2021 was a significant year for crypto . There has been no fungible token being awarded word-of-the year , and decentralized finance (DeFi ) trending within the mainstream media . Additionally, there have been headlines for various announcements. It is evident that many people are looking for ways to diversify their income and to work from home, which allows them to have more time to pursue new interests. Many chose to become involved in crypto.
Conversations began to shift from Bitcoin ( Bitcoin) and other larger crypto projects such as Ethereum network upgrades or central banks digital currencies. News coverage would indicate that mainstream adoption of crypto has already begun. One project could be able to bring crypto into everyday life. It is Web3.
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 consider this the next logical step in the evolution of the internet. It partially builds on the flaws of Web 1.0 and 2.0, such as the concentration and control of power within centralized entities, and privacy issues.
This is what we’ve seen in the DeFi and crypto spaces, such as MakerDAO project. It aims to create an independent global financial system that can be managed by the community. 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. It is possible. The main problem lies in the design of Web3. It is a community project so there are many options for how we move forward with our internet. Some argue widespread adoption would be difficult because of technical gatekeeping and lack of clear direction.
Is mainstream adoption possible without Web3?
Although crypto usage has increased since the pandemics, the growth in wallet holders has caused it to slow. 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 or cards with crypto-enabled digital wallets, 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 with strong cryptocurrencies-friendly governments, 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.
Next steps
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 moves data away from central powers and uses AI power to make internet accessible to all without relying on large businesses. Due to surveillance and exploitative advertisement, the current structure of our internet 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 new Digital Assets Group. This group is designed to foster innovation within the cryptocurrency sector and establish regulation. This would enable more people to enjoy the benefits of crypto, such as lower transaction costs and volatility mitigation, but it would also 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.