HOW SAFE IS WEB3?
Web3. The era where decentralization is seen as the solution to many problems faced in traditional web structures, questions about safety arise persistently. As blockchain technology and decentralized applications (dApps) gain popularity daily, concerns surface regarding the security and reliability of these new systems. “How safe is Web3?” you may ask. To answer your question, i think it all depends on the point of view from which you approach Web3.
Let’s start by understanding what Web3 is and how we got to this point with Web3.
Web3 refers to the third evolution of the World Wide Web, characterized by decentralized and distributed technologies that aim to change the way information and value are exchanged online. Unlike Web2, which relies on centralized servers and intermediaries, Web3 leverages blockchain technology such as the Arbitrum blockchain where the Sperax Team decided to build, and decentralized protocols like the Sperax Demeter farming protocol to create a more open, transparent, and trustless environment.
Web3 is seen by many as an upgrade to Web2, as many things that couldn’t be done in Web2 are now being carried out in Web3. In Web3, users have greater control over their data, digital identities, and assets, reducing reliance on third-party entities that are mainly centralized.
Web3 did not just appear out of thin air. It came into existence as a result of the need to change the centralized nature of Web2, particularly in the financial and banking sector. This gave rise to many cryptocurrency and blockchain projects like the first and arguably the most popular digital token, Bitcoin. Other protocols and tokens soon entered the space, and not too long afterward, the Sperax Team decided to introduce their native token; the $SPA token. Along with $veSPA, $xSPA and their stablecoin $USDs.
With $veSPA being the non-transferable token you receive after staking your $SPA tokens and then $xSPA being the reward token you earn as a reward for actively participating in governance activities within the Sperax ecosystem such as voting on the SPA Gauge. Lastly, $USDs being the stablecoin pegged to the USDollar with the superb ability to generate up to 10% APY without the need to stake.
In Web2, the internet is like a big open field where everyone shares and accesses information. But there’s a catch — it was overly centralized. Everything and everyone that had something to do with the internet had to go through one server or another, and these servers belonged to only a few tech giants like Microsoft, Google, Apple, and so on. These tech giants were able to collect and store the information of the users who interacted with their servers and then allegedly sell this information to other firms that needed it, such as marketing or ad agencies.
Have you ever wondered why your phone will suddenly show you an ad for a product that you once tried to research on the internet? Well, this is because your browsing data is being collected by these tech giants, and they show you ads that are directly related to the things you search for over the internet. Did I hear you say ‘invasion of privacy’? Well, that’s right, and this is what called for the need for Web3, with an emphasis placed all around making everything decentralized.
If you think Web2 isn’t good because those tech giants can easily sell our data, well, we kind of brought that problem upon ourselves. You see, before Web3 and Web2, we had Web1 where every action we could do on the internet didn’t really require the input of the end user. Web1 was mainly characterized by the fact that it was a ‘read-only’ interaction type of situation, meaning users could not directly communicate as they wished over the internet because the early internet days allowed users to read information provided by a few tech companies at that time, like Yahoo. Users could only read whatever information was displayed on their screens. Web1 was filled with a lot of consumers, and they began to ask for a more open internet where they can express their opinions, leading to the birth of apps like Facebook and Twitter. As we both know, to sign up for Facebook, you have to provide some of your private and personal information like your birthday and your name. This is how those tech giants get your private data.
Now, imagine Web3 as a new and improved version of the internet. Here, no single tech giant is in control of your data. Web3 uses cool things like blockchain and decentralized tools, making it more open and fair. You get to have more control over your own stuff. In a nutshell, Web3 is like a better and fairer version of the internet compared to Web2!
After reading the paragraph above, you might conclude that Web3 is absolutely safe because your data is not being given out to anyone, but all that glitters isn’t gold. Now that you understand the major points in Web3, which are primarily centered around decentralization, blockchain technology looks ready to lead the next phase. Let us examine the benefits and dangers. If you don’t know by now, a blockchain is a decentralized and distributed ledger that securely records transactions across a network of computers, ensuring transparency, immutability, and trust in a tamper-resistant manner. A good example is the Arbitrum blockchain.
Now, there are a whole lot of things that can be done on the blockchain, such as the creation of SocialFi dapps, DeFi protocols, and many more. While blockchain technology and Web3 offer promising innovations with decentralized systems, they are not without their share of potential dangers. Personally, the main concern i have with blockchain and Web3 as a whole is the anonymity provided to users. This anonymity could be misused by a lot of people out there to engage in illicit activities, such as money laundering, crypto scams, and the financing of terrorism. The decentralized nature of blockchain also makes it really difficult for the right authorities to take action in criminal situations like this. For instance, a shop that accepts cryptocurrency like $SPA or a stablecoin like $USDs in exchange for goods and services might unknowingly have made life easier for a fugitive who is hiding from federal authorities. When you pay for goods or services with cryptocurrency, using a wallet address you created yourself, not the type from a centralized exchange, there is almost no way the transaction can be tracked back to your real identity. The same thing applies to crypto scams. Once your tokens get stolen from your wallet, unless the scammer moves your funds to a centralized exchange where the exchange can freeze all activities of the suspect’s account, there is little to no help the authorities can offer you to help you recover your tokens, unlike a traditional banking system where the bank can decide to freeze the account of the suspected fraudster. Additionally, the reliance on consensus mechanisms like proof-of-work in many blockchain networks contributes to significant energy consumption, leading to environmental concerns.
Crypto scams and rug pulls are among the most prevalent negative aspects of cryptocurrency and blockchain technology. The rise of blockchain technology brought about the emergence of stablecoins and other cryptocurrencies, contributing positively to economic indicators such as capped supply and enhanced investment opportunities. However, many people lack sufficient knowledge to understand the underlying technology behind blockchain and cryptocurrencies, which operates on a lot of smart contracts. Instances of rug pulls where projects suddenly collapse can hinder potential users from embracing this technology. For example, Terra USD was supposed to remain pegged to the US Dollar. Terra USD experienced a depegging and devastating implosion that left investors and individuals who had invested their life savings in the coin penniless and broke. On the bright side, the stablecoin from Sperax, $USDs which is firmly pegged to the USDollar with multiple mechanisms to keep it pegged. With the ability to generate APY of up to 10% for simply holding in your wallet, not only do you get those sweet passive income on your $USDs, you don’t have to worry about it depegging!
Furthermore, for those who has been in the crypto space for a long time now, you must have heard of the scandal involving Sam Bankman-Fried and FTX. FTX is a centralized cryptocurrency exchange founded in 2017 by Sam Bankman-Fried. FTX gained popularity for offering various trading products, including spot trading, futures trading, tokenized stocks, and prediction markets. Unfortunately, mismanagement of customer funds led to FTX declaring bankruptcy, leaving them unable to return funds to their customers. This left many customers financially devastated with little or nothing they could do about it.
Despite the negative aspects of Web3 mentioned above that may cast doubts on its safety, Web3 has its own benefits and security features. For instance, to complete a transaction, especially the transfer of a large sum in the traditional banking system of Web2, you would be required to go through various authorization processes that consume a significant amount of time. In Web3, your typical cryptocurrency wallet address doesn’t require you to navigate through extensive authorization processes, and even if there are any, they are usually simplified like a passcode. Also, transactions conducted on the blockchain are usually finalized almost immediately, meaning they don’t take as much time as traditional banks would to complete a transaction. For example, you need to pay a friend in USDollars. You can easily exchange your FIAT for $USDs to complete your transaction with your friend. To exchange your FIAT for $USDs,
- Head over to https://app.sperax.io/ and you’ll see a page as shown in the screenshot below
2. Click on the ‘Buy SPA & USDs’ button i have underlined in brown in the screenshot above.
3. Then click on ‘Buy USDs’ as seen in the screenshot below then choose your preferred option to complete the transaction.
Economic advantages are also noteworthy, as unlike traditional fiat where governments can easily print more money, leading to a rise in the inflation rate, the supply of most cryptocurrencies is usually finite, indicating a limited number of these tokens in circulation. The $SPA token has a total supply of 4.611 Billion tokens. My favorite feature which is also my main concern about Web3 and blockchain technology is the anonymity aspects. You and I don’t have to worry about any tech giant collecting our data, as we aren’t required to provide any of our private information when creating a new wallet on any blockchain whatsoever.
Back to the main question I highlighted at the beginning of this article: ‘How safe is Web3?’ Personally, I think Web3 is really safe and transparent. All you have to do is make sure that you understand the basics and the technical aspects of Web3 so you don’t fall into any scams. Leave your opinions in the response section below. I want to hear it all.
I remain your humble friend Mary-the-guru and I’ll catch you in the next one!
#SperaxCreator