Web3 might be crypto’s key to the mainstream market

2021 has been a significant year for crypto, with no-fungible tokens (NFTs) being awarded the Word of the Year, decentralized finance (DFI) trending in the mainstream media and crypto companies with a slew of announcements. Getting headlines. There is no doubt that due to the effects of COVID-19 on the economy, many people are looking for new ways to diversify their finances and work from home for people to research new interests. Giving free time. And, many people chose to get into crypto.

As talks begin to move from bitcoin (BTC) to other large crypto projects such as an Ethereum network upgrade and central bank digital currencies, or CBDCs, news coverage suggests that mainstream adoption of crypto is already well underway. However, there is one project that has the potential to well and truly incorporate crypto into everyone’s daily life: Web3.

What is web3?

With an emphasis on community, Web3 represents the future of the Internet where users operate in a decentralized manner rather than relying on large private businesses or centralized government bodies.

To many, this seems like the next logical step for the Internet, where the concept is partly built on the shortcomings of Web 1.0 and 2.0 such as the concentration of power within centralized entities and issues related to privacy.

Connected: What is Web3 anyway?

We have already seen examples of this in the crypto and DeFi space, such as the MakerDAO project, which seeks to build a fair global financial system driven by the community. As DeFi grew in popularity in 2021, more projects and protocols made their way into the market, all trying to take the benefits of DeFi to as many people as possible. Similarly, protocols such as Nereus are designed to address the issues of fair governance and user experience, both of which mirror the current issues of Web 2.0.

While it may seem that Web3 and DeFi protocols are separate projects (which they are), these protocols are laying the groundwork for Web3 and its adoption. We’re still some way from seeing Web3 become a reality, but the DeFi protocols coming to market not only provide a taste of the next iteration of the Web, but also provide opportunities for feedback and tweaking to help ensure that it’s the best. Web3 truly serves everyone to the best of its capabilities. So, will this mean that crypto will truly be mainstream?

Sure, yes. As of January 2021, there were approximately 4.66 billion active Internet users worldwide, and if Web3 becomes the default, each of those users will end up using blockchain and crypto technology on a daily basis, even if they are not aware of it. The main issue, however, is what Web3 will look like. And, as a community project, that means there isn’t always one direction for the next phase of our Internet. As such, some have argued that widespread adoption would be difficult due to the lack of technical gatekeeping and clear direction.

Connected: Decentralized technology will end the Web3 privacy puzzle

Is mainstream adoption possible without Web3?

While the use of crypto has been on the rise since the pandemic, the growth of new wallet holders is starting to slow down. This would suggest that there are any impediments to the next phase of mainstream adoption. While it is possible that waiting for the implementation of Web3 could be the reason, government regulation could be another factor in helping to bring crypto into the mainstream.

Previously, crypto was not viewed as easily accessible to the mass market due to its complexity and volatility perception. As more accessible crypto products hit the market, such as stablecoins, crypto-enabled debit cards or DeFi products, opinions have begun to change.

Despite the multitude of benefits that crypto and DeFi can provide, some remain skeptical of the lack of government oversight, which is a very understandable stance. Will crypto go mainstream if governments start setting guidelines?

Based on the evidence we’ve seen, the answer is certainly a resounding yes. Arguably, cryptocurrencies are already “mainstream” in countries with widespread regulation such as Singapore or countries where governments favor cryptocurrencies, such as El Salvador and, more recently, Tonga. It remains on edge only in countries that are still outlining and deciding on their stance on crypto.

Connected: Why Singapore is one of the most crypto-friendly countries

next steps

While it is possible that government regulation and the introduction of Web3 could bring crypto into the mainstream, both have the power to potentially shape the future of crypto and DeFi and decide where the movement is going to go next.

The emphasis is on decentralization with Web3, moving data away from central powers and using AI power to make the Internet fully accessible to everyone without relying on big businesses. The current structure of our Internet has received criticism due to surveillance and exploitative advertising. For those who admire privacy and anonymity as the main advantages of crypto, the integration of Web3 will make these values ​​more synonymous with day-to-day life. Many have claimed that this was the original goal when bitcoin was first created – to allow users to conduct operations free of central control.

Conversely, if more governments decide to establish frameworks and regulations for crypto, it is likely that there will be a greater emphasis on centralization. Several countries have recently made announcements regarding CBDCs, which would establish a cryptocurrency that would be controlled by the central government.

For example, the United Kingdom has taken its plans a step further with the creation of the new Crypto and Digital Assets Group to ensure that the UK cultivates innovation in the crypto sector while establishing regulation. While this will allow even more people to easily access the benefits of crypto such as faster transaction speeds and lower costs (while reducing volatility), it will move crypto’s emphasis away from sovereignty and decentralization.

The crypto space is currently at a crossroads and the race between Web3 and central regulation will shape the future of the industry.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should do their own research when making a decision.

The views, opinions and opinions expressed here are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.