Blockchain Technology: Prospects and Challenges

How Web3 differs from Web2?

Note4Students

From UPSC perspective, the following things are important :

Prelims level: Web 3.0

Mains level: Not Much

web

Central idea: The article discusses the key features of Web3, including its decentralized nature, peer-to-peer transactions, and greater control over data and digital assets for users.

What is Web3?

  • Web3, also known as Web 3.0, is the next generation of the World Wide Web that emphasizes decentralization, security, and user privacy.
  • It is essentially a vision of the internet where users have more control over their data, identities, and online interactions.
  • It is built on blockchain technology, which enables peer-to-peer transactions without the need for intermediaries such as banks, governments, or other third parties.
  • This decentralized approach to the web allows for greater transparency and trust, as well as more secure and private transactions.
  • Web3 technologies include blockchain platforms like Ethereum, IPFS (InterPlanetary File System) for distributed file storage, decentralized identity systems like uPort, and decentralized marketplaces like OpenBazaar.

Features of Web 3

Feature

Web3

Web2

Centralisation

Decentralised Centralised

Intermediaries

Peer-to-peer Rely on intermediaries

Data ownership and control

Users have control Large corporations have control

 

Challenges for Web3:

Challenge

Scalability

Current blockchain infrastructure can only handle a limited number of transactions per second.

User Adoption

Despite being around for over a decade, blockchain technology is still relatively unknown to the general public.

Interoperability

Web3 is being developed by different organisations, each with their own unique vision for the technology, leading to challenges in integration.

Complexity

Technical expertise is required to use and understand Web3, which may be a barrier for some users.

 

Examples of Web3 use:

Use

Cryptocurrencies

Built on blockchain technology, cryptocurrencies enable secure, decentralised transactions without the need for intermediaries.

Decentralised Finance

Aims to build a new financial system on top of blockchain technology. DeFi applications enable users to borrow, lend, and trade crypto.

Decentralised storage

Used to create decentralised social networks and develop decentralised identity verification systems.

 

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