Hey folks,

It’s week 5 of Finshots Cracks Crypto, and while today’s story is a bit shorter than the usual ones in this series, it's sure to keep things interesting.

So far, we’ve understood Bitcoin, the history of money, DeFi, and altcoins. And hopefully, you now know a little more about crypto and blockchain than you did 4 weeks ago. Cheers to that!

The last story told you how the internet is evolving with blockchain. And today, we’re taking it a bit further – to Web3 (or the so-called future of the internet).

You’ve probably heard the term thrown around, maybe even seen Elon Musk call it a 'marketing buzzword'. But what is it really? And does it actually solve anything?

Let’s take it from the top.

The internet is a marvel today. You use it every day. Scrolling, streaming, shopping, swiping. Just think about how life was before and after it and you'll know what we mean. Collectively, we are connected more digitally than we have ever been. But have you ever wondered where it’s headed? Because the thing is, the internet has changed in ways most of us don’t even notice. So let’s first spend a minute to understand this transition.

The first version of the internet or as they call it—Web 1.0—was basically a giant digital noticeboard. You could read stuff, but that was about it. No interactions, no engagement. And that’s the reason it was also called the Static Web. Just like reading a post online, but without any comments or likes. It was static, boring, and one-way traffic.

And this limiting feature is why we got to Web 2.0 or The Social Web.

And oh boy, it did make things much more fun and collaborative. Now, you’re no longer looking at things. You could also post, share, comment, and like. Facebook, YouTube, Wikipedia, all of them thrived in this era. And Web2 also gave birth to what we call the creators economy. But Web2 also has a catch: big corporations control everything. Your data? Theirs. Your content? Theirs. Your account? They could suspend it whenever they felt like it. The internet is more social, sure, but it's also centralized.

And this is where Web3 steps in. You see, Web 3.0 or the Decentralized Web promises an internet where instead of everything being stored on the servers of giant tech companies, applications operate on decentralized networks powered by blockchain technology. So, you control your own identity and digital assets.

But at this point you might be wondering – Finshots, how does crypto fit into all of this?

Well, Web3 apps don’t use traditional logins. So, instead of signing in with Google or Facebook, you connect your crypto wallet (what we saw in the previous stories in this series). And to use most Web3 apps, you need altcoins (different cryptocurrencies that let you access services on these decentralized networks).

Let’s take an example to make it easy.

Say you discover a music streaming app where artists get paid directly by listeners, without record labels or middlemen. And this app is hosted on Web3 i.e. on the blockchain network. If you want to try it out, here’s how it would work…

• Discovering the Web3 app – You visit the website of this Web3 music platform and see that instead of logging in with Google, you need a crypto wallet to access the service.
• Setting up a wallet – You download a Web3 wallet (for example MetaMask or Trust Wallet), create an account, and secure your recovery phrase (this acts like your private key).
• Getting tokens – every Web3 app would have a token to access it. Say this music platform runs on Ethereum, you buy some ETH (Ethereum) from an a crypto exchange and transfer it to your Web3 wallet which you have just set up.
• Interacting with the platform – Now, you connect your wallet to the Web3 music app. Your identity is verified through the blockchain, meaning you own your profile without relying on a centralized database.
• Streaming and payments – Instead of paying a subscription fee to a company, you pay the artist directly through smart contracts. And the blockchain ensures transparent, instant, and fair payments without middlemen.
• Selling or trading access – If the platform offers NFT-based memberships (we’ll come to this in a bit), you can buy an NFT that grants you special access to exclusive content. Later, you can resell that NFT if you no longer need it, something that isn’t possible with traditional subscriptions.

And that, dear readers, is Web3 in action. It shifts power from corporations to users and uses blockchain to make transactions transparent and trustless. And all of this runs on altcoins. And since there may be many such applications, you need different altcoins to access different Web3 applications.

In that sense, altcoins aren’t just speculative cryptocurrencies. Many of them serve a functional purpose. For instance, here are a few altcoins with different functionalities on Web3.

Access to services – Decentralized cloud storage altcoins like Filecoin lets you store files without relying on Google Drive or Dropbox. You pay using Filecoin tokens (FIL).

Decision-making power – Platforms like Uniswap (UNI) allow users to vote on key decisions, making them stakeholders instead of passive users.

Staking and earning rewards – Many Web3 platforms let users stake their altcoins to help secure the network and earn rewards. If you own Polygon (MATIC), you can stake it to help validate transactions and earn passive income.

Faster transactions – Ethereum (ETH) powers most smart contracts but can be slow and expensive. That’s why altcoins like Solana (SOL) or Polygon (MATIC) offer cheaper and faster alternatives for running Web3 apps smoothly.

So we could say that Web3 will be teeming with applications, each fueled by its own cryptocurrency or token. And it’s a whole new internet which is vastly different from what we started with. And that’s perhaps why Altcoins aren’t just investments but the currency of Web3. They help users interact, transact, and govern platforms.

And that brings us to an even bigger question – Is Web3 overhyped?

Well, there are arguments on both sides. To some, Web3 sounds like a dream. But not everyone is convinced because here are some major concerns that come with it.

First up, we have the decentralization paradox. Many Web3 platforms are controlled by early adopters and founders who own a huge chunk of token reserves. And that gives them majority voting power, which isn’t exactly decentralized. Then there’s scalability – Blockchains are slow. Ethereum processes just 15 transactions per second (Visa does over thousands!). And Web3 can also be challenging because setting up a crypto wallet isn't exactly user-friendly. And there’s still regulatory uncertainty as governments are still figuring out crypto laws.

So Web3 might not be the silver bullet after all.

One last thing we want to discuss here is NFTs or non-fungible tokens. Because they are a big part of how Web3 develops as well as how we collectively interact with it.

Simply put, NFTs represent a digital ownership of an asset and it cannot be duplicated. Whether it’s art, music, real estate, or identity verification. Unlike Bitcoin (where every coin is identical), each NFT is unique.

Take concert tickets. Today, they’re easy to fake and resell at inflated prices. But an NFT-based ticketing system ensures authenticity because every ticket is verifiable on the blockchain. No fakes, no scalpers. Same with gaming. In traditional games, you don’t own in-game items. If the game shuts down, they vanish. But Web3-based games let players truly own and trade digital assets across different platforms. And similarly, real estate transactions could move to NFTs, where property deeds are stored on a blockchain, cutting out fraud and middlemen.

And of course, NFTs have their drawbacks. Many are speculative, some marketplaces are centralized, and many consume a lot of energy.

So yeah, whether it's art, contracts, identity, or even real estate, blockchain-based ownership is making its mark.

And Web3 and Altcoins may stick around, coexisting with Web 2.0 applications. We don’t know how fast and for how long, since adoption has been moving at a crawl. But if they gain traction, they could make a lot of things we use today better and decentralised.

Of course, this freedom comes with risks, just like the early internet had its fair share of cybercrimes before regulations caught up.

All we can do for now is acknowledge that Web3 is still in its early days. And yes, it has skeptics. But it's got potential. It’s not just about Bitcoin, Ethereum, or the hype. It’s about ownership.

For a long time, we’ve rented our digital lives from corporations. Web3 is an attempt to take that control back in a way. Will it succeed? We have no clue. But one thing’s certain and it's that this shift has already begun.

We will end this story on that note.

And in the upcoming stories, we will take you through two big themes – trading in cryptos and the downsides to cryptocurrencies. Because no innovation comes without baggage, eh?

It’s going to be an exciting last few weeks in this series ahead. So stay tuned, and let us know what you’ve enjoyed most so far!

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See you next time!

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