How to Adopt Web3 into Your Web2 Business in 2023 (Simplified Guide)
As Web3 continues to gain momentum, 88% of companies globally are researching and experimenting with new web technologies for a part or the whole of their business operations. Companies understand Web3 is a new landscape with new technologies and lots of untapped potentials.
One of the most common ways companies can successfully transition into Web3 comes in the form of selecting a trusted and experienced partner within the Web3 ecosystem to support their transition and navigate any pitfalls on the road to success.
Like every new technology, Web3 has its fair share of complexities and uncertainties, making mainstream adoption relatively challenging in this early stage. However, leading Web3 development companies like Blade Labs have launched cutting-edge solutions to help businesses unlock the power of Web3 when resolving real-world business hurdles with a focus on results and confidence in the expert support they receive.
With renowned Web2 brands like LG Electronics and Karate Combat leading the way, the entire myth surrounding Web3 enterprise adoption is being demystified. In this article, you will learn the step-by-step approach to successfully transitioning into the Web3 space and leveraging its numerous benefits. First, let’s discuss what Web2 and Web3 mean.
What Is Web1?
Web 1.0, or the first version of the World Wide Web, can be understood as the early days of the internet when websites were like digital brochures. Just like a business might have a physical brochure with information about its products or services, Web 1.0 was all about static web pages that provided basic information to users.
In this era, websites were mostly text-based, and users could only read the content without much interaction. It was similar to flipping through pages in a brochure to learn about a brand. Users could click on links to navigate between pages, but they couldn’t actively participate or contribute to the website’s content.
Web 1.0 was a one-way communication medium where brands could present information, and users could passively consume it. It lacked the dynamic features and interactive elements we find on modern websites.
What Is Web2?
Web 2.0 is a generation of the internet that relies on user-generated content, allowing users to read and create content. Typically, users signup on platforms where they can create, view, list, and read various content types. Although user-generated, the platforms exercise high control over the content, determining who engages with them based on a set of algorithms.
One sector that experienced a major shift with the evolution of Web 2 is social media. It made room for the creation of social networking apps that allow interconnection across the globe, like Facebook, Instagram, Twitter, TikTok, and LinkedIn. Web2 gives users equal access to information, airing their views, and building a network.
While Web2 offers many advantages, it has limitations, including privacy issues, identity theft, cyberbullying, and internet fraud. There is also a high risk of misinformation, and users often get exposed to unsolicited marketing campaigns using the data they provide to these platforms.
What Is Web3?
Web3 is an evolution of the internet that eliminates Web2’s limitations, including security and centralization. It leverages distributed ledger networks like Hashgraph and blockchain technology and other developments in the Semantic Web—a concept where web content and data are structured in a way that computers can understand their meaning and context.
Web3 also emphasizes the concept of digital sovereignty, where users have ownership and control over their digital identities, assets, and personal data. As opposed to Web2, where you can only create and view content, Web3 empowers you to own any content you create.
It employs various decentralization techniques to ensure that user-generated content is not restricted to the platforms where they are created. Using private keys you can move your content from one Web3 platform to another using private keys. However, Web3 is a transparent iteration of the internet where there’s little or no privacy regarding transactions executed.
While it’s difficult for someone to access or manage your accounts and their data, anyone with the right wallet address can view everything and the history of your transactions on the public ledger.
Key Components of Web3 Infrastructure
As discussed earlier, Web3 creates a more open, secure, and user-centric internet by leveraging decentralized technologies such as hashgraph, peer-to-peer networks, and distributed storage. Here are some of the key components that make up the Web3 infrastructure:
1. Distributed Ledger Technology (DLT)
In the simplest terms, distributed ledger technology is a digital system that allows multiple parties or organizations to keep and verify records in a decentralized and secure way.
Imagine a giant shared spreadsheet, like the ones used in traditional businesses, but with some special features. Instead of having just one central copy of the spreadsheet controlled by a single authority, DLT spreads the spreadsheet across multiple computers or nodes connected to a network.
Each time a new transaction or piece of information is added to the spreadsheet, it gets recorded on all the computers in the network. These computers work together to verify and validate the information, making it extremely difficult for anyone to tamper with or manipulate the records.
This decentralized nature of DLT brings several benefits. First, it increases transparency as all participants can access the same information. Second, it enhances security since altering or hacking multiple copies of the spreadsheet at the same time is highly impractical. Lastly, it removes the need for intermediaries or middlemen, reducing costs and improving efficiency.
Two common types of DLT are blockchain and hashgraph.
Blockchain is a specific type of DLT that uses a chain of blocks to record and store information securely. Once again, think of it as a digital ledger, similar to a traditional accounting book with lots of amazing capabilities.
In a blockchain, each block contains a set of transactions or data. What makes it special is that these blocks are linked together in a chain-like structure, forming a chronological order of information. Each block holds a unique code called a “hash” that connects it to the previous block, creating an unbreakable bond.
One of the major strong points of a blockchain is that once a block is added to the chain, it becomes extremely difficult to alter or remove it. This is because any changes made to one block would affect the entire chain, raising alarms and making tampering evident. This property of immutability ensures the integrity and trustworthiness of the recorded data.
Hashgraph is an innovative distributed ledger technology that offers an efficient and secure way of recording and validating information. To understand hashgraph, let’s imagine a digital meeting where everyone shares their thoughts and reaches a consensus.
In a hashgraph, participants, known as nodes, communicate by exchanging information about transactions and events. They don’t rely on a central authority but instead collaborate to reach an agreement on the order and validity of the information.
Unlike blockchain’s sequential chain of blocks, the hashgraph uses a unique algorithm that forms a directed graph. Each node in the graph represents a transaction or event, and the edges between the nodes show the order in which they occurred.
Instead of relying solely on the order of arrival of transactions like blockchain, hashgraph considers the entire history of communication between nodes. This means that each node has access to the complete record of interactions, allowing for a more accurate consensus. A good example of this DLT is Hedera Hashgraph.
2. Cryptocurrencies and Crypto Tokens
Cryptocurrencies and crypto tokens are digital currencies that operate on DLTs or decentralized networks. Think of them as digital money that exists purely in the online realm. While cryptocurrencies and crypto tokens are often used interchangeably, they are quite different.
- Cryptocurrencies, such as Bitcoin ($BTC), Ether ($ETH), and Hedera ($HBAR), are designed to be used as the native medium of exchange for a specific DLT, just like traditional currencies such as the US Dollar or Euro.
They allow for secure and direct peer-to-peer transactions without the need for intermediaries like banks. Cryptocurrencies are typically created through “mining,” where powerful computers solve complex mathematical problems to validate and record transactions on the blockchain.
- Crypto tokens, on the other hand, represent assets or utilities built on a particular DLT ecosystem. So a network can have as many crypto tokens as possible representing different projects on a particular network. They are often created and distributed through Initial Coin Offerings (ICOs) or token sales.
These tokens can have various purposes, such as granting access to a platform, representing ownership of a digital or physical asset, or serving as a form of reward within a decentralized application (dApp).
To convert fiat to digital currencies, you can buy cryptos via peer-to-peer transactions where you give USD or any other traditional currency you have to someone in exchange for the crypto you want.
Alternatively, you can use on-ramp payment services providers, like OnMeta and MoonPay, to facilitate the conversion, Blade Labs recently launched the first On/Off Ramp Aggregator on Hedera within Blade Wallet.
This means when users want to perform transactions, they are shown a list of on/off ramp platform options allowing them full autonomy over which provider they use for which transactions.
3. Decentralized Protocol
Decentralized protocols are innovative systems that operate without a central authority or control. In traditional Web2 models, central servers or entities usually oversee and govern the flow of information and transactions. However, decentralized protocols offer a different approach.
Decentralized protocols distribute equal control and responsibilities among the network’s nodes. These nodes work together to maintain and enforce the rules of the protocol, ensuring the system operates securely and transparently.
Since there is no reliance on a single central authority, decentralized protocols offer enhanced security, as there is no single point of failure that malicious actors can target. A good example of a decentralized protocol is the interplanetary file system (IFPS).
IPFS is a decentralized and distributed file system designed to replace the traditional client-server model of the web. It introduces content addressing, where files are identified and retrieved based on their cryptographic hash rather than location.
Each file is assigned a unique cryptographic hash based on its content, creating a permanent and immutable identifier. This approach ensures that files can be accessed and verified regardless of physical location, making content more durable and resilient.
IPFS leverages peer-to-peer (P2P) networking to facilitate file sharing. When a user requests a file, IPFS dynamically retrieves it from multiple nodes in the network, utilizing their available resources. This distributed nature reduces bandwidth costs, improves download speeds, and allows efficient data transfer across the network.
4. Decentralized Applications
Decentralized applications, or dApps, are a new breed of applications that operate on decentralized networks, bringing a fresh approach to how software and services are built and accessed. These applications are like the regular applications on smartphones, laptops, and web browsers, but this time, they are powered by a DLT.
5. Web3 Wallet
A Web3 wallet is a digital wallet that enables users to securely store, manage, and interact with cryptocurrencies, tokens, and dApps in the Web3 ecosystem. Unlike traditional wallets that primarily store physical cash or digital payment methods, a Web3 wallet is specifically designed for the decentralized web, also known as Web3.
It gives users full control over their digital assets and interacts directly with blockchain networks. A good example is Blade Wallet, the only CertiK security-audited, multilingual, dual-network wallet built on the Hedera ecosystem with an enterprise-grade security architecture.
6. DID (Decentralized Identity)
Decentralized Identity systems are an essential component of Web3 infrastructure. DID systems provide users with unique identifiers that are cryptographically verifiable and portable across different applications and services.
They enable users to authenticate and authorize themselves without relying on traditional username/password-based systems. Decentralized Identity ensures privacy, data ownership, and secure identity management in Web3 environments.
7. Governance Mechanisms
Web3 infrastructure often incorporates decentralized governance mechanisms to ensure decision-making and protocol updates are community-driven. Governance mechanisms involve voting systems, consensus algorithms, or token-based governance models.
Participants holding tokens or staking assets can influence the evolution and governance of the network. Decentralized governance ensures transparency, inclusivity, and alignment of interests among stakeholders in Web3 ecosystems.
Things to consider when Adopting Web3 Technology in Your Business in 2023.
Adopting Web3 technology within your business by 2023 can be an exciting and transformative journey. However, to embark on this journey, you should consider certain steps.
Step 1: Gain Knowledge and Educate Your Team
Start by familiarizing yourself with the key concepts and principles of Web3. Understand the fundamentals of blockchain technology, hashgraph, decentralized applications, smart contracts, and decentralized finance (DeFi). Educate your team members about the potential benefits and challenges of Web3 to ensure everyone is on the same page.
Step 2: State Your Objectives
Determine why you want to transition to Web3 and what specific goals you hope to achieve. Whether it’s increased scalability, transparency, improved security, enhanced user control, or new business opportunities, clearly define your objectives. This will guide your decision-making throughout the transition.
Step 3: Inspect Your Existing Infrastructure
Evaluate your organization’s technology infrastructure and identify any gaps or limitations needed for Web3 adoption. Consider factors such as scalability, data privacy, and interoperability. Determine if you need to upgrade or build new systems to support Web3 applications.
Step 4: Choose a Distributed Ledger Technology
Select a suitable DLT or decentralized platform that aligns with your organization’s needs. Consider scalability, security, developer ecosystem, and community support. Popular options include the Ethereum blockchain and Hedera Hashgraph—an enterprise-based distributed ledger that solves blockchain’s scalability problems.
Ethereum has a large community of developers, dApps, and users, but it has severe scalability issues that affect user experience, leading to high transaction costs. On the other hand, Hedera isn’t as popular as Ethereum but is highly scalable and has one of the fastest transaction speeds in the Web3 space.
If innovative technology, low and predictable fees, and excellent user experience are what you prioritize, then Hedera may be the best fit for your company. However, several other DLTs like Solana, AvalancheBinance Smart Chain, and Polygon exist. Research each platform’s capabilities and determine which one best suits your requirements.
Step 5: Design Your Web3 Architecture
Define how your organization will interact with the chosen platform and how you will integrate Web3 technologies into your existing systems. Consider factors such as data storage, transaction processing, and user authentication.
Work with an outstanding technical team to design the architecture for your Web3 infrastructure. For instance, Blade Labs designs, builds, and delivers core Web3 infrastructure. Using its suite of white-label solutions, for example, Blade can help you achieve frictionless transition and positively impact how your customers and users will interact with your new Web3 environment.
Step 6: Develop or Partner for DApp Development
Determine whether you want to develop dApps or partner with existing development teams. If you choose to build in-house, assemble a skilled team of blockchain developers or provide training to existing developers. Alternative collaborates with seasoned external development partners who specialize in Web3 application development.
Step 7: Test and Iterate
Start with small-scale pilots or prototypes to test your Web3 infrastructure and dApps. Gather feedback from users and stakeholders and iterate your designs based on their inputs. Use this iterative approach to refine your Web3 solutions before scaling them across the organization.
Step 8: Ensure Compliance and Security
Pay attention to regulatory compliance and security considerations in the Web3 space. Understand the legal and regulatory frameworks that apply to your organization’s activities, especially when dealing with cryptocurrencies, tokenization, and user data. Implement robust security measures to protect your organization and users from potential threats.
Step 9: Onboard Users and Stakeholders
Plan an effective strategy to onboard users and stakeholders onto your Web3 platform. Provide clear instructions, tutorials, and support to help them navigate the new decentralized ecosystem.
Step 10: Build a Community
Create a community of active users and continuously monitor the performance of your Web3 infrastructure while gathering feedback from users. Learn from the data and insights generated by the decentralized systems and make iterative improvements.