Web3 Use Cases: From Cryptocurrencies, DAOs, NFTs, to the Metaverse
The first time you heard the phrase "decentralization of the Internet" you probably had a lot of thoughts. Even though you may have heard it countless times since then, Web 3.0 can be a tricky world to explore. Let's look at what Web 3.0 means before looking at its use cases.
When you consider the milestones, the internet's progress over the years has been an astonishing phenomenon. The phrase "Web3" refers to the concept of an updated internet. This enhanced Internet is well known for utilizing the ideas of NFTs, blockchains, cryptocurrencies, etc., to provide direct consumer access to or ownership of the data.
The major turning points in the development of the internet have been nothing short of revolutionary. The foundation for the internet's growth was built by open protocols as it started to take shape.
Evolution of Web
The majority of people think that the Web only became a part of modern life after it was invented. But today's Web is very different from the Web of the past. Even the original internet inventors could not predict how the web would develop.
Understanding the recent history of the Web—which is broadly divided into Web 1.0, Web 2.0, and Web 3:
Web 1.0: Read-only web
The term Web 1 was coined by Tim Berners Lee, Which is called Berners Lee's invention in its initial form. Since users hardly ever added content, there was essentially no user interaction.
This state of the web was primarily designed for static websites owned by a small number of corporations. The term "read-only" website is frequently used for web1 because of its static characteristic. Readers/users couldn't talk about it or their personal experiences; they read there only.
Web 2.0: interact with the web and people
The web 2.0 era officially began in 2004 with the launch of social media platforms. Nowadays, people communicate online, interact with one another, and share tales. Instead of being a read-only medium, the Web evolved into a read-write one.
Businesses began to provide platforms where users could chat and share user-generated content instead of providing customers with products only through a static website.
Web 3.0: Control your online presence
This generated debate about possible Internet developments, which is how the idea of Web 3.0 came about. This third generation of the Internet is primarily concerned with boosting transparency and giving users back control over their private information.
It simply alludes to a future iteration of the Internet that supports decentralized protocols and aims to reduce dependency on well-known tech companies like Youtube, Netflix, and Amazon. Our Web 3.0 is capable of many duties, unlike the Internet's first and second generations. It is literate and has ownership.
Users can handle both the management and the governance of the Web. Handing up information to businesses each time you join up, visit them, etc. It's that easy—you own it, you keep it!
It's not as if sharing info is prohibited, but you simply have the option to refuse to complete the work in any case.
Top Use Cases of Web3:
The unique characteristics of Web3 show how technology can completely change how users interact with the internet.
Check the following top web3 use cases in action to get a better idea of the various applications the technology might support:
1. Decentralized Autonomous Organizations (DAO)
Decentralized autonomous organizations are a crucial component of Web 3.0. What does that mean, exactly? An organization that lacks or isn't employing the power to govern is known as a decentralized autonomous organization or DAO. These organizations prefer to operate under logical interaction protocols.
It's an innovative sort of legal structure which lacks a central authority and has members who are all committed to acting in the organization's best interests. DAOs have grown in popularity among proponents of blockchain technology and bitcoin because they allow for bottom-up decision-making.
Smart contracts play a big part in DAOs. Decision-making is mandated with smart contracts, through its logically coded agreements running on blockchain block which also makes it immutable.
On a blockchain, the voting procedure for DAOs is published, which then creates an opportunity for choosing between alternatives that are mutually exclusive and common for users. Users' voting power is frequently split among them according to the number of tokens or assets they possess in the organization.
The idea behind this technique is that individuals with a more significant financial stake in the DAO are encouraged to act honestly. Consider a user who possesses 35% of the total voting power. This user is free to engage in wrongdoing, but doing so puts the value of their 35% share in jeopardy.
Tokens issued in exchange for fiat currency are frequently stored in the treasuries of DAOs. Members of a DAO are the ones who will vote on how those funds are used. For instance, a Decentralized organization that wants to buy a digital asset might vote to trade it with its tokens.
The decentralized nature of digital currency is one of its essential characteristics. This indicates that they are distributed among numerous computers, networks, and nodes rather than being under the jurisdiction of a single organization like a government or central bank.
2. Decentralized Finance (DeFi)
A new financial system called decentralized finance (DeFi) is built on secure distributed ledgers comparable to those used by cryptocurrencies. By giving people access to peer-to-peer digital trades, DeFi threatens the well-known centralized financial system.
The DeFi system does not charge maintenance fees that banks and other financial institutions impose. Users can store money in a safe digital wallet and transfer money quickly, with the help of an internet connection, anyone can use DeFi anywhere.
It has enabled individuals, businesses, and merchants to perform financial transactions through new technologies, by helping them eliminate intermediaries. DeFi makes use of the connection, software, hardware, security protocols, and peer-to-peer financial networks.
By enabling anyone to utilize financial services wherever they are, regardless of who they are or where they are located, decentralized finance eliminates the necessity for a centralized finance model.
The blockchain technology that cryptocurrencies employ is used in DeFi. The blockchain is operated, and transactions are handled by programs known as dApps (decentralized applications).
3. Digital Infrastructure
The biggest problem with current blockchain networks is total openness. Blockchain web3 has been enhancing digital infrastructure and privacy. Mathematical proofs of validity can now be made without revealing any information, termed Zero-knowledge proof.
Digital infrastructure advancements depend on the protection of users' private information as one of the beauties of web3. Web3 has also increased the design freedom for applications with better privacy.
Given the significant data breaches in web 2.0, data safety is undoubtedly one of the critical highlights among numerous web3 use cases. With web3, you may now access a variety of applications that will improve the security of your data.
Additionally, the web3 use cases for privacy and advancements in the digital infrastructure may enhance regulatory compliance. Users that are reluctant to share personal information with a blockchain application or service can benefit from privacy layers. Web3 will, therefore, undoubtedly be essential in making the road to regulatory compliance in blockchain networks easier and risk-free.
4. Blockchain Games
Blockchain-based games are more practical when it comes to web3 use case applications. The games' personalized economies, where users own in-game goods, are built on blockchain technology.
An online video game that utilizes blockchain technologies, such as cryptocurrencies and non-fungible tokens, is referred to as a blockchain game (also known as an NFT game or a crypto game).
These games enable players to purchase, sell, or trade in-game assets with other players; as a monetization method, the game owner takes a cut of each transaction. Due to the technologies they contain that let players earn crypto through gaming, a subset of these games is also called "play-to-earn" games.
Blockchain-based games give players the option to move in-game assets between different games. Blockchain games have provided an excellent early look into the future of gaming. Blockchain-based games could create entirely new virtual worlds and economies with the help of web3 concepts in a decentralized system.
The introduction of blockchain technology to the gaming sector has also identified several prospective value advantages, particularly concerning asset ownership control. In a blockchain-based game, players would have control over the gaming experiences they design.
The play-to-earn models are another significant feature of blockchain-based games in actual web3 use cases. Axie Infinity is among the best examples of applying web3 concepts to gaming in the real world.
Many people have found it to be a promising technique for using the game to gain rewards in cryptocurrencies. The play-to-earn or P2E gaming revolution has brought about significant changes that can establish a solid foundation for blockchain gaming's future.
The impressive rise of play-to-earn gaming has expanded the opportunities for blockchain-based games. The blockchain gaming sector experienced a tremendous growth rate of about 2000% in the previous year.
In 2021, $4 billion was invested in the blockchain gaming industry. The play-to-earn system has promoted the use of blockchain-based games and brought massive adoption.
One such phenomenon that has caught the attention of everyone in the tech world is the metaverse. The metaverse was made possible through virtual reality and augmented reality technology.
Many experts are referring to the metaverse as the next version of the internet. It is only a matter of time before the metaverse idea becomes a reality, given the variety of potential use cases for it.
You would undoubtedly find the metaverse among the numerous entries in the list of significant web3 use cases. A limitless virtual environment, or "metaverse," where people can wander about as digital avatars: in essence, you won't be watching it on your computer displays; instead, you'll be there virtually.
The fundamental goal of Metaverse is to fully immerse the user in the online experience, mainly through virtual and augmented reality. The term "metaverse" is difficult to define in a single line due to its constant evolution.
Depending on your interests, you can participate in any of the various metaverses. However, the term "Metaverse" refers broadly to any virtual experience or place that you usually enter as an avatar.
According to recent data on the metaverse, the market is expected to reach about $800 billion by 2024. And also by 2024, over 32.8 million sales of AR and VR devices are anticipated, which will make the adoption of the metaverse easier and accessible for everyone around the globe.
The metaverse uses so many web3 mechanisms in order to give customers a good experience. The metaverse contains the elements of decentralization and creator economies. The metaverse encourages universal access and gives users ultimate control over their experiences.
Before getting into metaverse use cases, it's vital to understand how blockchain and metaverse interact with one another. For the metaverse to create the ideal digital reality envisioned in the technology's future, it depends on certain fundamental pillars. Among them are networking technologies, a creator economy, and—most importantly—a decentralized infrastructure.
Since businesses employing blockchain would search for blockchain-powered metaverse, this is where you would find the importance of metaverse blockchain use cases. The promise of an open, shared, and decentralized virtual environment plays a significant role in accepting the metaverse as one of the top web3 use cases.
The metaverse is still very close to reality. However, there are some glimpses of the technology on various platforms. Numerous well-known companies in the tech and business sector, like Facebook, Microsoft, Epic Games, and others, have recognized the potential of web3 concepts in various metaverse applications.
6. Creator Economy
Over the past 15 years, the emergence of content creators has been widely reported, but the economy that has accompanied it is seeing unprecedented growth. Approximately $100 billion is thought to be the value of the creator economy, and more than 50 million people throughout the world identify as creators.
Although the creator economy is not strictly a use case for web3, it is one of the key features of the web3 environment. The rising creator communities, including musicians, artists, and developers, are connecting with fans and supporters directly, according to the creator economy.
The web3 principles can be relied upon by creators to engage in frictionless collaboration without middlemen. Making engaging video content is one of the most well-known ways to make money, and YouTube's Partner Program was a pioneer in this field. It came around 2007, which gives creators the ability to advertise on their videos, but only if they meet the requirements to join. The creators keep the remaining 45% of advertising money after YouTube takes 55%.
However, the advent of the internet did not entirely usher in the Creator Economy. Before the internet's full potential was realized, it took some time.
In fact, one may argue that it corresponds with Web 2.0, a time when the internet's fundamental paradigm altered. People stopped using it just for information gathering and archiving and started finding other applications, like social networking and video sharing. The Creator Economy developed as a result of the myriad opportunities that Web 2.0 provided for individuals to express themselves online.
One of the best web3 use cases is the creator economy, which gives people who spend a lot of time online in different digital environments the chance to make money. NFTs give creators a variety of fresh alternatives for monetization while bypassing traditional gatekeepers.
Consequently, the creator economy use case of web3 can provide a beneficial way for creators to market their work directly. As platforms give way to artists and their communities in Web3, the concept of a creative is evolving.
The creator economy today is about new kinds of direct partnerships between creators and communities, not only about giving platforms value. There is a chance for creators to finally be able to share in the communal value that platforms assist in building, in addition to the option to offer more to their followers (including potential financial gain).
7. Privacy and Security
We've made significant progress in decentralizing data from Web1 to Web2, enabling users to generate and share content online. Since users do not own or control their data, that is where Web3 is changing. Furthermore, because Web2 is primarily controlled by giant tech companies, people are unaware of what true privacy and ownership feel like.
Web3 modifies the rules. It allows users to have access to a free, open, and unrestricted Internet without the need to rely on private enterprises or give up their right to privacy and data ownership. From Web1 to Web3, privacy and storage have seen a significant change. Web3 could strengthen society by reclaiming user control.
Spectrum is one of many decentralized messaging programs that are developing into Web3 versions of WhatsApp or WeChat. Web 3.0 permits connections without a phone number or email ID in an effort to prioritize privacy and security. Due to its centralization, the most recent version of the Web, Web 2.0, could identify a specific person. The server's owner kept the information.
Users can reclaim their privacy and ability to save data as dApps take the role of centralized websites. User-to-platform communications on Web3 are private and anonymous, both in theory and in practice. All of these enable people to recognize their own sovereignty and to feel secure about the protection of their personal data.
Although Web3 is not yet fully realized, we are making steady progress toward a digital society in which privacy and ownership are not just rights but necessities. The current difficulty is ensuring the durability of the essential infrastructure. dApps must be fully functioning, able to onboard large numbers of users, and offer their services at large.
In conclusion, we can claim that Web 3.0 has fundamentally altered how everyone uses the web, works, and lives. We have come a long way in this journey, from accessing the information on the Web to now owning the information without any privacy or security restrictions.
Although Web 3.0 is a cutting-edge idea, it is still in its early stages and needs time to mature. To update their internal infrastructure and switch to the web 3.0 architecture, many sectors have begun adopting web 3.0 use cases.
There will undoubtedly be many discussions in the near future about the viability, equity, morality, and consequences of Web3 because it is hailed as the beginning of the next generation and contains many other technology buzzwords. One important conversation revolves around the energy usage of cryptocurrencies. These discussions will be closely watched as the situation develops.
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Anas Hassan is a Blockchain and Web 3.0 writer based in Kwara, Nigeria. He helps web3 startups & projects create unique and easy-to-understand content. He is also a contributing writer at the International Youths Organization for Peace and Sustainability. Inputs and Edits by Aswin Raghav R.