Get Up to Speed on Web3: an In-Depth Guide

Web3 Marketer
Web3 Guide

Table of Contents

Investing in crypto and Web3 is an incredible opportunity—some might say it’s an opportunity that only comes around every 20 or 30 years.

But it doesn’t come without risks and navigating around those risks is half the battle to sustaining a high return on investment.

The Path to Success in Web3 is Forged by Increasing Your Knowledge and Understanding of the Web3 Space

Whether you’re investing in crypto, or any other market or asset;

To borrow a quote from legendary traditional finance investor, Warren Buffet:

“Never invest in something you don’t understand.”

With crypto and Web3, this is even more true.

It’s still very much the “Wild West” out there.

There are high-risk asset classes—and then there’s crypto. Even higher risk.

This guide is intended to be the main jumping-off point for investors eager to get started with crypto investing. Even those considered crypto veterans will likely learn some useful stuff as well.

If you’re completely new to this space, don’t worry. We’ll layer on the information, bit by bit. Don’t be afraid to seek out your own answers as well. Crypto and Web3 is a rabbit hole that never ends. Research is a crypto investor’s best friend.

Along the way, we’ll also answer questions like:

Crypto, Web3, Metaverse, DeFi, NFTs.. what does it all mean? Do all these terms really make up a potentially revolutionary technology?

Or is crypto—and all the other buzzwords that come with it—simply a risky and purely speculative investment? If that’s the case, is it even worth it?

We talk about a ton of crypto terms and topics, with some history and technical explanations weaved in. After reading this guide, you’ll come away with a broad array of knowledge about crypto, blockchain, and Web3.

Without further ado, let’s get started!

Immerse Yourself in the Endless Pit of Web3 Information

The goal of this guide is that by the end of reading it, you’ll have a good base of knowledge about crypto, Web3 and the reasons why it’s useful.

You’ll also probably have a bunch of confusing concepts swirling around in your head, but that’s okay. Crypto becomes more clear the more you read about it and the more you actually use it.

Blockchain and Distributed Ledger Technology in the Simplest Words

A distributed ledger is a shared database that lives on a distributed network of computer nodes.

Blockchains are a type of DLT (most commonly used for cryptocurrencies). 

Blockchains are quite literally blocks of data chained together.

Cryptocurrency in the Simplest Words

Crypto is the intersection of cryptography, financial technology (Fintech), economics and game theory.

But the simplest way to define it is: 

A cryptocurrency is a form of digital money that can be transferred peer-to-peer, via the internet.

Most cryptocurrencies like Bitcoin or Ethereum are decentralized, meaning users can transfer their currency to anyone or anywhere in the world, without the need for a central authority to facilitate the transaction, such as a bank.

How do Blockchain and Cryptocurrency Work Together?

Well, cryptocurrency is a form of digital money, right?

Blockchain is the underlying computer-science-based technology upon which (most) cryptocurrencies are built.

More specifically, blockchain is the ledger in which cryptocurrency transactions are recorded.

The blockchains we most commonly associate with cryptocurrencies are open-source and decentralized.

This means anyone can view the blockchain ledger, or even participate in helping secure the network (more on that later).

Blockchains in general, however, can be public or private. Some corporations use their own self-contained blockchain in which only the users in their business network have access to view or contribute to their blockchain database.

IBM’s Hyperledger blockchain is an example of a private, enterprise blockchain that many corporations have chosen to implement.

You Keep Hearing About Decentralization. What Does it Mean and Why is it Important?

Decentralization is the core concept that makes public blockchains and cryptocurrencies as useful as they are.

Decentralization is about dispersing the power of any central organization or network.

In the case of blockchains (and therefore cryptos), decentralization creates a system with the following features:

  • Immutability – All of the data within the blockchain, going back to the very first block, cannot be altered or deleted in any way.
  • Transparency – Anyone can view the details of transactions on the blockchain.
  • Trustless Transactions – Transfer of assets happens from peer-to-peer. Users do not need to trust a middleman or central institution to execute the transaction on their behalf.
  • Point of Failure Security – If there’s a point of failure in the network, a decentralized blockchain will stay secure and running. A centralized system would fail if the central authority fails or acts maliciously.
  • Consensus-Approved – The decentralized network of computers running the blockchain must reach a consensus about what’s being added to the blockchain database. This is one of the main security features commonly found across almost every single cryptocurrency.

There are some other features as well, but these are the key ones to remember.

Most importantly, remember this:

To be decentralized is to have no single person or entity acting as a central authority to control a system.

A perfect example of this is the current traditional banking system. If you want to send money to someone, the bank facilitates it for you. 

This process can be time-consuming, expensive, and you’re leaving your trust in the bank to:

  1. Deem the transaction acceptable (or not) based on their arbitrary rules or the government’s regulations.
  2. Perform the transaction as expected, in a timely manner.

With crypto, if you want to send digital assets to somebody, you’re relying on yourself and the code written in the blockchain to perform the transaction correctly.

This has advantages because a crypto transfer can be:

  1. Instantaneous.
  2. Cheap or even free.
  3. Trustless. There’s no single person or organization that can control blockchain transactions.

Blockchains (and therefore Cryptocurrencies) are Typically Open Source and Composable

Blockchains are usually open-source, which means anyone can read the code, or even copy the code for their own project.
In fact, many blockchains are built by simply copying and pasting the code from another blockchain. From there, the developers of the new project can make their own adjustments and improvements to the previous code. These improvements can come in the form of adding new features or patching security vulnerabilities.

Open-source blockchain code also makes it easy for different blockchains and cryptocurrencies to integrate their projects with each other.

This concept of sharing open-source code and building upon other blockchains is called composability. It’s how entire ecosystems of blockchains and cryptocurrencies sprout up.

How are Blockchains and Cryptocurrencies Decentralized? How do they Actually Work?

To understand how blockchains achieve decentralization, we first need to grasp a few game theory and cryptography concepts.

Game theory is the theoretical study of social situations with competing players. Another way to describe game theory is it’s the study of strategic decision-making. Game theory concepts can be applied to many situations in business, finance, sports, and everyday social interactions.

Cryptography is a sector of computer science, heavily involved with math, that studies and builds protocols that provide secure data communication, in defence of any malicious actors.

Byzantine Generals Problem

The Byzantine Generals Problem is a game theory problem which reveals the issues that decentralized systems have when trying to come to a consensus about a decision. This is especially true when there may be malicious parties involved.

With no trusted central authority, each party cannot verify the other’s identity and reach a consensus about the reality of their situation.

The Byzantine Generals Problem describes an analogy in which multiple generals surround and enclose on the city of Byzantium. In order to win the siege, the generals must decide on the precise moment to attack the city simultaneously. If they don’t attack at the exact same time, they will be defeated. However, one or more of them could be traitors.

The generals have no secure communication channels because the Byzantium city defenders are intercepting letters and messages. How can the generals coordinate their attack?

In 1982, the U.S. government-financed a research paper about the Byzantine Generals Problem, led by computer scientist Leslie Lamport.

The paper concluded that in order to solve the problem, the loyal generals need a safe means to agree on a plan (known as consensus).
So with regards to distributed computer systems, taken from the top of the research paper:

“Reliable computer systems must handle malfunctioning components that give conflicting information to different parts of the system.”

In a distributed system, those components are known as nodes. Nodes are individual computers that connect via the internet to a larger network of computers.

Bitcoin is Created—Trustless, Peer-to-Peer, Electronic Cash

In 2008, Bitcoin was created by an anonymous cryptographer (known by the pseudonym Satoshi Nakomoto).

As described in the Bitcoin whitepaper, (which should be required reading for anyone thinking about investing in crypto), Bitcoin is a peer-to-peer version of electronic cash.

Users can send value from one to another, without using an intermediary such as a bank.

How was Bitcoin able to accomplish this?

Well, Bitcoin was somewhat of a cryptographic programming marvel. It solved the Byzantine Generals Problem!

That is, if one or more of the nodes (computers) that are attached to the Bitcoin network fails, the other nodes can still reach a consensus about the accuracy of the blocks being added to the blockchain.

Remember, each block contains many Bitcoin transactions and the order in which the transactions took place. It’s the nodes’ job to help validate each block.

Since it solved the Byzantine Generals Problem, Bitcoin is known as Byzantine Fault Tolerant.

Now, you may be wondering how Bitcoin solved this grandiose problem and established itself as a legitimate peer-to-peer decentralized money.

The answer lies in the code (as it usually does).

How the Bitcoin Network Secures Itself

Bitcoin uses a consensus protocol called Proof of Work (PoW).

A consensus protocol (also known as a consensus mechanism or consensus algorithm) is essentially just a set of rules that the nodes interacting with the blockchain must follow in order to participate in validating the blocks.

Proof of Work (PoW)

With Bitcoin’s Proof of Work consensus protocol, the validators (also known as miners) are in a race against each other to brute-force-solve a math equation. Whoever solves the equation first, gets to validate the next block.

In exchange for their work to validate the block, the miners are rewarded with new Bitcoin that is automatically minted during block validation.

Proof of Work prevents network manipulation because it makes it impossible—or to put it more accurately—not economically feasible, to have enough computing power to take over 51% of the network.

Taking over 51% of any blockchain is trouble because the chain is then susceptible to manipulation and “double spending”. This is exactly how it sounds—spending your coins more than once and manipulating the blockchain to hide it.

Ethereum is Created—Decentralized Programmable Money

In 2015, Ethereum was launched—”a next-generation smart contract and decentralized application platform”. This quote was taken directly from the Ethereum whitepaper (which should also be considered required reading for crypto investors).

Vitalik Buterin, the creator of Ethereum, expands on the above:

Commonly cited alternative applications of blockchain technology include using on-blockchain digital assets to represent custom currencies and financial instruments (“colored coins”), the ownership of an underlying physical device (“smart property”), non-fungible assets such as domain names (“Namecoin”), as well as more complex applications involving having digital assets being directly controlled by a piece of code implementing arbitrary rules (“smart contracts“) or even blockchain-based “decentralized autonomous organizations” (DAOs). 

What Ethereum intends to provide is a blockchain with a built-in fully fledged Turing-complete programming language that can be used to create “contracts” that can be used to encode arbitrary state transition functions, allowing users to create any of the systems described above, as well as many others that we have not yet imagined, simply by writing up the logic in a few lines of code.

I’ve bolded the key parts (non-fungible assets, smart contracts, decentralized autonomous organizations) and we will talk more about those shortly.

First, let’s dig into how the Ethereum network is secured.

Proof of Stake (PoS)

Ethereum uses a consensus protocol called Proof of Stake (PoS).

Remember, consensus protocols are essentially a set of rules that nodes (computers) connected to the blockchain network must follow in order to participate and get rewarded for securing the network.

The consensus protocol is the mechanism that keeps the blockchain running in an honest and decentralized manner.

With a Proof of Stake protocol, “miners” can be considered “operators”. Only operators who have alot of currency (coins) can participate in validating the blocks.

Proof of Stake deters 51% attacks because it would require a ton of capital to take over the network.

What Would Happen if There Was a Succesful 51% Attack?

In the rare event that a 51% attack does occur, and succeeds, is there anything a blockchain network can do to put an end to it?

Yes, there is, through a process called forking.

Forking a blockchain is the process in which the code of the blockchain is copied and pasted—possibly with some adjustments or improvements to the protocol.

The result is a near-identical blockchain “forking” away from the original chain. Think of it like a fork in the road.

A soft fork is often used when developers want to make a major update to the blockchain code. The chain is soft forked and slowly but safely the entire network of nodes adapts to the new rules and migrates over.

A hard fork, on the other hand, is most often used when there is a disagreement among the network, such as a malicious 51% attack.

The legitimate nodes would recognize the malicious nodes and they would come to a consensus to fork the network. It’s even possible that the legitimate nodes would also “roll the blocks back” which means starting the transactions from right before the attack.

Users of the network (coin holders and traders) would also recognize the old, malicious network and they too would migrate over to the new, legitimate network.

Other Types of Consensus Protocols

So we now have a pretty good understanding of Proof of Work and Proof of Stake.

But those aren’t the only consensus protocols.

In fact, there are many more. Bitcoin and Ethereum really sparked the creation of more intricate and creative consensus protocols.

Some others include Proof of Authority, Proof of Space, and Pure Proof of Stake.

One other slightly more common one is Delegated Proof of Stake (DPoS). It works the same as PoS, but token holders can stake their coins on the network and delegate which validators they want to validate blocks. In exchange for their staked coins and vote of confidence, the token holders receive a small reward.

Smart Contracts

Smart contracts, made popular by Ethereum, are computer programs that automatically execute based on the terms of the contract (written into the code).

Think of smart contracts as the “middlemen” or intermediary in a value-exchange transaction.

For example, if I want to trade you 5 Ethereum for 1 Bitcoin, but we are strangers to each other and don’t trust each other, we can use a smart contract to facilitate the transaction. The terms written into the smart contract would specify that the coins not be released to each other until both amounts of coins are “pushed into the middle” so to speak.

In traditional finance, smart contracts are the equivalent of banks.

In decentralized finance, smart contracts allow for trustless, transparent, secure, cheap, and fast transactions.


Decentralized Finance, or DeFi for short, is the name of the entire ecosystem of decentralized financial applications built on top of blockchain networks.

These decentralized applications (known as DApps) use smart contracts to perform many of the functions and uses seen in traditional finance, such as:

  • Trading assets
  • Borrowing assets
  • Lending assets
  • Earning (high) interest on your assets
  • Crowdfunding, derivatives, and much more

Even stepping outside the DeFi ecosystem for a moment, you can imagine many more uses for smart contracts (crypto and Web3 in general), such as:

  • Insurance
  • Healthcare
  • Education
  • Identity verification
  • Supply chain management
  • Betting & gambling

Crypto & DeFi Infrastructure

Within the crypto and DeFi ecosystem, there are some innovative, common tools used to make everything flow in the most decentralized way possible.


Crypto wallets do exactly what they sound like they do—hold cryptocurrency.

Users can send crypto to their wallet, hold it there, or send it back out from the wallet.

Each and every crypto wallet can be identified by a unique string of letters and numbers, known as a public key. This is the address that’s inputed by the user as the destination to send their crypto to.

Private keys, on the other hand, are like the password to the public key. Private keys should never be seen or shared with anyone but the wallet’s owner.

There are a few different types of wallets such as:

  • Exchange wallets
  • Hardware wallets
  • Mobile wallets
  • Desktop wallets
  • Paper wallets

Each type of wallet has some pros and cons, with regard to security, accessibility, and usability.

We will go over everything about wallets, keys, sending, receiving, and securing crypto in our Basic Crypto Operations & Risk Management Guide.


Crypto exchanges are online platforms where users can buy, sell, and trade crypto.

Centralized Exchanges

Centralized exchanges (CEXs), which are run by centralized companies, provide users with easy access to tradeable crypto markets.

The benefits of centralized exchanges over decentralized exchanges are:

  • Smoother user experience.
  • Clearer government regulations.
  • Ease of use.
  • Higher liquidity among many different coins (lots of buyers and sellers).

Examples of centralized exchanges include Binance, Bitfinex, Kraken, FTX, and

Decentralized Exchanges

Decentralized exchanges (DEXs) are decentralized apps (DApps) that allow users to buy, sell, and trade crypto, without relying on a centralized company to hold their funds or facilitate transactions.

DEXs work very similarly to centralized exchanges except they’re decentralized—the software code holds crypto funds and facilitates transactions.

The benefits of using decentralized exchanges over centralized exchanges are:

  • Users don’t have to rely on a centralized company that may arbitrarily change their platform rules, freeze crypto wallets, or limit services.
  • Users can easily track transactions by following the blockchain data.
  • DEXs don’t typically require Know Your Customer (KYC) procedures so users have more personal privacy.
  • Users self-custody their own assets. Users are in complete control of their own wallets. No need to rely on a centralized company to hold your assets.

Examples of decentralized exchanges include Uniswap, dYdX, KyberSwap, PancakeSwap, and SushiSwap.


Stablecoins are cryptocurrencies that are coded to mimic traditional, government-issued currencies and remain stable—at $1.

The vast majority of stablecoins are “pegged” to the U.S. Dollar but there are some that are pegged to other traditional currencies as well.

Stablecoins can be used in a variety of ways but are most commonly used by traders who want to realize the gains on their crypto investments (sell), without cashing all the way out into traditional currency.

The most common stablecoins today are USDT, USDC, BUSD, and DAI (all are pegged to the U.S. Dollar).


Smart contracts seemingly have unlimited possible uses. But for many of those uses, smart contracts require data and information from the world outside of the blockchain.

Oracles are applications that take data/information from the world outside the blockchain and bring that data/info onto the blockchain. It’s in this process that they also filter and verify the data is correct.

Let’s say, for example, I want to bet that a sports team will win today’s game.

There are some DApps that provide sports betting, so I use one of those to make the bet. I provide some crypto to the DApp and the smart contract holds it in limbo until after the game is played.

When the game is over, how will the smart contract know whether or not I won or lost the bet?

Someone could manually input the score and result of the game, but that goes against the very nature of blockchains and decentralized applications.

Oracles perform this type of data transfer for us.

We won’t go into how exactly oracles work, but they aim to be as secure, trustless, and decentralized as the blockchain protocol that they feed the data to.

Block Explorers

Block explorers are web applications that can be used by anyone to view and track transactions on a blockchain.

Think of block explorers as the portal into the blockchain.

When you view a transaction, you’ll see the wallet addresses involved in the transaction, the time and date of the transaction, the type of token involved, and the amount of the token.

Block explorers are also great for viewing information like token distribution, as well as tracking what whales (heavy investors) are buying.

That’s what’s cool about blockchain. Anyone can follow the transactions from any wallet. Pure transparency!

Common block explorers are: (Bitcoin) (Ethereum) (Binance Coin) (Solana) (Cardano)

Finder.Terra.Money (Terra)


NFT stands for Non-Fungible Token.

To be non-fungible means it cannot be copied, substituted, or divided. It’s unique.

So a non-fungible token is a unique token.

Whereas a “regular” token is fungible, meaning it can be divided and there are copies of it. Bitcoin, Ethereum, Solana and thousands of other coins fall into this category.

The same thing applies to other fungible things like physical cash. A $20 bill can be replaced with an identical $20 bill. It’s fungible.

An example of non-fungibility in the physical world would be a rare coin that’s part of a limited collection. Or an expensive original painting.

What are the Uses of NFTs?

So what’s the point of NFTs?

As the world moves more online, NFTs can digitally represent ownership of—anything—and transparently display it on the blockchain.

And because blockchains are inherently immutable—meaning transactions and timestamps of the past (or present) cannot be altered—NFTs make a lot of sense for verification uses.

Some specific use-cases for NFTs include:

  • Digital media: art, graphics, music, videos, content of any sort.
  • Subscription purchases, online purchases, video game collector’s items.
  • A Physical representation of real-world assets. It might not be too long into the future before NFTs are considered law and we can use them to represent physical assets. Buying off Craigslist or Facebook marketplace would become much less stressful if the transaction could be completed and verified online and then the physical good can just be picked up or delivered.
  • Tickets. Concerts, sporting events, entertainment shows, etc. NFTs may replace how these are sold online. Being able to verify that they are in fact real tickets and not fakes would be awesome.
  • Identity verification. Education records, health records, driver’s license, passport. It’s very possible NFTs become embedded with these systems as well.

The Tokenization of Everything

NFTs also allow for anything to be “fractionalized”—which means split up into many pieces. Each fragment is its own NFT.

Take real estate for example. Right now there are a lot of people around the world who would love to invest in real estate, but there are barriers preventing them from doing so. Barriers like not enough down payment capital, low credit, or no means of securing a mortgage.

What if we could fractionalize and sell off equal portions of an investment property?

If there’s a $1 million property that could be divided into 100 equal portions and then those individual shares are sold off for $10 thousand each, it would allow many more people to get their foot in the door with real estate.

It would also allow much more real estate trade between states, provinces, and countries.

Real estate is an obvious use case for NFT fractionalization, but the concept can be applied to almost anything.

Outside of fragmenting the value of large investments, every single material item in the real world can be tokenized, if you really think about it.

And that’s where society might be headed soon. A digitally tokenized economy, with many different tokens that can be exchanged via our crypto wallets. Some tokens are unique NFTs that represent digital items or real-world items. Some tokens are fungible and represent a common digital currency.

Our society trades on value and we try to put a dollar value on everything. NFTs open up a whole new economic world.


The Metaverse is an interesting concept that can be difficult to wrap your head around. It might require some abstract thinking.

The best way to describe the Metaverse is by saying it’s the converging of many technologies that spawned from the advancement of computer technology in the past 20 years.

Blockchain, artificial reality, augmented reality, social media, gaming—all wrapped up to create an immersive digital world.

Some people already live on the internet, well now they will be able to live in the internet.

When most people think of the metaverse, they think of a virtual world where people have their own avatar/character. Users can buy and sell assets in the metaverse (in the form of NFTs). They can connect and interact with other users/characters, play games, meet new people, and who knows what else.

Our imaginations can only take us so far and the future iterations of the metaverse will likely be vastly different than what we can picture today.

Web3 companies are pushing the metaverse forward, but a lot of non-Web3 companies are getting involved with metaverse development as well. It’ll be interesting to see what kind of cool stuff develops over the next couple of years!


We currently live in a world with way too much centralization of power. There are too many large conglomerate companies with CEOs making 8-9 figures per year, while their employees live paycheck to paycheck.

What if we could transform how companies and organizations disperse their power?

What if every member of a company or organization could have an equal say and equal vote on the decisions and direction of the company?

Decentralized Autonomous Organizations, or DAOs, are groups of people who have a common goal or mission and go about achieving it, together, in a decentralized way.

In the Web3 world, DAOs are replacing traditional-structured, corporate companies.

It remains to be seen if this corporate shift will take traction in the non-Web3 world (but I wouldn’t bet against it). The power of the people.

Cryptocurrency Will Transform our Outdated, Centralized Financial Systems

Based on everything you’ve read until this point, you can probably envision how crypto might transform how people will exchange value in the not-too-distant future.

So how does this all tie into Web3?

Meet the decentralized internet.

Web3 is the Utilization of Crypto Technology to Transform How We Interact With the World Wide Web

What is Web3? First, Let’s Recap Web1 and Web2


Web1 was the initial consumer phase of the internet, where users could log in to the computer, boot up the internet, open up a browser, type a URL, and the webpage would pop up and be readable. Simple internet browsing. This is considered the era of the “read-only” internet.


The internet became more fun. Webpages contained more vivid media and became more interactive. And a new type of media sharing platform was invented—social media. This is considered the era of the “read/write” internet. Users could not only read what was on the internet but post their own content and connect with others.

So That Brings Us to Web3. What is it?

As the web became more immersive and more efficient to use during the era of Web2, more centralization was happening amongst the big players in the industry.

The winners of the era—think Google, Amazon, Facebook, Twitter, Youtube, etc—had captured the attention of the vast majority of internet users.

Users were able to use those platforms’ services for free, as long as they agreed to the terms and conditions of the platform.

It’s not until recently that some people realized what they were actually giving up in exchange to use those platforms’ services—their data.

Those platforms were (still are) scraping users’ data and selling it to ad companies and other interested parties.

Our data has a value to it. Things like our web/app usage, browsing habits, shopping habits, personal interests, and demographics (age, gender, ethnicity, nationality) are all valuable info that marketing and consumer companies pay to get their hand on.

In other words, when you use social media and a lot of other web and mobile apps, you are the product.

The data example is just one downside of the overall problem of too much centralization of the internet. Some other downsides include reduced competition, stifled innovation, having to trust the company to not lose your personal information, and trusting them to act fairly to you.

Web3 is About Decentralizing the Internet—Read/Write/Own

Rather than large companies owning and controlling large sections of the world wide web, users will have a share in the ownership of software and internet apps.

How will this be made possible?

Remember how we talked about the tokenization of everything?

Token Economies Provide Incentivized Frameworks for Users to Own and Govern

Incentives make the world go round. People are incentivized to work because they have bills to pay and mouths to feed. People are incentivized to not break the law because they would be arrested or fined if they do. People are incentivized to go to the gym because they want to get in shape.

Incentives spur human behaviour.

Cryptocurrencies are able to be decentralized because they rely on incentive models that urge the users to honestly contribute to the network.

More specifically, cryptocurrencies use token incentives to create a demand to hold the token.

This is how a crypto coin or token gains value. People want to hold it.

What kind of incentives do people have to hold crypto tokens? That depends on each type of cryptocurrency. 

Some cryptos will pay users on a regular basis for continuing to hold their coin. This process is called staking, and it involves locking up your coins for a set period of time, in exchange for rewarded crypto. The rewarded crypto is accrued based on a yield rate—rates that vary widely across DeFi—some offering higher than 20% Annual Percentage Yield (APY).

Other cryptos have utility attached to their token—that is, their token literally helps contribute to the network. The network would not function without the use of the token.

There are also governance tokens, which provide token holders with the ability to proportionally vote on the decisions facing the blockchain network (including future updates, partnerships, and general direction).

All of this talk about why a coin or token might be worth holding is part of a larger conversation about Tokenomics. Which is the study of the economics, and supply and demand of token economies. We go more in-depth into tokenomics in our Complete Guide to Tokenomics.

In the Web3 World, Token Economies Will Spur Users to Help Govern The DApps

Now you can see how Web3 all fits together.

Users read, write, create, connect, and interact with decentralized applications (DApps) in a permissionless way. Those DApps run on top of crypto/blockchain networks and are secured via token incentives that spur the users to keep the DApp and blockchain network running honestly. No central authority figure is needed.

To expand on the wide vision of Web3 a little further, many different blockchains and cryptocurrencies will likely all play a part in Web3. They will all be able to connect and trade with each other, creating one massive token economy. This form of workable connection between different blockchains is known as interoperability.

What are the Benefits of Web3?

So you have an idea of what Web3 will entail, but how does it benefit the end-user?

  • Permissionless, trustless, decentralized applications will be used instead of centralized applications owned by a few single companies.
  • Users will not only take part in using the DApps, but they will also take part in making decisions on how to govern the DApp and contribute to the upkeep of the overall blockchain network. They will be partial owners.
  • Users will earn value (crypto) based on contributions to networks (holding tokens, mining, etc).
  • Users will have a single “internet profile” that they can take from DApp to DApp and log in with it. So instead of having to create a new login for each social media or website account, users will have all their data tied to a single profile that they can then port to different locations on the internet. This profile also contains the user’s secure crypto wallet, containing all their digital assets available to be traded.
  • Users will be in complete control of their data. If a protocol or company wants to buy your data, you can choose to sell it to them for a price of your choosing (via crypto).
  • Users can choose to opt out of ads on the web. Users can also choose to opt into ads and they will be incentivized for doing so.

By using blockchains and cryptocurrencies, what other parts of society can we digitize and decentralize for the betterment of the people?

More than you think. Teams are already getting started on different things like DeSci (decentralized science) and GameFi (game finance).

Web3 is just getting off the ground so it’s impossible to know all the possible uses and benefits of what’s to come.

One thing’s for sure though, widespread tokenization and true decentralization are not far away. Bring the power back to the people.

Are you excited yet?! You now know more about blockchain, crypto, and Web3 than 99% of the world’s population. Use your knowledge to your advantage and never stop learning!