When reading about cryptocurrency, you may have heard the term “Web3”, especially in the context of digital assets.  Before I can explain what Web3 is, we should briefly confirm our understanding of Web1 and Web2.

In layman’s terms, Web1 was a read only version of the World Wide Web.  Web pages in the late 1990’s were Web1. If you wanted your own website, you would create a web page of text and graphics with clickable links to further information etc.  It was a little cumbersome and slow and you needed to learn html programming and upload information (i.e. your web-pages) to a web server so that others could see them.  Businesses used Web1 to showcase their products and Web1 websites were like electronic on-line brochures.

Figure: This is a picture of John Legere from AT&T Asia-Pacific taken from an interview where he talked about the company’s new internet service (Oct. 10, 1995). OMG, I used to have a tie like that!  Image Credit: PAUL WAN/SOUTH CHINA MORNING POST VIA GETTY IMAGES

Web2 is very similar – but it’s more dynamic and interactive.  It requires higher bandwidth and more powerful computers to use. Web2 lets us write information to the internet without having to know HTML programming.  We can blog, buy on-line, leave messages with pictures and videos that we can upload for all to see using services such as YouTube, Facebook, Twitter etc.

We can manage our finances at online banking websites and shop online at places like Amazon etc. Web 2 uses centralised data-centres which are considerably more powerful than the servers used to host the older, more static websites. HTML is an almost  archaic language by today’s standards – websites are written dynamically and generated new every time the page is visited. While we benefit from more functionality and ease of use, we now suffer less control over the information that we upload and communicate.  Who owns the pictures you upload to Picassa or the videos of your family holiday you upload to Facebook? Some of us have concerns about the security, intellectual property ownership and privacy of the information we currently communicate with Web2 websites.

Web3 allows us to do all the things we can do with Web2 but importantly, significantly, it uses decentralised technologies to encode embedded, financial and legal privacy protection into our transactions.  We now have the ability to read, write and own our data.  

We have the opportunity to move our information and digital currency around freely without interference from corporate, financial or government institutions – or thieves.  Web3 lets us to prove that we own our data without a costly professional legal team and it allows us to store and send our money to anyone in any part of the world without the need of a bank – we are our own bankers!

Web1 -> Web2 -> Web3  =  Read-Only -> Read-Write -> Read-Write-Own

Cryptocurrency Web3 Examples

Lets stop for a moment and consider how this is useful.  How will this technology put more people in control of their future? Here are just three examples of financial freedom enjoyed because of cryptocurrency:

Example One. Miguel Zonte in the USA is able to send money to his family in El Salvador using bitcoin.  Because it is almost instantaneous and because bitcoin is legal tender in El Salvador, his family (who unfortunately aren’t eligible to have bank accounts) are able to receive the money via mobile phone and use it without paying high US money transfer costs (these can sometimes as much as 30%).  His family are able to receive those funds without waiting (sometimes days) for the bank to confirm the movement of money from one account to another. Miguel’s family are considerably better off because of crypto.

Billions of people are set to benefit: There are almost three billion people in the world without a bank account. Many are shut out of the economy and forced to work in poorer paying jobs (despite their level of education and status) and unable to get credit (i.e. mortgages, credit cards etc.) or use a debit card.  Crypto is providing a solution – all they now need is a phone to be able to receive and transfer crypto quickly and legally. 

Example Two: Freedom for Larmina in Afghanistan.  Larmina had suffered for years at the hands of an abusive and controlling husband. However, because she had a blog and because she received donations in bitcoin, she was eventually able to save enough to divorce her husband and escape abuse and hardship.

Having access to, and being able to generate, your own funds is something that many of us take for granted. Cryptocurrency is the only solution for a great many people and something which is being increasingly facilitated and encouraged. Bitcoin may be outlawed in some countries (like China) but even that cannot be effectively enforced because cryptocurrency is difficult to manipulate.

Example Three: Protection from financial abuse by their government; Freedom Convoy 2022: In 2022, Truckers protesting against Covid-19 restrictions in Ottawa demonstrated peacefully at numerous locations across Canada. Unfortunately within days, some demonstrators found that their bank accounts had been frozen and Canada’s Prime Minister Justin Trudeau, invoked the Emergencies Act to include cryptocurrency transactions. The Ontario Superior Court of Justice sent Nunchuk, a self-custodial Bitcoin wallet, a “Mareva Injunction” ordering the company to freeze and disclose information about the assets involved in the Freedom Convoy 2022 campaign.

In an official response to the Ontario Superior Court of Justice, Nunchuk replied, “… it is a self-custodial, collaborative multisig Bitcoin wallet” and that they are a “software provider, not a custodial financial intermediary.” They went on to add:  “We do not collect any user identification information beyond email addresses. We also do not hold any keys. Therefore, we cannot ‘freeze’ our users’ assets. We cannot ‘prevent’ them from being moved. We do not have knowledge of ‘the existence, nature, value, and location’ of our users’ assets. This is by design.”

If you have the crypto in your wallet, nobody can take it away from you – not even your government – If you are the owner and have sole access to your private wallet key, it means that it’s your crypto, if not, then it’s not your crypto! Most people recommend that you transfer your cryptocurrency into a hardware wallet (offline storage).  This will give you the most protection and security against theft and abuse.  See the section on Crypto Security, Protecting Digital Assets.

In section four we will take a look at the difference between the types of digital asset: Coins, Tokens & Layers.

This article is copyright 2022 by Tony Fawl, CryptoNET.

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