What is Web3?

What is Web3?

Web3 is a term for internet applications built around blockchain records and wallets that users control. A person can connect a wallet, prove control of an address and authorise transactions with programs on a shared network. In this application model, the user's control of an address can replace an account managed by one platform operator for some interactions.

For example, a person might connect a wallet to a token-trading application. The website shows balances and prepares a proposed exchange; the wallet asks the person to approve it; programs on the blockchain carry out the transaction. The website, wallet and network perform different jobs.

Web3 is a broad description, rather than a single network, crypto-asset or standard investment category. The related expression Web 3.0 is also used for other ideas about the web, so the technology and service being discussed matter more than the label.

What changes from Web1 and Web2?

The Web1, Web2 and Web3 labels describe broad patterns, not three cleanly separated versions of the internet. Web1 is associated with reading pages published by others. Web2 adds services where users create content and interact through platforms that manage their accounts and databases.

Web3 applications move some records and rules onto a blockchain, while users can control an address through their own wallet. For example, a token balance can be recorded independently of the website used to view it. The shift concerns control of records and accounts; a Web3 website can still use ordinary hosting and other central services.

That matters when a service disappears. Another interface may be able to reach the same onchain program, but only if the program still works and the required infrastructure remains available. The term Web3 does not promise that every service will remain accessible.

What is a Web3 wallet?

A wallet manages the keys used to authorise actions from a blockchain address. The crypto-assets remain recorded on the network. The wallet provides a way to see balances and sign requests involving them. Its role is about keys and addresses, rather than storing assets inside a website account.

A service can ask for a signed message to establish control of an address. It can separately ask for a transaction that moves tokens or grants permission to a contract. Those requests have different effects: connecting a wallet is not the same action as approving a transfer.

An address also does not, by itself, establish a person's legal identity. It shows a place in the network's records. The distinction between a crypto wallet and an ETP explains what control of private keys allows.

What are dapps?

A decentralised application, usually shortened to dapp, combines a user interface with programs running on a decentralised network. On Ethereum, those programs are smart contracts. The interface helps a person interact with the application's contracts.

The network's native asset has a separate function. On Ethereum, ETH pays for transaction execution, even when the application transfers another token. Solana also runs applications, using its own onchain programs and SOL for network fees. Web3 applications are not confined to Ethereum.

DeFi is one group of dapps, covering activities such as lending and exchanging crypto-assets. The smart-contract guide follows the program's execution, while the blockchain overview explains the record underneath it.

Where control can remain centralised

A shared ledger does not make every part of an application decentralised. A company may operate the website. A wallet may rely on a provider to reach network data. Administrators may be able to pause or change contracts, and a currency-linked token may depend on an issuer keeping its redemption commitment.

Applications can also need oracles to supply outside data, such as market prices. These are dependencies a user still encounters even if transfers appear on a public ledger. Website infrastructure, performance and user experience remain practical limitations of dapps.

Keys, signatures and access

With a self-managed wallet, a platform's password-reset service cannot replace a lost private key or recovery phrase. Someone who obtains the recovery phrase may be able to control the assets. Keeping that phrase confidential is part of wallet security.

Permissions also outlast a browser visit. On Ethereum, a token approval can authorise a contract to spend an allowance until it is changed or used under the token's rules. The ERC-20 allowance is recorded on the chain, so closing the website does not withdraw it. Code bugs or misused administrator keys can create further problems even when the user keeps their own keys confidential.

Virtune Staked Ethereum ETP provides ETH price exposure through a security in a brokerage account. Holding this staked Ethereum ETP does not provide a Web3 wallet, a login to an application or the ability to execute its programs. The ETP guide explains that ownership.