What does Web3 represent?
Web3 is the term used to describe the next iteration of the Internet, built on blockchain technology and collectively managed by users themselves.
Web3 promises to change our digital reality by offering decentralized applications, smart contracts and financial instruments that will allow, among other things, to perform transactions without intermediaries such as banks and payment services. However, despite the attractive prospects, mass adoption of this concept is still far from final realization.
Technical and regulatory barriers
One of the main challenges is various technical limitations. Many popular blockchains, even with the abundance of technological solutions that have emerged in recent years, have difficulty with scalability, i.e., the ability to support millions of users simultaneously. An important obstacle is also the high power consumption of some networks, which raises questions about the sustainability of such technologies. In addition, security issues remain unresolved: hacks of smart contracts and theft of user credentials, despite all measures taken, occur every year and result in multimillion-dollar losses.
No fewer questions arise at the level of legislative regulation. While some countries openly support the crypto industry, others impose strict restrictions or ban transactions with digital assets altogether. Tax regulation and user identification requirements in different countries have not yet been harmonized, which creates uncertainty for both private investors and businesses.
Social and economic challenges
Most people still have a poor understanding of what Web3 is, and the technicalities of blockchain applications (e.g., having to navigate a huge number of networks and protocols) only raise the threshold of entry for new users.
Many large financial institutions and governments have already appreciated the full potential of blockchain technologies and their impact on society, so nowadays both decentralized blockchains and centralized solutions from governments (such as, for example, digital currencies of central banks) are developing in parallel. We can say that every year the presence of institutional players in the blockchain environment is only growing.
In addition, even though the cryptocurrency market capitalization has already surpassed $3 trillion, the still high volatility continues to deter many investors, making long-term planning difficult for investors and developers alike.
Possible solutions and perspectives
From a technical perspective, the industry has already made tangible progress, with new protocols emerging every year, more advanced scaling technologies being developed, and security measures now far beyond what was available to users in the early days of blockchain networks.
Regulatory progress has also been significant, and a number of countries have already introduced full-fledged legislative standards (e.g. MiCA in the EU) governing processes and transactions related to digital assets and cryptocurrencies.
Moreover, the number of tutorials and educational platforms that explain the principles and features of blockchain networks and the entire Web3 industry in plain language has multiplied. There has been no less progress in the development environment and technical documentation – it is now much easier to become a developer of decentralized applications than it was 10 years ago.
What’s in store for Web3 in the coming years?
Despite the challenges, Web3 continues to evolve. As technology improves and the rules of the game become clearer, decentralization may become a familiar part of our lives. The world is on the threshold of great changes, and those who understand the new opportunities in time will be able to make the most of them.
