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Getting to Know Web3

Web3 is the concept of the third generation of the internet, built on blockchain technology, where your data, assets, and digital identity are owned and controlled directly by you, not by a handful of big companies. Unlike Web2, where data is held by platforms like social media, Web3 uses a decentralized network so transactions can happen without intermediaries.

Web3 trading, crypto web 3.0, web3 coins, and web3 wallets are terms you’ll hear more and more as this ecosystem keeps growing. Crypto, NFTs, and DeFi are the most common examples of Web3 in action.

What is Web3?

Web3 is a third-generation internet model built on blockchain that puts ownership of data and digital assets in the hands of users. In short, you’re no longer just a “tenant” on someone else’s platform. You can actually own your digital assets, from crypto tokens and NFTs to your on-chain identity.

The term Web3 first became popular as a way to distinguish it from the two eras before it. Web1 was the “read only” internet. Web2 is the “read and write” internet we use today, where you can post content, but the platform still owns your data. Web3 adds the “own” dimension, meaning you hold control over your assets and data through a digital wallet and cryptographic keys.

A simple analogy: Web1 is like an old boarding house where you could only stay without changing anything. Web2 is like a modern boarding house. You can put up posters and invite friends over, but the landlord still holds the master key and can kick you out anytime. Web3 is like owning your own house with the title in your name, so no one can ever kick you out.

What is Web3 crypto?

Web3 crypto refers to digital assets that act as the “fuel” of the Web3 ecosystem, used to pay transaction fees, access decentralized applications (dApps), and serve as a medium of exchange between users without needing a bank as a middleman. If Web3 is the entire system, web3 crypto is the asset that makes that system run.

The most common example of web3 crypto is Ether (ETH) on the Ethereum network, used to pay “gas fees” every time a smart contract runs. There are also native tokens from other blockchains, like Solana (SOL) or Polygon (POL), each serving as the native payment currency in its own ecosystem. You can start getting familiar with and owning these assets through an investment app that’s already regulated by the OJK, without needing to jump between different platforms.

Is Web3 the same as crypto and blockchain?

No, Web3 is not the same as crypto, even though the two are closely related. Web3 is the broader concept of a decentralized internet, while crypto is one component within it that functions as a medium of exchange.

Here’s the simplest way to put it. Blockchain is the underlying technology, a transparent digital ledger that’s hard to manipulate. Crypto is the asset that runs on top of that blockchain. Web3 is the bigger vision, the entire ecosystem of apps and internet services that use that technology. So crypto is part of Web3, but Web3 covers a lot more, including NFTs, DeFi, and digital wallets.

A simple analogy: crypto is like the chips you use to make transactions, the blockchain is the table that records every exchange, and Web3 is the whole venue, complete with all the tables and rules. Chips are meaningless without a table, and both are part of one bigger place.

Who created the term Web3, and when?

The term Web3, in the blockchain context, was coined by Gavin Wood, one of the co-founders of Ethereum. The idea came about as a response to the internet being dominated by a handful of big tech companies.

Gavin Wood used this term to describe a decentralized, blockchain-based internet ecosystem, where users aren’t just consumers but also help own and manage the services themselves. An easy way to remember the three eras of the internet is through a formula popular in the Web3 community: Web1 is “read,” Web2 is “read and write,” and Web3 is “read, write, and own.” The idea of Web3 actually emerged earlier, but it didn’t truly capture widespread public attention until interest in crypto surged and major venture capital funding started flowing into the sector.

How does Web3 work?

Web3 works by replacing centralized servers with a distributed network of computers that records every transaction on the blockchain. No single party controls all the data, which is why this system is called decentralized.

When you do something in Web3, like sending an asset, that transaction gets verified by many nodes across the network, then permanently recorded on the blockchain. Applications running on top of this are called dApps (decentralized applications). Smart contracts, which are automated programs on the blockchain, enforce transaction rules without needing a human middleman. This is what lets services like lending and borrowing assets in DeFi run without a traditional bank.

What are the main characteristics of Web3?

Web3 has four main characteristics that set it apart from conventional internet: decentralization, trustlessness, permissionlessness, and native payment. All four boil down to one principle: control sits with the user, not a single central authority.

Decentralization. Data isn’t stored on one central server owned by one company, but spread across many computers or nodes in a blockchain network. This makes the system more transparent and harder to hack or shut down unilaterally.

Trustless. You can transact directly with someone else without needing to trust an intermediary like a bank. All the rules are enforced by code and cryptography on the blockchain, so every transaction can be verified without human intervention.

Permissionless. The network is open to anyone without needing approval from a central authority. Anyone can join, transact, or run an application without going through a centralized approval process. It’s worth noting that in Indonesia, platforms that facilitate crypto asset trading are still required to be licensed and supervised by the OJK to protect consumers.

Native payment. Web3 networks have their own built-in currency or token for paying transaction fees and accessing services. This token is used directly within the ecosystem without needing to be converted to fiat money first.

What is a web3 coin (web 3.0 coin)?

A web3 coin, or web 3.0 coin, is a crypto token that serves as the native currency of a blockchain network and is used to run the decentralized ecosystem built on top of it, from paying transaction fees and staking to voting on governance decisions. A web3 coin differs from a regular “crypto coin” because its function is directly tied to its network’s infrastructure, rather than just being a medium of exchange or a speculative instrument.

Here are a few categories of web3 coins you’ll commonly come across:

• Layer 1 coins. Examples include Ether (ETH) on Ethereum and Solana (SOL) on the Solana network, used to pay gas fees and secure the network through staking.
• Governance tokens. Used by holders to vote on the direction of a DeFi project or dApp.
• DeFi utility tokens. Used to access lending, staking, or trading services on DeFi platforms like Uniswap.
• Decentralized storage tokens. Filecoin is an example, rewarding users who rent out their spare storage space with tokens.

If you’re interested in owning these web3 coins, you can buy assets like ETH and SOL directly through a licensed investment app that’s regulated by the OJK, without needing to move between many different exchanges.

What is web3 trading, and how is it different from regular crypto trading?

Web3 trading is the activity of buying and selling crypto assets directly on the blockchain network through a decentralized exchange (DEX), without a third party holding your funds. The difference from “regular” crypto trading on a centralized exchange (CEX) comes down to who controls the funds and how transactions are processed.

Web3 trading gives you full control over your assets because no third party is holding your funds, but the trade-off is that you also bear the technical risks yourself, like sending funds to the wrong wallet address or dealing with a faulty smart contract. Because of that, for beginners, starting out with crypto trading on a centralized platform regulated by the OJK is a safer choice before diving deeper into pure web3 trading.

What is a web3 wallet, and why do you need one?

A web3 wallet is a digital wallet that serves as your main gateway to store, send, and use crypto assets and NFTs, while also connecting you to various decentralized applications (dApps) like DeFi and NFT marketplaces. Without a web3 wallet, you can’t directly interact with the Web3 ecosystem, since the wallet is what stores the private key that proves ownership of your assets.

There are two types of web3 wallets you should know about:

• Custodial wallet. The private key is managed by the platform, which is good for beginners since account recovery is still possible if you forget your access.
• Non-custodial wallet. You hold the private key entirely yourself, giving you more flexibility to connect to different dApps, but the risk is entirely on you as well.

Nanovest already offers a Web3 Wallet that you can use to store crypto assets and connect to the Web3 ecosystem, right from the same app where you invest in US stocks, digital gold, and crypto assets. So you don’t need to install a bunch of different wallet apps just to start exploring Web3.

How do you invest in Web3?

Beginners can start investing in Web3 with these five basic steps. Start with a small amount and a platform that’s already regulated.

1. Learn the basics first. Understand what blockchain, digital wallets, and private keys are. The goal: you understand the risks before putting in any money.
2. Choose a registered platform regulated by the OJK. Use an official app so your assets are better protected. The goal: a verified, legitimate account.
3. Set up a web3 wallet. This can be custodial (managed by the platform), which is good for beginners, or non-custodial (you hold your own keys) once you’re more experienced. The goal: a ready-to-use place to store your assets.
4. Decide which assets you want to own. You could start with layer 1 web3 coins like ETH or SOL, which are more established, before exploring newer and riskier project tokens.
5. Start with a small amount. Buy assets in an amount you’re prepared to lose, then study how the market moves. The goal: hands-on experience without major risk.

As a note, some local investment apps like Nanovest already offer access to crypto assets and a Web3 Wallet in one app that’s regulated by the OJK, so beginners don’t need to hop between different platforms just to start investing in Web3.

A simple analogy: a custodial wallet is like depositing your money with a bank teller. It’s convenient, and if you forget your PIN, it can still be sorted out, but you’re fully trusting the bank. A non-custodial wallet is like a safe at home. You hold the key yourself and have more freedom, but if you lose the key, everything inside is gone for good. That’s why beginners usually start with custodial wallets first.

What’s the difference between Web3 and Web2?

The main difference between Web3 and Web2 comes down to who owns the data and assets. In Web2, the platform holds control. In Web3, the user holds control through the blockchain.

What’s the difference between Web3, crypto, and the metaverse?

Web3, crypto, and the metaverse are three different things that often get mixed up. Web3 is the framework for a decentralized internet, crypto is the asset within it, and the metaverse is a three-dimensional virtual space where some Web3 activity can take place.

Crypto can exist without the metaverse, and the metaverse doesn’t have to use Web3 at all. But the three are often combined, for example when you buy virtual land (a Web3 asset) using crypto tokens inside a metaverse world. So think of Web3 as the foundation, crypto as the currency and asset, and the metaverse as one of the places where it’s applied.

What are some examples of Web3 apps and platforms?

There are already plenty of Web3 applications you can try today, ranging from decentralized finance to digital wallets. Here are the most common categories, along with examples.

Crypto and DeFi. Cryptocurrencies like Ether (ETH) serve as the main medium of exchange, while DeFi (Decentralized Finance) lets you lend, borrow, or swap assets without a bank. Uniswap is an example of this kind of platform.

NFTs (Non-Fungible Tokens). An NFT is proof of unique digital ownership that can’t be exchanged one-to-one with another item. The most iconic example is the CryptoPunks collection.

Decentralized storage. Instead of storing files on a single server, data is spread across multiple devices. Examples include IPFS (InterPlanetary File System) and Filecoin, which reward users with tokens for renting out their unused storage space.

Decentralized social media. These platforms let you control your own content instead of depending on one big company. Examples include Mastodon, which runs on a network of independent servers, and Lens Protocol, which stores profiles as NFTs on the blockchain.

Web3 wallets. These digital wallets act as the gateway for storing and using crypto assets and NFTs, while also connecting you to decentralized apps. Popular examples include MetaMask and Trust Wallet, and you can also use the Nanovest Web3 Wallet as an integrated entry point within your investment app.

Why is Web3 considered important?

Web3 is considered important because it shifts control of data and assets away from big platforms and back to individual users. This addresses growing concerns around data privacy and dependence on a handful of tech companies.

Beyond privacy, Web3 opens up new economic models. Content creators can get paid directly without a middleman, digital assets can be truly owned and traded, and financial services can be accessed by anyone with an internet connection. Adoption keeps growing as more people and institutions start using blockchain for a wide range of needs, from finance to data storage.

Is Web3 safe?

Web3 has strong security on the blockchain side of things, but the risk lies in user behavior and the surrounding ecosystem. The blockchain itself is hard to manipulate, but scams, lost private keys, and sketchy projects remain real threats.

Because you’re the one in control in Web3, you’re also the one fully responsible. If the private key to a non-custodial web3 wallet is lost, the assets inside can disappear for good. Scams like phishing and “rug pull” projects are also common. To reduce your risk, use a platform that’s regulated, never share your private key, and verify every project before investing. Keep in mind that crypto assets are volatile and their value can swing sharply, so the investment decision is always yours to make.

Is Web3 legal in Indonesia?

Yes, the main components of Web3, like crypto assets, are legal in Indonesia and officially regulated. Oversight of digital financial assets, including crypto, falls under the Financial Services Authority (OJK), as part of the mandate under Law Number 4 of 2023 on the Development and Strengthening of the Financial Sector (UU P2SK).

The technical rules are laid out through OJK regulations (POJK) that govern crypto asset trading operations, including licensing requirements for platforms that facilitate crypto buying and selling. Since these rules can keep evolving alongside the industry, make sure you always check a platform’s current licensing status on the official OJK website before transacting, and only use providers that are licensed and supervised.

Are Web3 assets taxed in Indonesia?

Yes, crypto asset transactions, as part of Web3, are subject to tax in Indonesia. Crypto assets are categorized as financial assets treated similarly to securities, so income from these transactions is subject to final Income Tax (PPh), with rates that may vary depending on whether you transact through a domestic or foreign provider.

Since tax rules can change based on government policy, it’s best to check the latest crypto tax regulations on the official Directorate General of Taxes website or consult a tax advisor for your personal calculations, since everyone’s situation can be different.

What are the risks of Web3 for beginners?

There are three main risks of Web3 for beginners: price volatility, scams, and user technical errors. All three can lead to losses, including the total loss of your assets.

Volatility means asset prices can swing drastically within hours. Scams include fake projects, phishing, and schemes promising unrealistic returns. Technical errors include sending funds to the wrong web3 wallet address or losing a private key that can never be recovered. Because this topic involves your finances, never invest money you need for basic living expenses, and always follow the principle of “don’t put all your eggs in one basket.”

FAQ

Is Web3 a scam? No, Web3 itself is a technology, not a scam. However, there are indeed plenty of scam projects within its ecosystem, so you need to be careful and only use platforms regulated by a body like the OJK.

Do I need a web3 wallet to start investing in crypto? If you’re investing through a centralized app regulated by the OJK, you may not necessarily need a separate web3 wallet, since crypto assets can be managed directly within the app. A web3 wallet becomes necessary once you want to connect directly to a dApp, DeFi platform, or NFT marketplace.

What’s the difference between a web3 coin and a regular crypto token? A web3 coin is usually the native currency of a blockchain, with a function directly tied to that network, like paying gas fees or staking. A regular crypto token might just run on top of someone else’s network without that native function.

Is web3 trading more profitable than regular crypto trading? Not necessarily. Web3 trading gives you full control over your funds and access to more new tokens, but the risk is higher due to minimal oversight and the possibility of faulty smart contracts. For beginners, trading crypto on a centralized platform regulated by the OJK is generally a safer starting point.

What are some popular Web3 applications? Examples include NFT marketplaces, DeFi platforms for lending and borrowing assets, web3 wallets, and blockchain-based games (GameFi). Investment apps that offer access to both crypto assets and a web3 wallet in one place, like Nanovest, also serve as an easier entry point into Web3.

Is Web3 really the future of the internet? Web3 is seen as one possible direction for the internet’s development, especially around data and asset ownership. But its adoption is still growing and hasn’t fully replaced Web2, so it’s best viewed as a technology that’s still maturing rather than a done deal.

What’s the minimum amount needed to start investing in Web3? There’s no fixed amount. Many platforms let you start with a small amount. What matters most is starting with an amount you’re prepared to lose.

Are Web3 assets guaranteed by the government? No, crypto assets and other Web3 assets are not government-guaranteed like bank savings. OJK oversight is meant to protect consumers in terms of governance and platform legitimacy, not to guarantee the value of your assets.