockchain Getting The Attention It Deserves? - Snapstack - Transforming Businesses (2024)

Difficult as it is to understand, the internet is prone to change as well. At its inception, the internet was a simple text-based medium but now, it is a dynamic platform that powers nearly every aspect of our lives.

However, the current web infrastructure, often referred to as Web2, is characterized by centralization, data privacy concerns, and limited user control. Web3 is about to change all that.

This groundbreaking technology will redefine how we interact with the digital world, offering decentralization, transparency, and user empowerment. At the forefront of this revolution are none other than Web3 apps.

But...

What are Web3 Apps, Exactly?

Web3 apps are software programs that operate on a decentralized network, primarily utilizing blockchain technology. Unlike traditional web applications, which rely on centralized servers and intermediaries, Web3 apps are distributed across multiple nodes, ensuring that no single entity has complete control over the application's data or operations. This decentralized architecture offers several key benefits:

• Decentralization: Web3 apps are not controlled by a single entity, eliminating the risk of censorship or data breaches.
• Transparency: All transactions and data on a Web3 app are publicly visible on the blockchain, fostering trust and accountability.
• Security: Blockchain technology provides robust security features, such as cryptographic algorithms and consensus mechanisms, to protect against fraud and attacks.
• User Control: Web3 apps empower users to have greater control over their data and interactions, reducing reliance on centralized intermediaries.

The Role of Blockchain Technology

Blockchain technology serves as the foundation for Web3 apps, providing the infrastructure for decentralized networks and secure transactions. Key components of blockchain include:

• Distributed Ledger: A shared database that records transactions across multiple computers, ensuring data integrity and transparency.
• Consensus Mechanisms: Algorithms that enable nodes in the network to agree on the validity of transactions and the state of the blockchain.
• Smart Contracts: Self-executing contracts with terms directly written into code, automating the execution of agreements.

Types of Web3 Apps

Here's a closer look at some of the prominent types:

1. Decentralized Finance (DeFi)

• Overview: DeFi apps offer financial services, such as lending, borrowing, trading, and insurance, without the need for intermediaries like banks.
• Examples: Aave, Compound, Uniswap, MakerDAO
• Benefits: Lower transaction fees, greater financial inclusion, and resistance to censorship.

2. Non-Fungible Tokens (NFTs)

• Overview: NFTs are unique digital assets that represent ownership of real-world or digital items.
• Examples: CryptoKitties, Bored Ape Yacht Club, NBA Top Shot
• Benefits: Authenticity verification, digital scarcity, and new revenue streams for artists and creators.

3. Gaming Platforms

• Overview: Web3 gaming platforms leverage blockchain technology to create immersive experiences with decentralized economies, player-owned assets, and interoperability between games.
• Examples: Axie Infinity, The Sandbox, Decentraland
• Benefits: True ownership of in-game assets, play-to-earn models, and a more equitable gaming ecosystem.

4. Social Media

• Overview: Web3 social media platforms aim to provide users with greater control over their data, privacy, and content moderation.
• Examples: Mastodon, Lens Protocol, BitClout
• Benefits: Reduced reliance on centralized platforms, data ownership, and community-driven governance.

5. Supply Chain Management

• Overview: Web3 can enhance transparency, traceability, and efficiency in supply chains by recording and verifying transactions on a blockchain.
• Examples: Provenance, IBM Food Trust, Walmart's Food Traceability
• Benefits: Improved product safety, reduced fraud, and enhanced sustainability.

6. Healthcare

• Overview: Web3 can revolutionize healthcare by enabling secure and decentralized data sharing, patient empowerment, and improved interoperability between healthcare providers.
• Examples: MedChain, Chronicled, Patientory
• Benefits: Enhanced patient privacy, reduced administrative burdens, and improved healthcare outcomes.

7. Education

• Overview: Web3 can create decentralized learning platforms, verifiable credentials, and new models for education financing.
• Examples: Open Campus, Credential Registry, Learn-to-Earn platforms
• Benefits: Increased access to education, reduced costs, and enhanced learner autonomy.

8. Governance

• Overview: Decentralized Autonomous Organizations (DAOs) leverage blockchain technology to facilitate community-driven governance and decision-making.
• Examples: MakerDAO, Uniswap, ConstitutionDAO
• Benefits: Transparent governance, democratic decision-making, and reduced reliance on centralized authority.

How Web3 Apps are Built

Building Web3 apps requires a specialized skill set and understanding of blockchain technology. Key aspects of the development process include:

• Smart Contract Development: Creating self-executing contracts using programming languages like Solidity or Rust.
• Blockchain Selection: Choosing a suitable blockchain platform (e.g., Ethereum, Solana, Polkadot) based on specific requirements.
• Frontend Development: Building the user interface using traditional web development technologies like HTML, CSS, and JavaScript.
• Integration with Oracles: Connecting Web3 apps to real-world data sources using oracles.
• Testing and Auditing: Rigorously testing apps for security vulnerabilities and performance issues.

Challenges and Opportunities

While Web3 apps offer significant potential, they also face several challenges:

• Scalability: Ensuring that blockchain networks can handle a large number of transactions without compromising performance.
• User Experience: Designing intuitive and user-friendly interfaces for Web3 apps, which can be complex for newcomers.
• Regulatory Landscape: Navigating the evolving regulatory environment surrounding cryptocurrencies and blockchain technology.
• Interoperability: Promoting compatibility and seamless interactions between different blockchain networks.
• Energy Consumption: Addressing concerns about the environmental impact of blockchain technology, particularly Proof-of-Work consensus mechanisms.

Despite these challenges, the opportunities for Web3 apps are vast. They have the potential to disrupt traditional industries, empower individuals, and create new economic models. As the technology continues to mature and adoption grows, we can expect to see even more innovative and impactful Web3 applications emerge.

The Future of Web3

The future of Web3 is promising, with the potential to reshape the digital landscape and create a more equitable and decentralized internet. As the technology continues to evolve, we can anticipate the following developments:

• Increased Adoption: Web3 apps are likely to gain wider adoption across various industries, leading to increased mainstream awareness and acceptance.
• Improved Scalability: Solutions such as layer-2 scaling solutions and alternative consensus mechanisms will address scalability challenges and enable Web3 apps to handle larger transaction volumes.
• Improved User Experience: Efforts will be made to simplify the user experience of Web3 apps, making them more accessible to a wider audience.
• Regulatory Clarity: As governments and regulatory bodies develop a better understanding of Web3, we can expect clearer regulations and guidelines that promote innovation while mitigating risks.
• Interoperability: Increased focus on interoperability will enable seamless communication and data sharing between different blockchain networks, fostering a more interconnected Web3 ecosystem.

The internet, once a revolutionary digital frontier, has become a familiar environment for us. But beneath its surface, a seismic shift is brewing—Web3, the next iteration of the internet, promises to redefine how we interact, transact, and create online. It's a fundamental change that moves away from the centralized control of tech giants and towards a more decentralized, user-centric environment. None of this would be possible without the key web3 technologies we will discuss below.

Key Web3 Technologies

Blockchain

Blockchain is a digital ledger distributed across a network of computers. Unlike traditional ledgers, this one is a decentralized system, not controlled by a single entity, be it a company or an individual. Given its decentralized nature, blockchain is incredibly secure and transparent as it can't be tampered with.

Types of Blockchains

• Public Blockchains, which are open to anyone, like Bitcoin and Ethereum. Anyone can join the network, view transactions, and contribute to the network's security.
• Private Blockchains - a single organization or a small group controls these. Only authorized members can participate, making them perfect for internal use cases within a company.
• Consortium Blockchains: These are shared by a group of organizations. They offer a balance between the security of private blockchains and the transparency of public blockchains. Hyperledger Fabric is a popular example.

Benefits of Blockchain

• Security: Blockchain uses cryptography to protect data. This makes it extremely difficult to hack or manipulate.
• Transparency: All transactions are publicly visible on the blockchain. This transparency ensures accountability and trust.
• Immutability: If you record data on the blockchain, you or anyone else can't alter it. This provides a permanent and reliable record of transactions.
• Decentralization: The distributed nature of blockchain makes it resistant to censorship and single points of failure. This also eliminates the need for intermediaries, reducing costs and increasing efficiency.

Applications of Blockchain

• Finance: Cryptocurrencies, digital payments, smart contracts, and supply chain management.
• Healthcare: Electronic health records, clinical trials, supply chain management, and drug traceability.
• Government: Voting systems, land registries, and identity management.
• Gaming: Non-fungible tokens (NFTs) and decentralized gaming platforms.
• Supply Chain: Tracking products from origin to consumer.

The Future of Blockchain

Blockchain is still a relatively new technology, but its potential is immense. In the future, we can expect to see even more innovative applications in various industries. From creating a more transparent and efficient financial system to revolutionizing healthcare and supply chain management, blockchain has the power to transform the way we interact with the world.

Smart Contracts

Smart contracts are essentially self-executing contracts with terms directly written into code. With traditional contracts, you have to rely on intermediaries and manual processes. When it comes to smart contracts, blockchain takes care of it all - you deploy them on the blockchain and you don't have to lift a finger for their execution. Once the predefined conditions are met, they are automatically executed.

This automation eliminates the need for third-party involvement, reducing costs and ensuring transparency.

How Smart Contracts Work

1. Writing the smart contracts in programming languages like Solidity, Vyper, or Rust. These languages allow developers to define the contract's terms, conditions, and actions.
2. Deploying the coded contract on a blockchain network. This makes it accessible to anyone on the network.
3. When specific conditions are met, the contract automatically executes the predefined actions. For example, if a buyer sends a payment to a seller, a smart contract can automatically release the product or service.

Types of Smart Contracts

Depending on their functionality and complexity, we can categorize smart contracts in several groups:

Basic Smart Contracts

• Simple Agreements that we use for straightforward agreements, such as buying and selling goods or services. They typically involve predefined conditions and actions.
• Escrow Contracts that we rely on to hold funds or assets in escrow until all involved parties meet the predefined conditions.

Complex Smart Contracts

• Decentralized Applications (DApps): These are applications built on blockchain platforms using smart contracts. They can range from simple games to complex financial systems.
• Token Contracts: These contracts create and manage digital tokens, which can represent assets, currencies, or memberships.
• Oracle Contracts: These contracts interact with external data sources (oracles) to provide real-world information to the blockchain, enabling smart contracts to respond to external events.
• Governance Contracts: These contracts are used for decentralized governance, allowing token holders to vote on decisions and manage the development of a blockchain network.

Specialized Smart Contracts

• Insurance Contracts: These contracts automate insurance claims processing and premium payments based on predefined conditions.
• Supply Chain Contracts: These contracts track products through the supply chain, ensuring authenticity and quality.
• Legal Contracts: These contracts can be used to automate legal processes, such as contract execution and dispute resolution.

It's important to note that these categories are not mutually exclusive, and smart contracts can often combine elements from different types. As blockchain technology continues to evolve, we can expect to see even more innovative and specialized types of smart contracts emerge.

Benefits of Smart Contracts

• Automation: Smart contracts eliminate the need for manual processes, saving time and reducing errors.
• Transparency: All contract terms and executions are publicly visible on the blockchain, ensuring transparency and trust.
• Efficiency: By automating processes, smart contracts can improve efficiency and reduce costs.
• Security: Blockchain technology provides a secure and tamper-proof environment for storing and executing smart contracts.
• Trustlessness: Smart contracts can facilitate trustless interactions between parties who may not know or trust each other.

Applications of Smart Contracts

• Finance: Decentralized finance (DeFi) applications, such as lending platforms, exchanges, and derivatives.
• Supply Chain: Tracking products, ensuring authenticity, and automating payments.
• Gaming: Non-fungible tokens (NFTs), in-game economies, and decentralized gaming platforms.
• Real Estate: Property ownership, rental agreements, and escrow services.
• Insurance: Automated claims processing and premium payments.

Future of Smart Contracts

In the future, we can expect smart contracts to become more complex, handling everything from managing finances to automating legal processes. As advanced encryption and verification methods become more sophisticated, they will make them even harder to hack. Governments will likely create rules to ensure they're used fairly and safely.

Tokens

Tokens are digital assets that represent ownership or access rights to something of value. They are a fundamental component of Web3, a decentralized internet where users have greater control over their data and interactions.

Types of Tokens

There are primarily two main types of tokens:

1. Utility Tokens: These tokens provide access to specific services or products within a blockchain ecosystem. For example, a utility token might grant users access to a particular decentralized application (dApp), platform, or network.
2. Security Tokens: These tokens represent ownership in a company or asset, similar to traditional securities like stocks. They offer potential returns based on the performance of the underlying asset.

Key Characteristics of Tokens

• Divisibility: Tokens can be divided into smaller units, making them highly flexible.
• Transferability: They can be easily transferred between users on a blockchain network.
• Programmability: Smart contracts can be used to define the rules and conditions governing tokens, enabling complex functionalities.
• Interoperability: Tokens can potentially be used across different blockchain networks, facilitating cross-chain transactions.

Benefits of Tokens

For Individuals:

• Ownership and Control: Tokens allow individuals to own and control digital assets, giving them more autonomy over their finances.
• Accessibility and Inclusivity: Tokens can make financial services more accessible to people in underserved areas, as they often don't require traditional banking infrastructure.
• Diversification: Investing in tokens can provide opportunities for diversification beyond traditional financial instruments.
• Potential for High Returns: While investing in tokens carries risks, there's also the potential for significant returns.

For Businesses:

• Fundraising: Tokens can be used to raise capital for new projects or ventures, often more efficiently than traditional fundraising methods.
• Customer Engagement: Tokens can be used to reward loyal customers, create incentives for participation, and foster community engagement.
• Supply Chain Transparency: Tokens can be used to track the movement of goods and verify their authenticity, improving supply chain transparency.
• New Revenue Streams: Businesses can create new revenue streams by offering token-based services or products.

Applications of Tokens

• Decentralized Finance (DeFi): Tokens are essential for lending, borrowing, and trading on decentralized platforms.
• Gaming: In-game items and currencies can be represented as tokens, enabling players to own and trade digital assets.
• Supply Chain Management: Tokens can track the movement of goods and verify their authenticity.
• Identity Verification: Tokens can store and verify personal information securely.
• Real Estate: Property ownership can be fractionalized and represented as tokens.

Future of Tokens

As the decentralized internet continues to mature, tokens are becoming integral to various industries. From cryptocurrencies and NFTs to tokenized assets and governance mechanisms, tokens offer a versatile and innovative approach to value representation.

Increased interoperability, standardization, and privacy improvements are paving the way for a more interconnected and secure token ecosystem. DAOs, powered by governance tokens, are disrupting traditional organizational structures.

Moreover, the integration of tokens with everyday services, coupled with the potential emergence of CBDCs, promises to revolutionize finance and commerce. While challenges remain, the future of tokens is bright, with the potential to reshape industries and create new economic opportunities.

We’ve become accustomed to a world where tech giants run the show. Our data, our content, our very digital identity are often pawns in their grand chess game. But what if there was a way to break free from this centralized control? Enter Web3, the next evolution of the internet, promising a decentralized utopia where users reign supreme.

We compared web2 vs. web3 and learned there’s more than meets the eye. Data ownership is one of the differences, but that’s just the tip of the iceberg. Here we’ll uncover them all!

What Is Web2?

Web2 represents a significant evolution from the static, information-centric Web1. Imagine the early internet as a big library where you could only read books. That's what the first version of the internet, Web1, was like.

Web2 changed everything—it's the internet as we predominantly experience it today, a dynamic space where users are not just passive consumers but active participants, characterized by:

• User-generated content: People create and share content, not just consume it.
• Interactivity: Websites and platforms encourage interaction and collaboration.
• Ease of use: Websites are designed to be user-friendly and accessible.
• Social networking: Platforms connect people and build communities.

Key features of Web2:

• Social media: Platforms like Facebook, Instagram, and Twitter.
• Blogs and vlogs: Personal websites and video blogs.
• Wikis: Collaborative platforms like Wikipedia.
• Video sharing: Websites like YouTube.
• Online shopping: E-commerce platforms.

What is Web3?

Web3 is a vision for a new internet where users, rather than big tech companies, have control over their data and online experiences. It's built on the idea of decentralization, meaning information and services are spread across many computers instead of being stored in one central location.

Key features of Web3:

• Decentralization: No single entity controls the network.
• Blockchain technology: This is the backbone of Web3, providing security and transparency.
• Cryptocurrency: Digital currencies like Bitcoin and Ethereum are often used for transactions.
• NFTs (Non-Fungible Tokens): Unique digital assets representing ownership of items like art, music, or virtual real estate.
• Smart contracts: Self-executing contracts with the terms directly written into code.

Web2 vs. Web3: General Overview

To better understand the differences between Web2 and Web3, let's compare key aspects:

Web2 vs. Web3: The Key Differences

Centralization vs. Decentralization

The fundamental distinction between Web2 and Web3 lies in their architectural approaches.

• Web2 Centralization:
  
  • Monopolistic Tendencies: A small number of tech giants exert significant control over the digital landscape. This concentration of power can lead to market dominance, reduced competition, and limited innovation.
  • Data Silos: User data is collected and stored in centralized databases, making it vulnerable to breaches and misuse. Platforms often monetize this data without explicit user consent.
  • Single Points of Failure: Reliance on centralized servers creates vulnerabilities. If a platform's infrastructure fails, services can be disrupted for millions of users.
    
• Web3 Decentralization:
  
  • Distributed Networks: Power is distributed across a network of computers, reducing the risk of censorship and control by a single entity.
  • Data Sovereignty: Users maintain ownership and control over their data, preventing its exploitation by third parties.
  • Resilience: Decentralized systems are inherently more resilient to attacks and failures.
  • Governance Challenges: Decentralized governance can be complex and time-consuming, requiring robust mechanisms for decision-making.

Data Ownership and Privacy

The treatment of user data is a critical differentiator between Web2 and Web3.

• Web2 Data Ownership:
  
  • User as Product: Platforms often treat users as products, collecting and analyzing vast amounts of personal data to generate revenue through targeted advertising.
  • Data Breaches: Centralized data storage increases the risk of data breaches, exposing sensitive information to malicious actors.
  • Lack of Transparency: Users often have limited visibility into how their data is collected, used, and shared.
    
• Web3 Data Ownership:
  
  • User Control: Individuals have greater control over their data, deciding how it is shared and with whom.
  • Data Privacy: Decentralization and encryption help protect user data from unauthorized access.
  • Data Monetization: Users can potentially monetize their data directly, creating new revenue streams.

Governance and Decision-Making

The way decisions are made is a stark contrast between the two models.

• Web2 Governance:
  
  • Top-Down Control: A small group of executives or shareholders makes critical decisions.
  • User Influence: Users typically have limited input into platform policies and features.
  • Profit-Driven: Decisions are often driven by financial considerations rather than user benefits.
    
• Web3 Governance:
  
  • Community-Driven: Decisions are made collectively by token holders through voting and proposals.
  • Transparency: Governance processes are transparent and auditable.
  • User Empowerment: Users have a direct say in the platform's development and direction.

Economic Models

The methods of generating revenue and distributing value differ significantly.

• Web2 Economic Model:
  
  • Advertising-Centric: Platforms rely heavily on advertising revenue, often prioritizing user engagement over privacy.
  • App Store Fees: For mobile applications, platforms charge commissions on app sales and in-app purchases.
  • Data Monetization: User data is a valuable asset, used to target ads and inform product development.
    
• Web3 Economic Model:
  
  • Token-Based Economy: Cryptocurrencies and tokens are used as incentives and rewards for network participation.
  • Decentralized Finance (DeFi): Offers financial services without intermediaries, enabling new forms of lending, borrowing, and trading.
  • Creator Economy: Platforms empower content creators to earn directly from their work through tokenization and fan support.

User Experience

The interaction between users and platforms differs substantially.

• Web2 User Experience:
  
  • Centralized Control: Platforms curate content and personalize user experiences based on data.
  • Ease of Use: User-friendly interfaces and intuitive navigation are prioritized.
  • Dependency: Users become reliant on platform features and services.
    
• Web3 User Experience:
  
  • Decentralized Applications (dApps): Offer a wider range of functionalities and customization options.
  • Learning Curve: Users may require technical knowledge to navigate the Web3 ecosystem.
  • Interoperability: Challenges in connecting different dApps and blockchains can hinder user experience.

Security in Web2 vs. Web3

While both Web2 and Web3 present unique security challenges, their approaches to security differ significantly.

• Security in Web2
  
  • Centralized Security: Web2 platforms are responsible for implementing and maintaining security measures to protect user data and services. This centralized approach can be both a strength and a weakness.
  • Vulnerability to Attacks: Large, centralized systems are prime targets for cyberattacks, such as data breaches, DDoS attacks, and malware.
  • Data Protection Regulations: Adherence to data protection laws like GDPR and CCPA is crucial, but enforcement can vary.
  • User Education: Users rely on platform security measures, but a lack of cybersecurity awareness can lead to vulnerabilities.
    
• Security in Web3
  
  • Decentralized Security: Security in Web3 is distributed across a network of nodes, making it more resilient to attacks.
  • Cryptography: Blockchain technology heavily relies on cryptography to secure transactions and protect data.
  • Smart Contract Vulnerabilities: While offering potential benefits, smart contracts can be susceptible to vulnerabilities if not carefully audited.
  • User Responsibility: Users have more control over their security but also bear greater responsibility for protecting their private keys and digital assets.
  • Emerging Threats: New types of attacks, such as rug pulls and phishing scams, are prevalent in the Web3 ecosystem.

Web2 vs. Web3 Key Takeaways

Web2 and Web3 represent two fundamentally different approaches to the internet. While Web2 is centralized and controlled by tech giants, Web3 promises decentralization and user ownership. As these two worlds continue to collide, the current state of the internet hangs in the balance. As for the future, it’s obvious web3 offers tens of benefits and comes with better opportunities for everyone. Could this be a telltale sign of what the future holds?

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