Web3 Goes Beyond DeFi, NFT, And Cryptocurrency.
Whenever people hear about Web3, the first thing that comes to mind is DeFi, NFT, and cryptocurrency. And while they are not wrong, Web3 is beyond that.
“Decentralized Finance” is the ability for users to borrow, lend and yield farm their cryptocurrency without a centralized organization permitting them to do that.
In the traditional banking system, you must provide collateral and various documents before borrowing money. This process could take a few days or weeks before your loans will be released. And this doesn’t guarantee that the loan will be released to you.
However, in DeFi, you don’t have to go through hassles to borrow money. There are no central authorities to approve or reject your loan application.
You only need to deposit your cryptocurrency and use it as collateral to borrow other funds. This takes minutes, and you have your loans available to you.
Let me explain this in simple terms.
Let’s say you are bullish on Ethereum. You buy the dip, supply it to the Compound protocol as collateral and borrow DAI. You can use the DAI to buy more Ethereum, yield farm or anything you want to do with it.
The most important thing here is that with DeFi, you can carry out financial activities without involving a centralized authority like the banks.
It means “Non-Fungible Token.” Before the introduction of Web3, artists displayed their artwork in museums, galleries, cultural centers, etc.
To get your artwork displayed in these places, you must know someone or have been recommended by someone.
What are your chances of getting your artwork in these places as a new artist?
With the introduction of Web3, projects like Opensea and Rarible have made it easy for artists to display their artwork without the rigorous processes in the traditional and Web2 applications.
NFT Marketplaces allow artists and users to buy, sell, list, and mint NFTs without any middleman.
Aside from the speculatory purposes of cryptocurrencies, they are used to transfer payments from one person to another borderless.
The Ukraine-Russia war has given us a real-life example of cryptocurrency usage. Payment channels in Ukraine were shut down. And if you were to send money from abroad, no offices were open to receiving it.
This made Ukraine adopt receiving financial aid from abroad using cryptocurrency. Most importantly, there was no mediator to receive the funds before giving them to the end-user.
In Web3, privacy and security are not a big issue.
Web3 eliminates the basic concept of personal data leakage from a privacy and security standpoint because Apps may only access information users have previously made public.
For instance, signing up for a new project on the Ethereum blockchain is as simple as adding a wallet connection. Connecting your Metamask on your Google chrome extension is all you need to access new and old projects on the Ethereum blockchain.
On your Metamask, your wallet address and assets are already public, which is the much needed to access new and old projects.
On the contrary, if you want to sign in to your Facebook account using a third-party website, you must input your username and password.
And if you have to sign in to five different third-party apps, you have to input your Facebook username and password five times. And this is precisely one of the scenarios where users complain about not being in charge of their data.
How can you input your password on a website you do not trust?
Some people forget to sign out on these third-party applications. After a few days, they started complaining about hacked Facebook accounts.
Test versions are launched on Web3.
The absence of simple, secure, and interoperable testing networks is another issue with Web 2.0.
Consider creating a Twitter app that tweets trends of the day as your first step in beginning an online retail firm. As you construct your software, you should probably test it.
However, it is impossible to make false Twitter accounts or tweets. It’s pretty simple to flood gibberish tweets with potentially important corporate information if your app has a bug. Since your new company presumably has no Twitter followers, the stakes in this scenario are minimal. But once your company starts gathering personal information or is connected to a payment processor, the dangers become much more severe because an error risks people’s privacy and finances.
Even at Facebook and other corporate conglomerates, these data breaches already occur so frequently that many people believe it is just an unavoidable aspect of software development.
When the stakes are high, specific platforms do enable test accounts. However, many don’t, and even when they do, they frequently have limitations that hinder complete compatibility between, for example, Stripe and Facebook test accounts.
Once more, Ethereum stands out in this comparison since it provides a unique global network that enables smooth communication across blockchain applications. This design naturally leads to the ability to start a test version of the complete network, including every single application running on it. All possible outcomes — including any externalities brought on by a bug — can now be safely simulated and verified. Outside of web3, such power does not exist. It permits bold development.
Web3 payment structure.
Collecting payment using Web2 applications has always been a key friction point for an individual or business. In theory, it should be easy to open and set up a Paypal account, sign service terms, and verify other compliance requirements.
And after these, when you begin receiving funds, you have to wait for payments to be processed, but only after the platform has first cut your revenue.
With stable coins like USDC, there are still transaction fees, but you receive payments in under a minute. And while Paypal is not supported in every country, USDC is automatically supported worldwide.
For all these reasons and more, we must shift from Web2 applications and adapt to the innovations in Web3.
I posted a copy of this article here.