What Are Web 3 Cryptocurrencies?
Crypto Basics

What Are Web 3 Cryptocurrencies?

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Created 2w ago, last updated 2w ago

Dive into what web3 encompasses, and what some of the top Web3 cryptos are in this deep dive with CoinMarketCap Alexandria.

What Are Web 3 Cryptocurrencies?

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Over the last couple of years the concept of Web3, (sometimes referred to inaccurately as Web 3.0, the third generation of the internet), has evolved from a vaguely defined new digital utopia to becoming a leading driver — and all-encompassing term — in the growth of blockchain and cryptocurrency adoption for the foreseeable future.
Despite this, many of us still don’t understand the difference between Web3 and cryptocurrencies in general, and it gets more confusing when it appears like every crypto project has seemingly pivoted to a Web3 rebranding overnight.

One thing is for sure: Many consider web3 to be the “killer app” that can make crypto truly mainstream thanks to a plethora of high-potential use cases.

In this article, we’ll dive into the following:

  • Explain what Web3 cryptos are
  • Look at some of the most popular coins out there
  • Dissect the compelling use cases they offer

Please note that none of the information in this article should be construed as financial advice of any kind, and are purely for educational purposes only.

First, let’s start with the basics.

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What Is Web3?

While there is a lot of confusion surrounding the term, Web3 is typically considered to be distinct from Web 3.0 — which is the next-generation of the world wide web, also known as the semantic web where users can “read-write-own.”

Instead, the Web3 term is used to represent the next generation of the internet — which is being created to free internet users from the need to use Web 2 firms (centralized intermediaries (who have gained a bad reputation for exploiting users’ rights to privacy and freedom of speech for financial gain) by replacing them with decentralized service providers instead. This is similar to how Bitcoin and other cryptocurrencies have removed the need for people to use banks and other financial institutions when transferring or storing value.

Read: Web2 vs Web3

Web3’s decentralized structure allows to ensure real data privacy and censorship resistance and enables users to control and monetize their private data as they wish, instead of lining the pockets of Big Tech through targeted advertising. As with regular public blockchains, network participants are incentivized with Web3 cryptos to share their resources in order to help provide and maintain specific network infrastructure and services.

What Are Web3 Cryptos?

Web3 cryptos are a new generation of cryptocurrencies that incentivize the building of a new decentralized internet. These native tokens of Web3 projects are distributed as incentives to network participants (such as users, validators, service providers, content creators etc.) for their support.
Web3 cryptocurrencies combine smart contract and blockchain technology, and promises artists and the creator economy a much fairer sharing of revenue, such as royalties and commission, since Web2 firms like Meta, Spotify and YouTube no longer receive the lion’s share for providing a centralized platform.

Is Web3 a Cryptocurrency?

No, Web3 itself is not a specific blockchain or cryptocurrency in itself, but rather a decentralized version of the Internet that uses cryptocurrencies to provide specific services to users. However, Web3 and cryptocurrencies both run on borderless public blockchains and share important similarities such as enabling decentralization, trustlessness, open-source technology  and equal access for all users.

What Do Web3 Cryptos Do?

Web3 crypto coins and tokens are used to incentivize a decentralized range of services previously provided by centralized tech companies.

These critical services include data storage (e.g. Filecoin and Arweave), network infrastructure (Helium for example), bandwidth and processing power sharing (e.g. Theta and Render), data indexing (see The Graph) identification, web hosting, social media and more.

What Are the Biggest Web3 Projects Right Now?

Web3 projects provide a full gamut of decentralized web services, and the top Web3 cryptos will be familiar to crypto users.

All are well-established and have been around for more than a few years. With only DOT, LINK, FIL and ICP currently managing a market cap over $1 billion, this nascent crypto sector still offers a lot of growth potential if Web3 can deliver on its promise. That remains a big “if” at present though, so DYOR before investing anything. Make sure you first understand concepts like tokenomics, total market cap, and fully diluted value in full.

What Are the Best Web3 Cryptos in 2023?

There are hundreds of Web3 projects currently building throughout the crypto winter since 2022, although falling token prices, bankruptcies and fall of major players like FTX, who invested heavily in the Web3 space, may end up killing these projects. Therefore, it’s best to play it safe during a bear market and only consider Web3 cryptos that already have measurable network effect, utility and continuing traction.
You can find the list of the top Web3 tokens and smaller, riskier projects all here on CoinMarketCap’s list of top Web3 tokens by market cap. Before investing, consider these 5five things to know first and strategies such as dollar cost averaging (DCA).
Chainlink (LINK) is a oracle network that connects crypto networks with real-world data, thereby making it one of the most highly touted crypto projects out there. LINK uses smart contracts to connect to various off-chain data sources such as data feeds, events, APIs, banking payment networks and more. Further, many decentralized protocols utilize Chainlink’s price and market data feeds on their platform. While its price doesn’t reflect this, Chainlink is finally starting to kick things up a notch, and recently introduced LINK staking, which will make it appealing as an investment that generates passive income.

Filecoin (FIL)

Filecoin (FIL) uses blockchain technology to enable the decentralized storage of almost all types of data (audio/video/images etc), similar to centralized platforms like Amazon Web Services (AWS). Filecoin incentivizes participants who contribute hardware sharing with its FIL coin. It launched with a $200M ICO, and many believe it is set to play an important role in the future of Web3, where decentralized storage will be a critically important component.

Helium (HNT)

Helium (HNT), also referred to as the “People’s Network,” is a blockchain-powered decentralized and wireless P2P network that connects thousands of  Internet of Things (IoT) hotspot devices around the world in order to share data through radio wave technology, free from intermediaries that could censor, block or misappropriate this information.
It uses its own Proof-of-Coverage consensus algorithm to validate and reward participating hotspots with its HNT token as incentive.

Audius (AUDIO)

Audius (AUDIO) is a decentralized music streaming platform that aims to become the blockchain’s version of Spotify, only with better royalty-sharing for artists and attractive rewards for listeners and network node operators in the form of its native asset the AUDIO token. Audius is backed by some of the top names in the music industry, including Steve Aoki, 3LAU, Katy Perry and more.

Theta (THETA)

Theta Network (THETA) is a powerful blockchain-based platform that delivers decentralized video streaming for both Web3 firms and traditional media streaming firms, who are struggling to keep up with their users’ insatiable need for higher resolution and bigger bandwidth.

Theta already boasts validator nodes from Big Tech firms like Google, Samsung and Sony, and continues to make traction thanks to its ability to be customized and scaled as needed by clients. Users share bandwidth, storage and processing power in order to earn THETA rewards.

A project similar to Theta is Livepeer (video streaming) and Render Network (RNDR), which instead of video streaming focuses on building a decentralized network of shared graphics processing (GPU) power in order to render 3D graphics used in gaming and other applications.

Polkadot (DOT)

It’s no surprise that Polkadot (DOT) tops the list of biggest Web3 cryptos by market cap, as its founder Gavin Wood actually coined the term “Web3” in 2014, and later launched the Web3 Foundation, which provides funding for builders.
Polkadot (and its “canary network” Kusama, which is used for early testing) is Wood’s realization of that vision for a decentralized web, an interoperable multi-chain platform that can seamlessly connect compatible public and private chains (called parachains) through its Relay Chain to securely interact with each other in a trustless, immutable and transparent manner. DOT, its native asset, helps incentivize services for operations, security, network governance and bonding tokens for use between parachains.

Internet Computer (ICP)

Internet Computer (ICP), controversially developed by Dfinity, is building an ambitious “World Computer” blockchain that can power a complete range of end-to-end fully decentralized web services.
Internet Computer allows project builders to avoid the security and privacy pitfalls that come with using traditional IT cloud computing, database and web server providers, and differentiates itself by using smart contract software (called “canisters”) and innovative blockchain applications such as chain key cryptography.

Canisters can scale at speeds comparable to Web2 services, and allows users to use the web and other blockchains without the need for bridges.

The Graph (GRT)

The Graph (GRT) is an indexing protocol that enables data-heavy networks like Ethereum and the InterPlanetary File System (IPFS) to query data in order to support DeFi and Web3 protocols. The Graph makes it easy thanks to a hosted service for any developer to create and publish a subgraph, an open-source application programming interface (API) that apps can query to retrieve blockchain data by using GraphQL.

Read: What Is IPFS?

The Graph makes it easier for developers to pull specific data from blockchains, where they previously had to create centralized servers and databases for indexing and querying, which was expensive, time-consuming and less secure due to a single point of failure. Apps that use The Graph only need to provide an API endpoint such as the Uniswap subgraph to start querying data, for example trade volumes.

Stacks (STX)

Bitcoin maxis rejoice: Thanks to Stacks (STX) and similar projects, smart contract and decentralized application (DApp) next-generation use cases are finally coming to Bitcoin (BTC), without altering its core value proposition of the most decentralized security and stability that crypto has to offer.

Stacks is a layer-1 blockchain building on top of Bitcoin. Its DApps are modular and open, built on top of each other and leverage Bitcoin as a secure base layer for all settlements and network activity. Its proof-of-transfer consensus mechanism drives Bitcoin adoption as miners need to pay in BTC to mint new STX tokens, and conversely “stack” these tokens to earn BTC in return.

Previously known as Blockstack, Stacks’ native asset STX and smart contract-focused programming language Clarity (also used by Algorand) is used to execute smart contracts, validate transactions and add new assets on its blockchain.

Importantly, Stacks was the first SEC-qualified cryptocurrency for sale in the U.S., helping it raise nearly $30 million in 2019. With so much confusion around what the SEC considers to be crypto securities, it’s very bullish for Stacks that STX is not viewed as one by the State’s leading securities regulator.

Kadena (KDA)

Kadena (KDA) is a proof-of-work (PoW) blockchain that aims to scale Bitcoin by combining its PoW consensus mechanism with directed acyclic graph (DAG) elements.
Just like Stacks, Kadena aims to leverage Bitcoin’s security for use by businesses, in this case by achieving high throughput (how many actions can be completed within a certain time) comparable to traditional IT service providers. It can mint several blocks at the same time, by connecting several blockchains that work together at the same time and asynchronously to verify network transactions. This also boosts the chain’s security as bad actors have less time between blockchain confirmations to attack the network.

Kadena offers multi-chain support, decentralized infrastructure and the ability to scale at an industrial level while remaining energy-efficient compared to Bitcoin. Importantly, Kadena offers enterprises the ability to cover their customers’ gas fees through the use of their gas stations, a major hurdle for crypto application in mainstream businesses.

Kadena’s permissioned layer-2 blockchain Kuro can support up to 8,000 transactions per second across its 500 nodes.
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