A Practical Introduction to Blockchain and Web3 Support Technologies

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Most websites, apps, and online services we use today—like streaming platforms such as Netflix—are hosted on servers owned or leased by large corporations. Think of servers as the physical location where an application or website "lives." When a company providing a web service manages its own servers, we refer to this model as "centralized."

For example, Netflix operates servers in data centers, enabling you to stream your favorite shows. When you log into Netflix, your device communicates with these servers, exchanging data back and forth. Crucially, Netflix retains full control over these servers: it decides what content to host, streaming speeds, and who can access its services.

This model defines today’s internet, often called Web 2.0. In contrast, Web3 represents a decentralized web that operates differently—especially in how servers are managed and how users access content.

In Web 2.0, you typically log into services like Netflix using a username and password or a third-party login (e.g., "Sign in with Google"). In Web3, you often need just one universal identifier to access everything. Sound convenient? This is made possible by new technologies that replace centralized servers and traditional logins.

Key technologies enabling this shift include:

If these terms are unfamiliar, don’t worry. This guide breaks down these core concepts, explaining how decentralized technologies work and their role in Web3.

What Is Blockchain Technology?

A blockchain network is a revolutionary system that enables decentralization. Instead of relying on a single server, a website or application can exist across many independently owned and operated servers. No single entity has full control over the network. Blockchain makes this new Web3 model possible.

At its core, a blockchain consists of multiple individual computers or servers spread globally. Together, they maintain a shared record of data, often called a "ledger." This ledger functions similarly to a traditional accounting ledger. While it can store various types of data, it most commonly records cryptocurrency transactions.

Data is grouped into "blocks" chained together sequentially. Each new block of processed data is appended to the end of the chain. Every block is essential to the chain’s integrity—if one block is compromised, the entire chain is affected.

Once a set of transactions is grouped into a block, the data is processed through a cryptographic method called "hashing." Each input (transaction) produces a unique output (a transaction ID hash). This hash is a hexadecimal value (using characters 0-9 and a-f) that allows network participants to verify a block’s validity. If someone tries to alter even the smallest transaction detail or insert a fake transaction, the block’s hash will change. Other participants will detect this, and the block will be rejected.

👉 Explore how blockchain verification works

How Are New Blocks Added to a Blockchain?

New blocks originate from people interacting with the blockchain network. This often involves trading cryptocurrency, purchasing NFTs, or playing Web3 games—but it can encompass many activities. What matters is not the activity itself but the underlying process: users attempting to complete transactions on the blockchain, necessitating new blocks to be added to the ledger.

No single company, IT admin, or CEO controls the blockchain. Instead, network participants—each storing a copy of the shared ledger—must collaborate as peers to achieve consensus on the network’s state. This includes who owns which assets, who sent cryptocurrency to whom, and other transactional details.

These participants are called nodes—individual computers connected to the blockchain network. They communicate with each other to verify new transactions or data blocks for authenticity. Together, they agree to add new blocks to the chain.

How Do Nodes Add New Blocks?

With thousands of nodes operated by individuals worldwide, reaching agreement is challenging. One node might act greedily and try to include an fraudulent transaction. What happens then?

To facilitate block addition and ensure node honesty, blockchains rely on consensus mechanisms. These are carefully designed frameworks and rule sets that resolve disputes and ensure only valid transactions are approved. The first consensus mechanism, introduced by the Bitcoin network, is called Proof of Work (PoW).

In PoW, nodes compete to compile recent transactions into a new block and add it to the chain. They solve complex digital puzzles; the first to solve the puzzle earns the right to "mine" the block. This node compiles the transactions, verifies all data, and broadcasts the block to other nodes for validation. In traditional PoW blockchains like Bitcoin, at least 51% of the network must agree the block is valid before it’s added.

(Note: While PoW was first, other consensus mechanisms now exist that enable faster block times, lower fees, and different designs.)

Ensuring Block Authenticity

If a node broadcasts a manipulated block, other nodes will easily recognize and reject it. The large number of nodes involved in decentralization makes it economically incentivized to maintain the blockchain’s integrity. While a few nodes might confirm a fraudulent transaction, it’s highly unlikely that 51% would collude to do so—especially on widely used, reputable blockchains like Bitcoin or Ethereum. The more participants in a blockchain, the more decentralized and secure it becomes.

In contrast, traditional finance requires compromising only one centralized server (e.g., a bank’s database) rather than thousands of independent nodes. This makes shared ledger systems fundamentally more secure against manipulation.

As long as most nodes act honestly, the blockchain remains robust against manipulation. In fact, blockchain networks are often less vulnerable to manipulation than centrally managed, opaque traditional databases.

There’s also a financial incentive for nodes to behave honestly. Blockchains reward nodes that successfully add new blocks with block rewards—usually in the form of the network’s native cryptocurrency. Honest nodes earn these rewards. If a node’s block is rejected due to dishonesty or false data, the node loses potential earnings and may be flagged as untrustworthy. Other nodes may begin ignoring data broadcast by malicious actors.

With a secure structure, proper consensus mechanisms, and high participation, blockchains enable something previously impossible online: transparent, decentralized networks. Anyone with a computer and internet access can audit the entire transaction history. Blockchains support trustless, decentralized networks instead of relying on opaque central authorities.

How Does Blockchain Relate to Web3?

As we’ve seen, blockchain is a novel system for achieving consensus among network participants without a governing authority. Web3 is the decentralized web, where applications, online services, and even finance no longer require central authorities. How do they work together? Fundamentally, blockchain technology powers the decentralization Web3 requires.

Compare Web3 with Web 2.0:

With blockchain, users no longer need to create usernames and passwords on centralized servers that a central authority can lock, shut down, or restrict. Instead, users connect to websites and applications hosted partially or fully on blockchain networks, making these services partially or fully decentralized. These decentralized applications and websites on Web3 are often called DApps.

Users rely on crypto wallets (more on these later) to verify access to DApps, complete cryptocurrency transactions, post content on new Web3 social platforms, and achieve nearly any other purpose on Web3. All of this requires blockchain technology to function.

What Is Cryptocurrency? How Is It Used in Web3?

Earlier, we mentioned the need to incentivize independent blockchain participants (nodes) to achieve consensus. This is where cryptocurrency becomes essential.

Cryptocurrency is a digital asset linked to a specific blockchain network. Each blockchain typically has a native cryptocurrency integrated with its network and consensus mechanism. The Bitcoin network uses Bitcoin (BTC), the Ethereum network uses Ether (ETH), and so on.

These cryptocurrencies form the block rewards given to nodes for adding or validating new blocks—essentially, an economic incentive for nodes to do their jobs properly. Without cryptocurrency, node operators would have little reason to support the blockchain network beyond goodwill.

With native cryptocurrencies representing digital value, blockchain networks use consensus mechanisms to facilitate network operations like transferring assets or adding and validating new blocks. For example, sending Bitcoin from one person to another incurs a transaction fee (sometimes called a "gas fee") for using network resources like electricity and computing power.

These transactions are batched into blocks and added to the shared ledger by network nodes. In turn, nodes receive cryptocurrency compensation for their participation.

Crypto Wallets: Storing Assets and Connecting to Web3

With all this cryptocurrency exchanging hands to power decentralized networks, people need a way to store their assets. Crypto wallets are designed for this purpose. They allow Web3 users to store cryptocurrency, transfer it to others, pay transaction fees, and more.

Basically, if you’re interacting with Web3, you need a crypto wallet. Why? Because Web3 relies on blockchain networks, blockchains rely on cryptocurrency to facilitate operations, and cryptocurrency requires a wallet for storage, sending, and transacting. A crypto wallet is your passport to Web3. The only difference is that, unlike a travel passport, a crypto wallet isn’t issued or managed by any central authority like a government.

How Do Crypto Wallets Let You Log Into Web3 Apps or Sites?

Crypto wallets use private keys to access public "addresses" that can replace traditional login credentials.

A typical blockchain public address looks like this:

0x634790328Ab021cA1E9Cf80457E8f8eFc5E8bA79

This address is a unique wallet identifier—think of it as a username. When you access an app or website on Web3, you’ll be prompted to connect your wallet. To do this, you authorize the connection using your wallet address and private key (which functions like a password).

The key difference is that in Web 2.0, a username and password grant access to only one app. In Web3, your wallet address and private key together grant access to any app or website on Web3. Because these services integrate with blockchain, cryptocurrency, and crypto wallets, your wallet address can serve in place of an email and password—potentially helping you maintain anonymity across supported services.

This is the beauty of decentralization: it’s built into the core of how people interact with Web3.

The Foundation of Web3

Blockchain and cryptocurrency aren’t just odd, unrelated parts of the Web3 movement. They are essential components of the decentralization that makes Web3 possible. They are core ingredients of the entire system.

All these technologies combine to create a decentralized version of the internet—this new thing called Web3.

👉 Discover tools for connecting to Web3

Frequently Asked Questions

What is the main difference between Web 2.0 and Web3?
Web 2.0 relies on centralized servers controlled by companies, while Web3 uses decentralized blockchain networks. This means no single entity has full control over data or access in Web3, offering greater transparency and user autonomy.

Do I need to own cryptocurrency to use Web3?
Not necessarily for all activities, but many Web3 applications require cryptocurrency for transactions, fees, or interactions. Having a crypto wallet is often essential to fully participate in the Web3 ecosystem.

How secure are blockchain transactions?
Blockchain transactions are highly secure due to cryptographic hashing, decentralization, and consensus mechanisms. Altering a transaction requires controlling most of the network, which is practically impossible on large, established blockchains.

Can I remain anonymous on Web3?
While wallet addresses don’t directly reveal your identity, transactions are publicly visible on the blockchain. True anonymity requires careful practices, as sophisticated analysis can sometimes link addresses to real identities.

What are the disadvantages of Web3?
Current challenges include scalability issues, complex user experiences, volatility in cryptocurrency values, and energy consumption in some consensus mechanisms like Proof of Work. However, ongoing innovations aim to address these limitations.

Is Web3 the same as the metaverse?
No, Web3 refers to the decentralized web built on blockchain, while the metaverse is a concept of a virtual shared space. Web3 technologies can support metaverse platforms, but they are distinct ideas.

Embracing the Decentralized Web

Blockchain, cryptocurrency, and crypto wallets are not just buzzwords—they are foundational technologies enabling a more open, transparent, and user-controlled internet. Understanding these basics helps you navigate Web3 with confidence, whether you’re trading digital assets, exploring DApps, or simply learning about the future of the web.

This shift toward decentralization promises to redefine how we interact online, emphasizing security, privacy, and user empowerment. As the ecosystem evolves, these technologies will continue to mature, offering new possibilities for innovation and engagement.