Category Archives: Web3

Web 3.0 – Potential and Challenges

This post is inspired by the following article on

The article discusses Web3.0, where it is right now, what are some of the possible use cases, and what challenges are foreseen. The web has seen an interesting journey in the last couple of decades from Web 1 to 2 to 3.

 While the first incarnation of the web in the 1980s consisted of open protocols on which anyone could build—and from which user data was barely captured—it soon morphed into the second iteration: a more centralized model in which user data, such as identity, transaction history, and credit scores, are captured, aggregated, and often resold. Applications are developed, delivered, and monetized in a proprietary way; all decisions related to their functionality and governance are concentrated in a few hands, and revenues are distributed to management and shareholders.

Web3, the next iteration, potentially upends that power structure with a shift back to users. Open standards and protocols could make their return. The intent is that control is no longer centralized in large platforms and aggregators, but rather is widely distributed through “permissionless” decentralized blockchains and smart contracts.

Web 3.0 is the future, no matter if you like it or not. At this point, it is difficult to predict how things will pan out, but the change will be significant.

The disruptive premise of Web3 is built on three fundamentals: the blockchain that stores all data on asset ownership and the history of conducted transactions; “smart” contracts that represent application logic and can execute specific tasks independently; and digital assets that can represent anything of value and engage with smart contracts to become “programmable.”

Web3 applications and use cases are built on top of three technology fundamentals: blockchain, smart contracts, and digital assets.

At this point, we are seeing the finance industry as one potential frontrunner in terms of use cases available for Web3.0 and Blockchain. The following image shows how lending is one area where Web3.0 can have an impact.

Web3 could represent a paradigm shift in business models for digital applications.

The opportunities presented are not without challenges. There needs to be clarity on the responsibility owned by various parties.

The chief challenge is regulatory scrutiny and outlooks. Regulators in many countries are looking to issue new guidance for Web3 that balances the risks and the innovative potential, but the picture remains unsettled. For now, there is a lack of clarity—and jurisdictional consistency—about classifying these assets, services, and governance models. For example, smart contracts are not yet legally enforceable. 

Blockchain – Basics

If we look at the word blockchain, it gets simplified to a chain of blocks. A block in the blockchain is a node that contains, data, hash, and previous hash. This previous hash information helps these nodes connect to each other, hence forming the chain.

blockchain is a type of distributed ledger technology (DLT) that consists of growing list of records, called blocks, that are securely linked together using cryptography. Each block contains a cryptographic hash of the previous block, a timestamp, and transaction data

Blockchain is a shared, immutable ledger that facilitates the process of recording transactions and tracking assets in a business network.

Three terms we are hearing here

Ledger: In simple terms, a ledger is a book of records. In this case, a record is a block. And blocks chained to each other (blockchain) form the ledger.

Distributed: This is where things get interesting, this ledger is not dependent on one machine available in multiple machines, hence distributed in nature.

Immutable: Records or Blocks are immutable. This is because updating a record means corrupting the hash (hence the whole chain is corrupted).