Perhaps as a result of your interest in NFTs or crypto, you’re probably aware of the hype surrounding Web3 right now. Although exciting, Web3 is currently evolving and adapting, making it difficult to define it in its current form concisely. That being said, this article takes a look at Web3 in more detail and provides an insight into how you can secure your Web-3-based digital assets with the right insurance.
Simply, Web3 is often referred to as the future of the internet. In its current form, the internet is known as Web2. Therefore, Web3 has not yet been finalized, and it’s still very much an iterative process. Perhaps the best way to describe Web3 is to look at its core characteristics: It is decentralized, permissionless, and trustless. But what does this mean in practice?
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Web3 is not under the control of a third party and is completely decentralized. This means that it is not controlled by a government or corporation. Presently, Web2 is predominantly owned by “big tech” firms, who are able to manipulate algorithms and data to suit their own objectives and fill their pockets. Web3 will change this.
Web3 is built on permissionless blockchains, which allow users to store data online. Therefore, users on either side of a transaction no longer need to seek “permission” from a third party to carry it out. Furthermore, blockchain guarantees that data can be stored under the exclusive control of one person, prohibiting access by a third party.
The beauty of Web3 is that it facilitates transactions between two parties without the need for support from a trusted third party. In essence, it does away with payment providers. Web3 uses cryptocurrencies instead of traditional banking methods, which is how trustless transactions are made possible. For instance, you can send Bitcoin directly to another user, and the process is facilitated by blockchain and encryption. There’s no need to use a payment provider.
Web3 has made it possible for users to own digital assets in myriad ways. For example, direct ownership through non-fungible tokens (NFTs) is made possible on Web3. An NFT is comprised of digital data stored in the blockchain and is 100% online. Due to its make-up, it’s impossible to replicate a digital asset, and the owner is the only person permitted to trade or transfer it. The potential of NFTs to transform the way that transactions are conducted promises to reduce the incidence of cybercrime and online fraud, which adds security to online ownership.
Another positive aspect of Web3 is that you can secure your entire online identity with a single Ethereum address. This means you don’t need to create different login details for every platform that you sign up for. Rather, you just create an ENS profile on Web3, which you can then utilize across the internet. An Ethereum address is anonymous, which offers greater security and protection as far as your internet transactions are concerned.
Web3 is also groundbreaking when it comes to making online payments. Payments on Web2 are reliant on banks, building societies, and payment processors. In other words, if these third parties didn’t exist, there would be no way of conducting online transactions. However, native payments are supported on Web3, and cryptocurrencies enable people to trade without the help of payment providers. This has many benefits and reduces the likelihood of fraud.
Although digital assets are secure, cybercriminals are constantly looking at ways of hacking into networks and stealing Web3 assets. That’s why it’s important to take out insurance to protect your digital insurance. Deployed on Solana, Amulet Insurance provides DeFi insurance protocol for the Rust-Based ecosystem, including smart contract risk, stable coin depeg, slashing, oracle failures, and economic exploits.
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