2021 was a landmark year for crypto. There has not been any fungible token (NFT), decentralized finance (DeFi), or word of the Year awards. Crypto companies have made headlines for various announcements. Many are looking for ways to diversify their financial resources and to work from home, which allows them to have more time to pursue new interests. Many chose to become involved in crypto.
News coverage suggested that mainstream adoption of crypto was already underway as conversations moved from Bitcoin (BTC), to larger projects such as central bank digital currencies and Ethereum network upgrades, or CBDCs. But, Web3 is a project that could catapult cryptocurrency into everyday life.
What is Web3?
Web3 is a community-oriented internet platform that focuses on the future. Users will be able to operate independently of large corporations and central government agencies, rather than depend on them.
Many people consider this the next logical step in the evolution of the internet. It partially builds on the weaknesses of Web 1.0/2.0 such as the concentration and control of power within centralized entities, and privacy issues.
Related: What is Web3?
This is what we’ve seen in the DeFi and crypto spaces, such as MakerDAO, which aims to create a global financial system that is independent of the government. DeFi became more popular in 2021 and many new protocols were introduced to the market. All of them aimed to make DeFi available to as many people possible. Protocols such as Nereus were created to address issues related to fair governance and user experience. These issues mirror those of Web 2.0.
Although it might seem that Web3 is separate from DeFi protocols (which they are), the DeFi protocols are helping to lay the foundation for Web3’s adoption. Web3 is still a ways off, but DeFi protocols are providing a glimpse of what Web3 might look like. They also offer opportunities for feedback and tweaking so that Web3 serves everyone to its full potential. This would mean that crypto could become mainstream.
Arguably, yes. There were 4.66 billion internet users worldwide as of January 2021. If Web3 was made the default, all of these users would use blockchain and crypto technology every day, even if it wasn’t their conscious. The problem lies in the design of Web3. It is a community project so there isn’t always one direction for the next phase. Some have suggested that widespread adoption would be difficult because of technical gatekeeping and lack of clear direction.
Related: Web3 Privacy Conundrum will be solved by decentralized technology
Is mainstream adoption possible without Web3?
Although crypto usage has increased since the pandemic it has begun to slow down. This could indicate that something is preventing mainstream adoption. It’s possible that Web3 is still being implemented, but government regulation could also be a factor in driving crypto into mainstream adoption.
Because of its complexity and volatility perception, crypto was not seen as being accessible to mass markets. As more crypto products become available, such as DeFi products and stablecoins or crypto-enabled debit card, opinions have begun to shift.
Despite all the benefits that DeFi and crypto can bring, there are still people who remain skeptical. This is understandable. If governments set guidelines, would crypto be able to move into mainstream?
The evidence is overwhelming that the answer to this question is a clear yes. Crypto is “mainstream” in countries that have comprehensive regulations, like Singapore, or in countries that favor cryptocurrencies such as El Salvador, Tonga, and most recently Tonga. It is only marginalized in countries that are still defining frameworks and deciding their crypto stances.
Related: Why Singapore is the crypto-friendly country
It’s possible that Web3 and government regulation could make crypto mainstream. However, both can have the potential to influence the future of crypto and DeFi as well as decide the direction of the movement.
Web3 focuses on decentralization. Web3 uses AI power to make the internet accessible to everyone, without relying on large businesses. Due to the use of exploitative advertising and surveillance, the current internet structure has been criticized. Web3 integration would bring these values closer to everyday life for those who believe privacy and anonymity are the main benefits of cryptocurrency. Many claim that this is the original goal of Bitcoin’s creation: to let users operate without central control.
However, centralization would likely be more prominent if more governments establish regulations and frameworks for crypto. A number of countries recently announced plans for CBDCs to establish a cryptocurrency under central government control.
The United Kingdom seems to have gone one step further in its plans with the creation the Crypto and Digital Assets Group. This group will ensure that the U.K. fosters innovation within the cryptocurrency sector and establishes regulation. This would enable even more people to enjoy the benefits of cryptocurrency, such as lower transaction costs and faster transactions (while also mitigating volatility), but it would shift the focus of crypto away form sovereignty and decentralization.
The crypto industry is at crossroads right now. Web3 and central regulation are the two main drivers of its future.
This article is not intended to provide investment advice. Every trade and investment involves risk. Readers should do their research before making any decision.
These views, thoughts, and opinions are solely the author’s and do not necessarily reflect the views or opinions of Cointelegraph.
Pavel Matveev, the CEO and cofounder of Wirex has 15 years experience in software development, IT management, and his past work at Morgan Stanley, Morgan Stanley and BNP Paribas. He is responsible for the overall functioning and growth at Wirex, with a focus on product development and platform evolution. He has published many articles in international journals and is a highly sought-after speaker at payments and blockchain conferences.
Eileen Wilson –Technology and Energy
My Name is Eileen Wilson with more than 5 years of experience in the Stock market industry, I am energetic about Technology news, started my career as an author then, later climbing my way up towards success into senior positions. I can consider myself as the backbone behind the success and growth of topmagazinewire.com with a dream to expand the reach out of the industry on a global scale. I am also a contributor and an editor of the Technology and Energy category. I experienced a critical analysis of companies and extracted the most noteworthy information for our vibrant investor network.