While these terms are thrown around randomly across multiple platforms, users want to decode and comprehend what all this is. This will help them participate in the new digital economy empowered with knowledge of what all they can do in say, metaverse or with NFTs or on Web3.
Web3: A blockchain-based next era of internet is set to break cover
To begin with, all of them are related in some ways—part of the foundation of the new internet—and are also different in many ways.
Web3 is the decentralised internet that runs on a public blockchain, which so far has been used primarily for cryptocurrency transactions. Being positioned as the future of the internet, venture capital firms are betting big on Web3. Several new applications are coming up (such as cryptocurrencies, NFTs) that promise more privacy and security on the Internet besides changing the way value is generated in the digital world. Moreover, entrepreneurs in India who missed the boat on Web1, when tech giants such as Google and Amazon were built, are now looking at Web3 to create scalable businesses.
Why is it called web3? Because it’s the third major evolution of the internet, after the worldwide web (web1) and the user-generated web (web2, or social media).
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Coming to NFTs. Non-fungible means it’s unique and cannot be replaced with something else. It is a non-interchangeable unit of data stored on a blockchain, a form of digital ledger, that can be sold and traded. NFTs may be associated with digital files such as photos, videos, and audio. NFTs are unique cryptographic tokens that exist on a blockchain and cannot be replicated. NFTs can represent real-world items like artwork and real estate. “Tokenising” these real-world tangible assets makes buying, selling, and trading them more efficient while reducing the probability of fraud.
PK Misra, president, All India Gaming Federation (AIGF) says, “NFTs have the potential to make markets more efficient by converting a physical asset into a digital one. They can easily eradicate intermediaries, improve supply chains and reinforce security.”
NFTs can really be anything digital (such as drawings, music, social media post, artworks, etc), but a lot of the current excitement is around using the tech to sell digital art. Of course anyone can copy a digital file as many times as he wants, including the art that’s included with an NFT.
But NFTs are designed to give you something that can’t be copied: ownership of the work (though the artist can still retain the copyright and reproduction rights, just like with physical artwork). To put it in terms of physical art collecting: anyone can buy a Monet print. But only one person can own the original.
Cryptocurrency is decentralised digital virtual currency running on blockchain and secured by cryptography. There are over 5,000 cryptocurrencies worldwide like Bitcoins, Dogecoin, Monero, Litecoin, Cardano, and so on.
The Reserve Bank of India (RBI) besides central banks of several other countries has
cited concerns over crypto and indicated in many instances that they should be banned. So far crypto exchanges have been able to find ways to continue working in India since the industry falls in a legal grey area. Incidentally, one of the world’s largest crypto exchanges which announced its India entry on April 7
halted UPI payments for cryptos within three days of the launch. The government is working on legislation to regulate cryptocurrencies, but no draft has yet been released.
As for the metaverse, think of it as a place where real meets virtually. The term `metaverse’ was coined by Neal Stephenson in his book Snow Crash, published in the early 1990s. In recent months metaverse has garnered not only popularity but also pushed companies to build their products with metaverse in mind. According to research firm Gartner, by 2026, users will spend at least one hour a week transacting in the metaverse. Unlike in the physical world, transactions in the metaverse will be digital via NFTs and so on.
As the world transitions to these new platforms knowing the differences will only enhance user confidence in participating in the new web.