How does Web3 work with NFTs?Jun 05, 2023
If you're new-ish to NFTs and Web3 here's what they are:
- Web3, aka the current internet, allows NFTs (digital collectibles and assets) to be bought and sold, mainly with cryptocurrency, and recorded on the Blockchain. This is done without a middleman.
- The Blockchain part is important, because that's how your NFT has a permanent record of the exact time, date and info of the sale. It confirms the provenance, or origin, and additional sales of the NFT.
For example, if you were buying the Mona Lisa, the transaction on the Blockchain would tell you, in digital format, who (via their public wallet address) bought it from Leonardo da Vinci first, the date, time, and exact information on the painting and then each sale until it ended up in the Louvre in Paris.
Web 1 v Web2 v Web3
- Web1 (1990-early 2000s)
The internet was new. It had static boring web pages. You found sites on directories like Yahoo. Web1 was built on a set of rules for formatting and processing data, called open protocols, like HTML.
- Web2 (early 2000s-today)
The big change was ease of use, beauty and interactivity.
But it came with a high cost. Web2 is built on client-server architecture where users are the client, and big companies control the servers (like Google). These tech giants, aka middlemen, make money from users on both sides by following your every movement online to use it (think targeted ads, etc) to make billions of dollars.
- Web3 (2020+)
The major change in Web3 is trust. It's built on peer-to-peer networks of computers that talk to each other without middlemen. The beauty of the Web3 vision is for you to create, buy, sell and trade directly -without the need for a 3rd entity to assist you. It's 'decentralized'.
- You don’t have to trust banks to get paid
- You don’t have to trust lawyers to draft a contract
- You don’t have to trust social networks to make a living
How do Web3 transactions work?
Cryptocurrency and a Blockchain
- Cryptocurrency allows anyone in the world a way to get/use funds without a middleman (bank) as long as they have internet access.
- Cryptocurrency is digital money, like Bitcoin or Matic or ETH, that is bought with fiat currency (dollars, euros) and is used to buy/sell/trade digital assets including NFTs.
- A Blockchain stores NFTs and other data in blocks that are linked together in a chain of blocks.
- A Blockchain is an online digital ledger that records crypto transactions (NFT sales) without a middleman.
- The transaction (NFT sale) is recorded on a block on the Blockchain confirming the date, time, and token/NFT info.
SchizoPops (nfts) on Opensea
Currently, NFTs rely on Web3's crypto and blockchain to be bought and sold. As more people buy and sell them, it's inevitable that big business will get involved and change that. In fact, Christie's auction house sold one of the most expensive NFTs in the world with the gavel coming down at $69 million.
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