Discovering the Future of the Internet: Intro to Web 3.0: Blockchain, NFTs, & The Metaverse
Over the last decade we’ve seen a rise in popularity of web applications that are blockchain based, especially in the last 2 years (2020-2021). One of the most notable examples is cryptocurrencies. Bitcoin was an early entrant in this market and proved to be increasingly popular and more valuable with time. Ethereum (which uses a different type of blockchain) allows developers to build decentralized apps on its platform.
What is web 3.0?
Data on Web 3.0 is interconnected rather than individual people interacting with web pages and applications. Web 3.0 is the next generation version of internet technology that connects machines, people, data, services, and algorithms in new ways to create a more open and intelligent global network.
This means web users will no longer have to log onto web applications, but web apps will instead log onto web user’s devices. This will reduce the power and importance of centralized servers which host web applications such as Google or Facebook, to name a couple.
What is a Blockchain?
A blockchain is a type of distributed ledger, which is a fancy way of saying there are multiple copies (distributed) across many different computers. The main difference between blockchains and traditional ledgers is that the information on blockchain networks can be verified by everyone who has access to the network.
Blockchain technology doesn’t just apply to currencies like Bitcoin or Ethereum, but can be applied to any type of digital asset that needs to have public verifiability and transparency.
With blockchain networks, you can now transfer money directly to anyone with an Internet connection on a peer-to-peer basis. Web users will no longer need to access bank accounts, as they can use their cryptocurrency wallets instead.
Investments: Crypto Currencies and NFTs
Cryptocurrency assets, such as Bitcoin and Ethereum, are just some of the many different types of decentralized assets available on blockchain networks. In addition to cryptocurrencies, there have been a number of projects that have launched as NFTs. NFTs can be used to represent any type of asset from real estate or art, to physical items such as a car.
Cryptocurrency is a digital currency with a variable exchange rate, created from data bits. all cryptocurrencies are built on decentralized systems, where users can transfer cryptocurrency to each other without the need for a middleman. Cryptocurrencies such as Bitcoin or Ethereum are stored on digital wallets which allow users to track their account balances.
How does Cryptocurrency Work?
Users can transfer cryptocurrency to each other directly, similar to how peer-to-peer file sharing works for data transmission. For example, if User A wants to send some Bitcoins (BTC) or Etheruem (ETH) to User B, they simply enter the amount of cryptocurrency that they want to send and their private key.
The network verifies that User A owns this particular cryptocurrency by checking against everyone else’s copy of the blockchain ledger for this data record. Once it is verified, a transaction message gets sent out to other users on the network .
What is a NFT?
An NFt is a Non-fungible Token. A Non-fungible token is a type of cryptocurrency that is distinct from “fungible” assets like Bitcoin and US dollars because each token is unique rather than identical. Because each NFT is unique, they may be used to authenticate ownership of digital assets such as artworks, recordings, and virtual items. NFTs can be scarce, meaning there is a limitation on how many copies exist and vary in value based on their scarcity, which makes them similar to traditional stocks.
Benefits of NFTs
Non-fungible Tokens come in the form of many things, such as digital artwork, real estate, music, game items, etc. Tokens can represent ownership of physical or intellectual property and are defined by the string that is stored on the blockchain rather than its owner. This means it may be possible to transfer tokenized assets (e.g., land deeds) across borders as easily as sending an email.
These tokens provide a secure method of recording ownership that is also transparent, easily auditable, and unforgeable. They can represent unique assets such as a house or even an object like gold which makes it possible for people all over the world to own something without fear of counterfeiting.
Real Estate and NFTs
On blockchain networks such as Algorand or Ethereum, real estate can be tokenized into non-fungible tokens ( NFTs) and then be traded on cryptocurrency exchanges. This means that you can buy tokens to invest in blockchain companies, making it easier for you to invest in other geographical locations.
How will Crypto and NFTs affect the Finance World?
Traditional investment opportunities such as stocks and bonds will become less relevant since web users can now invest directly into crypto currencies. This means they don’t have to rely on traditional investment firms but instead can simply buy cryptocurrencies like Bitcoin or Ethereum (or other altcoins) through an online exchange such as Coinbase today.
This shift will also increase liquidity of assets since investors don’t have to wait for stock prices to go up before they sell, but instead just trade their digital assets directly on cryptocurrency exchanges.
Lending: Crypto Staking and DeFi
Crypto Staking and DeFi are ways to earn cryptocurrencies without having to buy more of them, as well as a way to earn money passively on the blockchain.
DeFi stands for decentralized finance and means a decentralized form of lending. DeFi applications automate the lending process by creating a smart contract that executes when certain conditions are met, allowing for more trustless and secure services to take place without any intermediaries involved.
DeFi can provide new forms of financing for users who have crypto assets but do not want to sell them in order to gain financial returns or would like additional liquidity. This is possible because DeFi applications allow you to earn money passively without having to actively manage your assets.
What is crypto staking?
Staking crypto simply means committing a certain amount of cryptocurrency to help support the blockchain network so transactions can be processed.
You can stake some of your Bitcoins (BTC) to help support the Bitcoin Cash(BCH) Blockchain or Ethereum (ETH) for the Ethereum Blockchain. In return you will earn interest on that cryptocurrency deposit over time for helping confirm transactions and supporting the underlying infrastructure.
This is possible because cryptocurrencies that use the proof-of-stake model allow for an alternative way to validate transactions and add them onto the blockchain rather than using a mining device that uses computing power.
Traditionally in the finance world when you perform a wire transfer through a bank you have to pay a fee to send money. On the blockchain once a transaction has been verified, it is added to a pool of other transactions that are waiting to be processed. The next cryptocurrency miner who creates a block gets rewarded with cryptocurrency for adding this new record to the blockchain ledger.
With cryptocurrencies you pay a fee , but it is known as a mining fee (aka known as “gas”) since you’re essentially compensating the people who help process and confirm transactions on blockchain networks. This goes for all cryptocurrency and NFT transactions.
As more cryptocurrency miners add transaction records, the network speeds up since there are more resources available for processing transactions . Cryptocurrency networks work best when they have a lot of users and miners working together, which is why it’s important that these systems remain decentralized .
Future-Proofing for Web 3.0
Individuals and businesses that are future minded and prepare for the coming shift of web 3.0 will be able to reap the benefits of the changes happening in the financial sector. Many of these concepts are still relatively new to the average user and there are many misconceptions.
Future-proofing yourself involves learning how to work with blockchain technology, what applications are being built on top of it and why they are so important for businesses in any industry.
Taking steps now to learn about blockchain technology and getting involved with cryptocurrency networks can help you future proof your business for Web-based transactions that are decentralized, trustless, secure, and accessible from anywhere in the world.
This article provides a light introduction into the world of Web 3.0 finance, how it works, and how to take advantage of the changes that are happening in this space.
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