Web3 definition
Web3 is a vision of the internet built on blockchains, in which users hold their own digital assets and identities in wallets, and applications run on open, decentralized protocols rather than platforms controlled by single companies. It encompasses cryptocurrencies, smart contracts, DeFi, NFTs and DAOs, and the term is also used loosely for the wider crypto ecosystem.
Web1 vs Web2 vs Web3
The terms describe broad phases of the internet rather than precise technical standards. The labels became popular in the crypto community, and Ethereum co-founder Gavin Wood is often credited with coining Web3 in this sense. The distinctions are simplifications, but they help explain what Web3 proponents want to change about how online platforms and ownership work. In practice, the three coexist, and most popular services remain Web2.
- Web1: mostly static, read-only websites published by relatively few creators.
- Web2: interactive, user-generated platforms such as social networks and marketplaces, with data and accounts owned by the platforms.
- Web3: applications where users own assets and identity through wallets and interact with shared, open protocols.
Core technologies of Web3
Web3 builds on public blockchains such as Ethereum and Solana, smart contracts that run application logic, tokens that represent money, ownership or governance rights, and wallets that hold keys and sign transactions. Supporting technologies include decentralized storage like IPFS, oracles that bring off-chain data on-chain, layer 2 networks that make transactions cheaper, and decentralized identity standards that let users prove facts about themselves without relying on a central provider.
Account abstraction is now standard wallet infrastructure. ERC-4337, together with EIP-7702 from Ethereum's 2025 Pectra upgrade, which lets ordinary accounts delegate to smart contract code, lets wallets act as smart contracts with features like social recovery, spending limits, batched transactions and gas paid by the application, bringing Web3 sign-in closer to the experience people expect from ordinary apps.
Examples of Web3 applications
Common examples include decentralized exchanges and lending protocols, stablecoin payments across borders, NFT-based tickets and memberships, DAOs managing shared treasuries, blockchain games where players own items, and decentralized social protocols where users can move their followers between apps. Some mainstream companies use Web3 components quietly, such as stablecoin settlement for payments or tokenized loyalty points, without branding the product as Web3 at all. Payments are currently among the most practical uses.
Criticisms and limitations
Critics point out that many Web3 applications still depend on centralized services, such as a few RPC providers, hosted frontends and large exchanges, so decentralization is often partial. User experience remains difficult, with seed phrases, gas fees and irreversible mistakes. Speculation, scams and high-profile collapses have damaged trust, and regulatory uncertainty persists. Supporters counter that infrastructure, wallets and regulation are maturing, and that open ownership models have lasting value in areas such as payments and digital assets.
What Web3 means for businesses
For most businesses, Web3 is best approached as a set of tools rather than an ideology. Stablecoin payments, tokenized assets, verifiable credentials and digital collectibles can solve specific problems when there is a clear benefit from shared, verifiable records or user-held assets. Nexzem helps companies identify where Web3 components genuinely fit and builds them with familiar user experiences, often hiding wallets and blockchain details behind standard login and payment flows.
A practical starting point is a small pilot with measurable goals, such as cutting cross-border settlement time or reducing ticket fraud, run alongside existing systems. Pilots reveal regulatory, accounting and user experience questions early, before larger investments are made. Start where the benefit is easiest to measure.