Need in Web 3.0 and its Opportunities for Cryptocurrency Investors

Алёна Инжеева
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To understand what Web 3.0 is, let's try to understand Web 1.0 and Web 2.0. 

Web 1.0 is the genesis of cyberspace. Previously, there were no pop-ups or annoying ads in browsers. They were just bright pages full of useful information. Libraries, businesses and government agencies used the Internet to host their data. 

Web 2.0 is the Internet as we know it now, a centralized storage with unlimited content. It all takes place on one server—games, work, music, relationships and politics. Every photo you post, every tweet you send, every movie, song and game you play is compiled and recorded for mass use. The ads you see and the articles in your feed are based on an analysis of your online activity. How else can you explain the fact that we see ads of cat food after we search the Internet for advice on taking care of cats? Your smartphone ceaselessly informs Google where you are and what you like.

Web 3.0 says NO to all the above. For Web 3.0, decentralization is pivotal. Web 3.0 has barely passed the conceptual stage, but we already can say that it has huge potential. In particular, it is worth exploring the questions of what the relation between the Internet and the blockchain will be in the future, as well as how crypto users can benefit from the development of this industry.

Denis Kurilchik, Co-Founder of CLS Analytics, states that in order to answer any questions related to Web 3.0, it is necessary to understand WEB 3.0. According to the expert, there is no consensus on this matter, but most of those who mention WEB 3.0 agree that this is the Internet for blockchains. From that we conclude that since different blockchains need the Internet, they must interact with each other. Thus there must be bridges or other interaction mechanisms.

The expert also delved into the history of Web 3.0 creation, noting,

“The very idea of ​​WEB 3.0, according to some, appeared thanks to Dr. Gavin Wood, who, after leaving the Ethereum team, set up Web3 Foundation. If you try to explain Web 3.0 in simple terms, you can classify Web 1.0 as the earliest history of the Internet, when you could create a site and interact with it. Web 2.0 followed—this is the Internet in which applications and sites (Youtube, Twitter, Facebook, Reddit, VK, etc.) appeared that allowed the author to create content on them and other users to interact with the created content. Nowadays, as many say, the era of Web 3.0 is coming, where a financial function will be inbuilt in the Internet regulated through cryptography and blockchain, and there will also be freedom and anonymity for its users.”

Denis Kurilchik mentions that Web 2.0 gave rise to many problems and started to move away from the line laid down by Web 1.0, since a lot of content created on websites or in Internet applications can be censored or simply deleted. In addition, in Web 2.0, many websites have access to the personal data of their users' accounts, and this information has often been sold to large corporations for marketing services. 

There is also an unfair distribution of profits between site authors and content creators. As to the Internet for blockchains, as Vitalik Buterin recently noted, cross-chain and multi-chain are different things. Having a negative attitude towards the cross-chain because of the vulnerability of its bridges to hacker attacks and expressing sympathy for the multi-chain of the future, it is necessary to understand that something must relate all blockchains.

The expert notes that it all has boiled down to the fact that two of the most famous projects enter the cryptographic market—Polkadot ($DOT) and Cosmos ($ATOM). These projects are similar in that they are both Layer 0, and not Layer 1 or Layer 2, like other blockchains. Again, don't forget that the creator of Polkadot is Dr. Gavin Wood. Polkadot was ahead of its time. When Vitalik Buterin said in January 2022 that the future will be in the multichain, and sharding is a cool thing, Dr. Gavin Wood had already started creating Polkadot following these principles back in 2016. 

Polkadot can become the basis for Web 3.0, where it provides security with its Layer 0. In Layer 0, Layer 1 blockchains are connected through parachains, in which, in turn, smart contracts are created. In addition, all parachains will be interconnected by Relay Chain. There will just be no need to make bridges within Layer 1 since all parachains will be interconnected via Relay Chain. What is it if not multichain?

Web 3.0 and the blockchain technology

We asked experts about the role blockchain technology will play in Web 3.0 and the possible connection between the Internet and cryptocurrencies.

Alexander Bespalov, vice-president of the Investor Relations Club, notes that Web 3.0 is a set of new protocols that change the existing picture of the Web markedly. Decentralization underlying some of these protocols makes it possible, for example, to create websites that cannot be blocked, and not only linking information to a personal domain, but also using it as a payment address in cryptocurrency. According to the expert, in Web 3.0, the user can securely manage their personal data and selectively share it with required services, while the data itself can be stored on the blockchain. Also, the user will be able to use secure authentication methods, quickly and safely send and receive payments within new services (including messengers), and so on.

Egor Abramov, Principal of Fort Ross Ventures, believes that the main innovation of Web 3.0 is the ability to own digital assets.

He says,

“Until now, no Internet user (Web 2.0) has been able to own something on the web. A social network account, correspondence in a messenger, letters in a mailbox are all owned by service providers—Meta, Telegram, Google. They simply rent it all out to us and have the right to dispose of everything that appears as a result of our actions on their platforms. And they do it actively—they sell our data to advertisers without our consent, and sometimes even without our knowledge.

“The way to own something digital on the Internet is provided by the blockchain technology. Humanity has not yet come up with another way. Therefore, Web 3.0 and blockchain are essential to each other.

“The emergence of cryptocurrencies such as Bitcoin is not an end in itself, but only a consequence of the emergence of blockchain technology. If you like, this is the first most obvious and sought-after business case. As soon as it becomes possible to own, people try to create an analogue of money or gold. But this is far from the only use case for the technology.”

Yusuf Gayrat, the Founder of Narfex, says that Web 3.0 is the next stage in the development of the Internet. This opens up the opportunity for investors to manage their resources, not only cash, but also intellectual property or content property. From these resources, the Internet giants, the so-called creators of the Web 2.0 era, are now profiting, and people give them their content and time for free. Moreover, the Internet in our time has become a "public domain" and people can earn income themselves if they watch some content or advertisement. It also means not storing data on a server from one giant, but storing it with users. Web 3.0 brings a kind of personalization to the Internet, and in this day and age, when most of life moves to the Internet, it becomes a necessity, not a wish.

Vladislav Akeliev, Development Director of the ECOS cryptocurrency investment platform, expresses the following opinion,

“Blockchain brings to Web 3.0 the fundamental characteristics of the new Internet: decentralization, transparency, security, and efficiency. It may become an infrastructure and a base for project development. This process is already being tested, but within the crypto community, since DeFi, NFT, and the metaverses are basically the first versions of Web 3.0. The role of cryptocurrencies themselves cannot be overstated because the Internet is the world of digital money, and the concept of Web 3.0 involves the participation of users themselves in all processes, including the creation of new means of exchange. To do this safely and with minimal commissions, cryptocurrencies are needed.”

Danatar Atajanov, Brand Manager at OXLY.IO, is confident that blockchain will be critical to the popularization of Web 3.0. Due to the decentralized nature of the distributed network, traditional data channels will be supplemented by a multitude of computing resources distributed across various devices, which are predicted to produce and consume much more information than they currently do.

The expert adds, 

“Due to its distributed architecture and the absence of unnecessary intermediary links, Web 3.0 equalizes the opportunities for users, making the environment more democratic. Thus, thanks to the new technology, we will have a more open, transparent, reliable and freer Internet. ”

Nikita Kutsenko, Founder of the FINOMEN Investment Academy, emphasizes that blockchain technologies play the role of a connecting element of the Web 3.0 ecosystem. A distributed ledger is the basis of a decentralized network infrastructure in which web applications can exchange information directly and all participants are equal.

Mikhail Alyonushkin, Managing Director of 3V FUND, says,

“Web 3.0 is a new decentralized Internet. Here, any data, any content will be stored using the blockchain. There is a direct connection between it and cryptocurrencies, since Web 3.0 will be implemented on the blockchain; and if we are talking about the metaverse (which is also implemented on the blockchain), it will have its own economy where cryptocurrencies will be required. What these cryptocurrencies are is not yet clear, but they will be in demand.”

Victor Dorokhov, Professor of Digital Economy Program at RUDN University, recalls that the Internet was originally developed as a decentralized environment for information exchange. However, at the moment, the web (Web 2.0) is highly centralized in terms of sources, aggregators and data storages: Google, Yandex, etc. Accordingly, censorship with monopolies is a natural phenomenon. Take the manifestations of “cancel culture” in the US—blocking Twitter accounts, etc.

The expert says,

“Web 3.0 is a concept that, especially in recent years, has even been associated with the blockchain technology. This is because this technology can effect an increase in the level of decentralization on the Internet. Cryptocurrencies, in particular Bitcoin, are initially positioned as ‘electronic cash’. Cash is what we have in the wallet, not in the bank, hence they talk about the connection of cryptocurrencies with the ‘new Internet’ of the future—which will be decentralized.”

Advantages of Web 3.0 over Web 2.0

As the Internet becomes decentralized, no one will collect your personal data. Censorship will also vanish. No one will be able to delete your posts and comments from social networks, as the blockchain does not provide for this. What you broadcast to the network will remain there forever thanks to the unchangeability of the blockchain, and no one can delete this information. Neither can you.

To further delve into the issue, we asked experts about the benefits of Web 3.0 over the existing Internet.

Egor Abramov believes that since the main innovation of Web 3.0 is the ability to own digital assets, the benefits generated by this technology are endless. Just like the emergence of the concept of private property changed the world, the online world will also change dramatically now.

The expert gives a specific example:

“Imagine that one state has carried out a reform in real estate. You can buy an apartment, but you cannot sell or rent it out. If you want to exchange a one bedroom house for a two bedroom one, you need to drop the one bedroom house and just buy yourself a new two bedroom house. How do you think people would act? I would venture to say that many would prefer to wait and buy a bigger apartment. Why waste money? This would lead to an economy decline in such a state, for a purchase of an apartment, related relocation, repairs, and replacement of household appliances, etc. are a powerful accelerator for any economy. The more people move and consume, the better.

“So in the modern Internet, its ‘economy’ is in great decline and is controlled by several large companies that have monopolized the information landscape. Web 3.0 will bring about a qualitatively new level of functioning of this economy and breathe new life into it.”

Yusuf Gayrat believes that the primary advantage of Web 3.0 is the fact that a person will be the owner of his data and actions.

Alexander Bespalov comments on this issue as follows,

“The new Web 3.0 is expected to be more secure than the current network. It will allow the user to manage their data more flexibly, and websites to become independent from third parties (whether governments or regulators).”

Daniil Shepovalov, an IT expert, specialist in technical analysis, emphasizes that today everyone has their own interpretation of the term “Web 3.0”. Recently, more and more emphasis of ideologists and journalists has been placed on the fact that now everything that users generate on the Internet, in any activity, companies like Google and Meta / Facebook make money on, and in the beautiful decentralized Internet of the future, the user will independently own their digital assets, including digital content.

The expert gives a simple example:

“In an online game on the regular internet, your Chaos Fire Sword purchased for $777 is stored somewhere on the gaming company’s servers. With Web 3.0, the same sword is stored in the blockchain as an NFT. Without any game, you go into a browser extension, your MetaMask wallet for Ethereum or Phantom for Solan—and there lies the sword. If the arctic data center of the gaming company is suddenly destroyed by a meteorite, or if the board of directors in full eat fly agarics, reject worldly fuss and go to Tibet on the first flight, nothing will happen to the sword. It's nice."

Nikita Kutsenko believes that thanks to decentralization, the transition to Web 3.0 can solve the problems of non-transparency of web services, network censorship, and confidentiality of personal data. 

He singles out the following advantages of the "new" Internet:

  • An Internet without centralization. Web 3.0 will not exist on centralized servers owned by specific people or companies. It will be a distributed database stored on special nodes, and anyone can become the owner of a node. Thus, an open public registry ensures transparent reporting. Without central authority, one participant cannot impose a decision on others or gain access to someone else's encrypted data.
  • Anonymity of user data and transactions. Thanks to encryption, Web 3.0 allows you to surf the web, download and buy without your identity being tracked. Users enjoy full control over their data, and information can only be shared individually and with permission.

Vladislav Akeliev has his own opinion:

“First of all, this is decentralization. Services and platforms will work with the help of the users themselves and the power of their equipment. Web 3.0 implies deeper user participation in all Internet processes. This gives a huge number of benefits—greater data privacy and security, the stability of sites and applications, more interaction with the environment, and the Internet of things.”

Danatar Atajanov highlights the following advantages of Web 3.0 over Web 2.0:

  • Openness: Web 3.0 applications are built on open source software that users and developers have access to and control over.
  • Equality: The technology enables participants to interact openly or privately without the involvement or control of a third party, such as an ISP which grants access and determines your rights or preferences.
  • Inclusiveness: Use of projects or participation therein does not require differentiation based on any quality or permission from higher authorities.

The expert also notes that the sale or exchange of information in the Web 3.0 environment occurs without the owner losing control, giving up confidentiality or depending on third-party intermediaries. 

Mikhail Alyonushkin speaks about this in the following way:

“The advantages are speed and decentralized data storage. There will be no physical servers that can be taken out or can break. All data is stored in a decentralized way, by and large, on all computers in the world. Everyone will have access to them, everyone will be able to use them, and it will be impossible to stop this process.”

Viktor Dorokhov believes that the benefits of Web 3.0 are associated with the unconditional ownership by people of their own data: money is stored with users; personal information is provided by consent and/or can be monetized by users, etc. In the Web 3.0 paradigm, blockchain is the most important technology since it makes it technically impossible, or economically extremely inefficient, to appropriate and use other people's data and assets.

The practical relevance of web 3.0 in the crypto industry

We also asked experts what interesting uses Web 3.0 has for crypto users in particular and why the development of this industry is promising for the crypto industry and the community.

Mikhail Alyonushkin is sure that Web 3.0 has a huge perspective. According to the expert, the entire world is moving in this direction.

He says,

“Web 3.0 will provide for a serious development of the metaverses. In the future, for example, in 10 years, it will be possible to forget about fiat money altogether and use only cryptocurrency. This means a huge increase in demand for it. As an example, I can cite the MANA project. By and large, this is a custom game. You register, log in, and you have your own character, can buy real estate and land in the game for real cryptocurrency and receive income depending on the popularity of these lands. A very interesting story."

Denis Kurilchik also believes that Web 3.0 has a huge application potential. Using the technology of cryptography and smart contracts, the Internet can become a completely anonymous, decentralized and uncensorable environment. There are already many projects that offer domains on decentralized sites, such as Ethereum Name Service, Unstoppable Domains, etc.

Yusuf Gayrat expresses his opinion on this:

“Ways to use Web 3.0 today is the realm of GameFii or applications in DeFi, which work entirely on smart contracts and interact with users through Web 3.0. I would say that almost all new generation coins from DeFi, NFT and GameFi are successful examples of Web 3.0, as well as websites such as Odyssey (a decentralized analogue of YouTube, or the Brave browser).”

Egor Abramov gives some of the applications that are closest to implementation today:

  • Fintech: everything related to finance, trade, money transfers, and banking services. Cheaper and faster financial transactions.
  • Security. Transactions in blockchain are much more transparent than in cash and even in banks, for the first is not visible to anyone at all, and the second is visible only to a narrow circle of banks, but not to the general public. In the blockchain world, any transactions (not just in money) are in plain sight. Therefore, everything related to KYC / AML (Know Your Customer and Anti Money Laundering) procedures, security, identification verification, etc. will work much more conveniently, transparently and better.
  • Creative economy: the world moves from companies that produce goods toward creative individuals who can produce goods on the network on their own.This is especially true for digital art: images, music and video. But the one problem is that in Web 2.0, everything that people have created on the web does not belong to them. Web 3.0 has to fix that.
  • Metaverse: the world is moving towards spending more and more time online. Further advancement is possible if the online world begins to resemble the offline one we are used to. The limiting factor is again the inability to own anything. Now that I can buy a plot of land in virtual reality and know for sure that no one can ever take it away from me, I will buy it, start arranging lectures there, for example, on floristry, decorate the whole building with flowers and advertising banners, and I will earn money from this, and thousands of people will stand like at a concert and listen to my performances.

Daniil Shepovalov says in relation to this,

“To better understand the scope, you can go to the website, a framework for Web 3.0 programmers: NFT, NFT loot boxes and marketplaces; social and governance tokens, etc. In general, this whole topic is on hype. Funny flash mobs are organized on crypto Twitter: ‘Here I am in Web 2.0 / and here in Web 3.0’. But it can hardly be said that the revolutionary masses of Web 3.0 geeks are cornering fat IT giants, making them turn off their servers and sadly leave into the night to the sounds of blues.

“Rather, it is a wild laboratory in which a variety of projects are foaming, some of which will remain and result in something global. So far, a significant but still limited geek audience interacts through MetaMask, Phantom and other decentralized wallets. Within a few years, it this audience will quite possible become much bigger. Especially if people are offered new tools for this, with an emphasis on the simplicity and convenience of the interface.”

Nikita Kutsenko talks about the reasons why Web 3.0 is needed and the opportunities it will give cryptocurrency investors. According to the expert, this is a new stage in the development of the Internet, which will use blockchain technology and other decentralization tools like DAO. Web 3.0 also goes far beyond the Internet and fully penetrates the real world. This is an attempt to change the financial system and the principles of interaction between people, to form new rules for the company and build a completely new world. 

As for practical application, the following points can be highlighted:

All data in the network, including its own content, will be tokenized.

Apps will turn into DApps—decentralized applications.

Web 3.0 implies that all company’s organizations, services and applications will be decentralized autonomous organizations.

Identity (identification) will be cross-platform. The user will not need to register every time. Also, thanks to Identity and tokenization, any digital items can become cross-platform.

Metaverses. In fact, it will be an upgrade of social networks from Web 2.0 with the help of virtual reality technologies.

Vladislav Akeliev says concerning it,

“A lot of projects from the crypto industry are already within of Web 3.0. For example, decentralized exchangers, the work of which is supported by the users themselves. Thanks to them, users can create their own means of exchange and NFTs. Metaverses allow users to buy and sell digital real estate in games. In the future, people can be inside those universes with the help of VR technologies.”

Danatar Atajanov notes that new ways of interaction between people and devices created thanks to the Internet of the future, integrated with NFT, DeFi, metaverses and cryptocurrencies, will attract new users and contribute to the development of the industry and the rapid adoption of new technologies and digital assets. For investors, this means a lot of opportunities.

At the same time, the expert adds that the best way to invest in Web 3.0 is to buy shares or cryptocurrencies of companies associated with the development or implementation of technology. He also names several promising tokens:

“For example, Polkadot (DOT) is the final project supported by Web3 Foundation. In less than a year, Polkadot launched over 350 applications and revolutionized blockchain technology.

“Another project is Polygon (MATIC) built on Ethereum and designed to make the entire ETH network more scalable, faster, more user-friendly and interoperable by connecting other blockchains. In addition, Polygon recently created a Decentralized Autonomous Organization (DAO) for the Web 3.0 space.

“Helium (HNT), known as the People's Web, is a decentralized wireless network based on the Internet of Things (IoT). There is an opinion that Helium will destroy the 5G market and may lead to the displacement of all devices connected to Web2.0.” 

Weaknesses of Web 3.0

But Web 3.0 has not only strengths. First, the transfer of information between servers can take longer than we would like. We're all used to one big ISP server, so the innovation can be a bit unconventional. Technical support will also become a problem. Now we can call our ISP's help desk and complain whatever we like, but in Web 3.0 we shall not be able to do that. Most likely, implementation of separate protocols will be required. This could potentially create additional complications.

We also asked the experts about the obvious shortcomings of Web 3.0.

Denis Kurilchik, Co-Founder of CLS Analytics, says,

“We need to realize that WEB 3.0 is a powerful technology that will be in the hands of the users themselves, and both risks and pluses follow from this. Everything will depend on how we use this technology.”

Egor Abramov, Principal of Fort Ross Ventures, believes that an evident drawback of the technology is its still insufficient distribution and the entrance barrier for a wide range of users. Few people used the Internet in the 80s and 90s, and then it was not as convenient and useful as it is today.

Another disadvantage of the technology is the tendency to centralize it. More precisely, the fact that the power is concentrated in the hands of a small number of rich structures. In some form, the system is being rebuilt, but still remains one way or another under the control of the largest capitalists. Of course, their degree of influence on end users is significantly less than in the modern Internet, but nevertheless, complete decentralization and transfer of the Internet into the hands of users remains a vain dream.

Also, according to the expert, due to the novelty, the system is imperfect, and many people still do not understand how it works. Therefore, there are a huge number of scammers who profit from the ignorance of people. Unfortunately, every time someone hacks a service and steals a large amount of cryptocurrency, Web 3.0 withdraws. Fortunately, the rate of development of the system today is such that it manages to take another 100 steps forward.

Yusuf Gayrat, Founder of Narfex, answers thus,

“The shortcoming of web 3.0 is, rather, the youth of the sphere (still quite raw products), since this area began to develop literally a year ago. There are still a lot of flaws, of course, but I think they are being fixed quickly and soon we will see the transition of the entire Internet from Web 2.0 to Web 3.0.”

Nikita Kutsenko, Founder of FINOMEN Investment Academy, believes that due to the novelty of the technology, there are many scammers in this area. Also, according to the expert, there are critical vulnerabilities that lead to the disclosure of users' personal data, and sometimes lead to the deprivation of deposits, if it comes to dubious exchanges or DeFi projects.

Alexander Bespalov, Vice-President of the Investor Relations Club, adheres to his position on this matter, saying,

“So far, most of the services in Web 3.0 are quite cumbersome and not very user-friendly, and also require higher qualifications. Like cryptocurrencies in general, the third web is in its infancy and requires a lot of mass adoption to develop.”

Vladislav Akeliev, Director for Development of the ECOS cryptocurrency investment platform, believes that the main drawback of Web 3.0, as well as blockchain in particular, is its complexity to the average person. However, as the crypto industry has proven, this deficiency can be eliminated over time by explaining complex things in simple terms.

The expert adds that another disadvantage of Web 3.0 is the lack of specialists–developers, analysts and managers. This is a new direction that requires new knowledge and it will take time for other professionals to get adapted to it.

Mikhail Alyonushkin, Managing Director of 3V FUND, says,

“A clear disadvantage is the existence of large monopolies in the world that deal with Web 3.0 and metaverses (Facebook, Twitter, Reddit). Each of them pursues its own interests. We shall see a serious struggle between them, and its outcome is not yet clear.

“Second, growing pains. Web 3.0 and the metaverses are made by programmers. This implies a human factor, and we are not immune from mistakes. The recent case of the hacking of the bridge between Solana and Ethereum, from where $250 million worth of cryptocurrencies were stolen, shows that not everything is so safe yet. But over time, the security system will evolve.”

Danatar Atajanov, Brand Manager at OXLY.IO, emphasizes that, like any new technology, Web 3.0 has its downsides. The main fears are associated with uncontrolled flows of information that might be dangerous for society. Modern parents are worried about the lack of control over their children and possible hater actions on the network. The introduction of new technologies is associated with possible conflicts with previous solutions, the necessity to learn something new and the difficulties in accepting a new paradigm as a whole. But, as experience shows, children's diseases of new technologies are treated quite quickly.

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