What does Web3 mean and what will it do for cryptocurrency in 2022

What, why and where is Web3 heading this year

Friday 27th May, 2022

Web3 Everywhere on Social Media

Social media is flooded with posts on financial planning, investment, crypto, and now Web3.

As the global economy fluctuated during the COVID pandemic, people around the world have become conscious about their financial planning. This prompted them to explore different financial assets for investment that ultimately kickstarted a year-long bull run in crypto space beginning from 2020. The bull run continued during 2021 with Bitcoin going past $69,000.

The same year also witnessed Bitcoin getting adopted as legal tender by the sovereign government of El Salvador. And more countries too followed suit: Dubai, Ukraine, and Russia have also legally recognized digital assets.

What is Web3?

Web3 is not limited to just crypto.

It is a whole new phase of the internet. The earlier semantic web was seen as the upcoming Web3. However, the rapid progress made in Decentralized Finance (DeFi) and governance systems through the emergence of blockchain technology changed the course of Web3 development.

Web3 means decentralized governance, moving away from the centralized institutions where only a few had the decision-making power.

Web1 was the era of static websites. Web2 brought the ability to create content on social media such as Facebook, Instagram, Tik Tok, etc. But, Web3 enables the users to own a piece of the content or the service they use. In this system, the users collectively make decisions to decide the future of a project.

Today the world is alert about the data privacy, misuse, and implications of digital services on mental health. People want the developers to be accountable for their actions and Web3 has emerged as a solution to that.

Bear Grapples the Market

The Crypto market is currently tumbling, especially due to the collapse of LUNA and UST.

Since 2022 began, the market has been plunging. But the LUNA - UST fiasco has finished billions of dollars of investor money plunging Bitcoin to $25,000 at a point, a level that was last seen in December 2020 (Check out the Bitcoin the history calculator for past price points).

The collapse of Terra, a major blockchain, and its algorithmic stablecoin has prompted the community to ponder over the robustness of algorithmic stablecoins. In 2021, IRON, another algorithmic stablecoin, had collapsed in a bank run similar to that of UST.

Therefore, investors might remain sceptical for a while about such stablecoins.

Cryptocurrency Regulations

Governments are realizing the potential of Web3 so positive regulatory steps are expected from some more tax haven economies. But, regulation of crypto in a major economy will have greater implications for the industry.

These days the news that Russia may legalize crypto payments is making rounds. It is a G20 economy with global influence. If the news becomes reality, this may prompt other G20 countries to look favourably on crypto, but things will be uncertain with the current war in Ukraine.

More Startups in Web3 Space

The world is now wary of big tech and its control over the lives of the common masses. Considering this, more entrepreneurs may step into the Web3 space and try to find Web3 solutions to Web2 products.

This also means that Web2 companies may begin feeling the competitive heat from Web3 organizations. These entrepreneurs would want to further increase the pace of crypto adoption. So, more posts on Web3 and crypto may appear on social media.

Crypto Organizations Will Have to Prove Their Mettle

The year 2022 will test the mettle of crypto institutions as the global economy stabilizes, interest rates increase, and stock markets correct. Crypto is an essential facet of Web3. Bitcoin is the most dominant cryptocurrency, and it is now more correlated with S&P 500 than ever.

Tags:

Ethereum Bitcoin