What Is Web3? Everything You Need to Know About the Blockchain in 2025

The concept of Web3, within this familiar story, operates on the same principle; however, it eliminates intermediaries. As a result, every time you send crypto to a friend, there’s a technology in place to ensure it’s secure and decentralized; instead of banks and dozens of invisible systems, it’s smart contracts.

Does this mean you can send money or value to your friend without the bank, and they receive that value securely and instantly? Yes, that’s what it means, but Web3 is even bigger than just that one use case.

Just a couple of decades ago, the internet was read-only, and then it became social and interactive. Now, it has evolved into Web3, a new phase where you own your data and digital assets.

Robert Stevens' article on Coindesk defined Web3 in a really Unique way: Web3 refers to a decentralized version of the internet powered by blockchain technology, where value and control shift from corporations to individual users.

There’s no doubt that it’s the next phase of the internet, where value moves peer-to-peer on public blockchains, and you hold the keys. In this article, we’ll explore how we arrived at this point, from the early web to blockchain and the numerous use cases with it, and what Web3 actually means in various contexts of the world.

Think of it like how the traditional web works: we have the physical infrastructure (servers, cables), we have money systems (credit cards, PayPal), and then we have the apps you actually use (social networks, online games, marketplaces).

A Quick Analogy

Understanding the differences provides the complete map; now, let’s look closely at the foundation itself. What exactly is a blockchain, how does decentralization work, and why are smart contracts so central to Web3 crypto? That’s where we’ll go next.

• Blockchain = the internet cables and servers.
• Cryptocurrency = the native currency (like paying postage to send data).
• Tokens = apps, tickets, and items created on top of that system.
• Web3 = the entire ecosystem, an internet built around decentralization, where all the aforementioned components work together.

This design makes it decentralized, with no single company or authority controlling it. Every participant has a copy of the ledger, and they must all agree on any updates, which occur through consensus algorithms (such as miners or validators approving new blocks).

Decentralization

This concept means that power and data are distributed across the network rather than being held by a single entity. In a decentralized blockchain network (like Bitcoin or Ethereum), thousands of independent nodes verify and record transactions, ensuring no central party can falsify or censor the data.

Before a new block is added, network participants must agree that it's valid (through mechanisms such as Proof of Work or Proof of Stake). This consensus process ensures that malicious or incorrect data does not enter the ledger.

A simple analogy: think of a public diary where each page (block) is signed and sealed. You can add new pages, but you can't rip out or rewrite old ones without everyone noticing. This immutability underpins the security and trust of the blockchain.

• Public (Permissionless) Blockchains: These are open networks, such as Bitcoin and Ethereum, that anyone can join and utilize. They are fully decentralized and secured by large communities. All data is transparent, and you don't need approval to interact. Web3 essentially builds on public blockchains, as the goal is to create an open and accessible internet for all.
• Private (Permissioned) Blockchains: These are closed networks, often used inside companies or consortia. Only selected participants (such as different banks within a group) can run nodes or make transactions. They sacrifice some decentralization for the sake of speed or privacy. While not directly part of the public Web3 movement, private chains utilize similar technology for specific use cases.
• Consortium or Hybrid Blockchains: These are partially decentralized, with a specific group of organizations collectively maintaining the ledger. It's a middle ground between public and private: more control than a public chain but more openness than a single-company chain.

Once deployed, a smart contract will automatically execute its rules without needing any third-party intervention. This concept was popularized by Ethereum. Smart contracts enable the development of complex applications on blockchain, allowing them to manage digital assets, enforce agreements, and even run entire organizations (DAOs, or decentralized autonomous organizations) autonomously.

In Web3, smart contracts allow for trustless interactions. For instance, you could rent digital storage from a stranger via a smart contract that automatically releases payment when time is up. Because the contract's code is on the blockchain, it's transparent and tamper-proof; neither side can cheat the rules without the network noticing.

Interaction was minimal; this was way before Facebook, so you weren't logging in to Facebook or posting your own videos yet. It was decentralized in the sense that anyone could host a website, but experiences were basic.

So, the entire journey begins with allowing people to read, then read and write, and now, read, write, and own. Web3 is built on blockchains, inheriting decentralization, transparency, and trustlessness. However, when you fast-forward to 2025, there's a lot more new innovations happening.

• Web1 (1990s – early 2000s): The "read-only" web. This was the era of static webpages, homepages, and early portals. You mostly consumed content. Think of personal sites on GeoCities or reading news on Yahoo.
• Web2 (mid-2000s – today): The "read-write" web. With the advent of blogs and social media, the internet became an interactive platform. Users like you and I can create and share content on platforms such as Facebook, YouTube, Twitter, Instagram, and others.
• Web3 (the 2020s): The "read-write-own" web. This term, coined by Ethereum co-founder Gavin Wood in 2014, envisions an internet where users have ownership stakes in platforms and protocols via tokens, and control their own data through decentralized networks. In Web3, you're not just a user or content creator; you can also be a shareholder of the networks you participate in. For example, using a decentralized social network might earn you tokens that represent a say in how the network is governed. The content you create could be minted as an NFT that you truly own and can sell or transfer elsewhere.

One of the biggest pushes in 2025 is improving crypto's usability through account abstraction. In simple terms, account abstraction refers to making crypto wallets function more like traditional accounts by abstracting away complex cryptographic details and incorporating smart features.

Account Abstraction

With account abstraction, wallets can be smart contracts themselves (often called smart accounts or contract wallets). This enables features like:

• Social Recovery: If you lose access to your wallet, you can rely on trusted contacts or a second device to help restore it.
• Flexible Security: You can change your private keys regularly or implement wallet policies (such as a daily transfer limit) that a hacker would find challenging to bypass.
• Paying Gas in Any Token: Account abstraction can allow the wallet (via smart contract logic) to pay gas fees using whatever token you have, or even let a third party pay your gas (known as gas sponsorship).
• Auto Executions & Bundling: Smart wallets can let you queue up tasks (like "swap tokens if price hits X" or "pay my friend every month automatically") and handle them without requiring you to sign off on every step.

It sounds like magic, but an example helps: suppose you want to prove you're over 18 to a website without disclosing your exact birthdate. A ZKP could allow a verifier to be convinced that you have a valid ID showing an age greater than 18, without you sharing the ID itself. Only the proof (a string of data) goes on-chain, which says "yes, this person is an adult" and nothing more.

ZK tech is a game-changer, enabling private, scalable Web3 applications. Whether it's ZK-SNARKs securing privacy coins (like Zcash) or ZK-rollups turbocharging Ethereum dApps, zero-knowledge proofs are foundational to many innovations in 2025.

• Privacy: Blockchains are inherently transparent (anyone can view the data you put on-chain). ZKPs allow you to keep sensitive data off-chain while still utilizing it to prove things.
• Scaling via ZK-Rollups: A rollup is a Layer-2 solution that batches hundreds of transactions off the main chain and then posts a concise proof back to the main chain. In a ZK-rollup (zero-knowledge rollup), that proof is a ZK validity proof asserting that all those bundled transactions followed the rules. The Ethereum mainnet then only needs to verify the proof, which is significantly smaller and less expensive than verifying each transaction individually.