Understanding the Relationship Between Web3 and Blockchain


Blockchain and cryptocurrencies are driving the revolution of Web3, enabling decentralization, security, and transparency. Embracing these transformative technologies offers benefits such as faster transactions, improved efficiency, and cost savings, while reshaping the digital economy and empowering users with trustless interactions.

Although blockchain, a type of distributed ledger or database that’s used to validate and store digital transactional records, and Web3, the next iteration of the World Wide Web, are different technologies, they are still closely related.

While blockchain technology helps organizations securely store and manage data without the need for intermediaries, Web3 is a decentralized web that allows companies to create decentralized apps (dApps) and services. Using such technologies as blockchain and distributed ledger technology, the goal of Web3 is to establish an increasingly transparent and secure Internet.

Supporting Web3 Infrastructure

Combining blockchain with Web3 technologies lets organizations build more efficient, secure, and transparent apps. Consequently, the connection between the two is the underpinning of a new digital economy in which assets are stored securely and exchanged without intermediaries.

Blockchain and cryptocurrencies play major roles in creating the Web3 infrastructure by enabling companies to decentralize the services of Web2, including databases, social networking sites, and cloud computing. However, there are other technologies that allow dApps to analyze data in a Web3 environment much the same way as humans do it. These include:

Because dApps are built on top of decentralized technologies, such as blockchain, they allow users to interact with decentralized systems as they would with traditional web apps. And developers can use dApps to build a variety of applications, such as supply chain management apps, financial apps, and social networking platforms.

Blockchain is also changing the way transactions happen on the Internet as the technology enables users to complete online transactions without the need for third-party services, such as banks, Visa, Amazon, and Google.


Moreover, Web3 and blockchain encourage openness and transparency. With Web3, users can use cryptographic keys to access content, agreements, resources, and applications.

How Blockchain and Crypto Fit Into Web3 Technology

Here are a few ways blockchain and cryptocurrencies fit into the open, accessible, and borderless Web3 technology:

  • Permissionless access

Blockchain-based projects replace the proprietary systems of traditional organizations with code that’s openly available. The permissionless nature of the apps built on the blockchain enables anyone across the globe to access them and interact with them without any restrictions.

  • Decentralization

One of the main problems of Web2 is that the power and data are concentrated among a few major stakeholders. However, blockchain and cryptocurrencies decentralize Web3 by more widely distributing information and power.

Using distributed public ledges powered by blockchain, Web3 enables greater decentralization and transparency.

  • Digital payments infrastructure

Since cryptocurrencies are borderless and don’t need intermediaries, they can act as Web3’s digital payments infrastructure, improving Web2’s bulky and expensive payment infrastructure.

  • Trustless transactions

With blockchain and cryptocurrencies, users don’t have to trust an intermediary, such as a bank. Web3 users can complete transactions without having to trust any third party except the network itself.

  • Ownership and transparency

Cryptocurrencies offer such tools as self-custody crypto wallets that enable users to store, manage, and trade cryptocurrencies without requiring intermediaries.

Additionally, when users connect their wallets to decentralized applications, they can use their funds for a variety of reasons, and using a transparent public ledger, anyone can verify who owns these funds.

  • Immutable transaction records

Blockchains are designed so that no one party can alter the transaction record because once a record is added to the blockchain, it’s virtually impossible to remove it.

Benefits of Blockchain in Web3

As blockchain and Web3 technologies are adopted more widely, companies are identifying a variety of ways to take advantage of this combination of technologies.

Here are some of the ways a blockchain-based Web3 can benefit businesses:

Improved security: Blockchain’s distributed ledger system enables secure transactions without the need to rely on intermediaries or third parties. As such, organizations’ data is better protected from fraud and cyberattacks.

More rapid transactions: Blockchain tech processes payments much faster than traditional methods for payment processing. Consequently, it’s perfect for apps such as online shopping.

Cost savings: Blockchain networks are decentralized, which means companies don’t have to spend money on servers or any other related overhead expenses. Therefore, organizations can save money on transaction fees and other charges.

Enhanced transparency: Since blockchain provides a digital chain of custody, it’s easier for companies to track assets from one point to another. This helps organizations keep accurate records and remain compliant with regulatory requirements.

Improved efficiency: Blockchain tech automates time-consuming routine tasks, improving workflow and reducing operational costs.

The Bottom Line

Blockchain is the foundation for Web3, especially since it transforms the structure of data in the backend of the web. The main feature that makes it the foundation for Web3 is decentralization.

Web3 and blockchain technologies are closely related as Web3 tech uses decentralized technologies to establish secure and transparent systems for interacting with the internet.

Blockchain and Web3 are key parts of the emerging digital economy. By employing these powerful technologies, organizations can take advantage of faster transactions, better security, enhanced transparency, and cost savings. As blockchain offers cryptographic proof of a series of transactions, its use in Web3 is critical, particularly in terms of boosting trust among users.

Technically speaking, Web3 is an assortment of blockchain-based protocols that aims to change the wiring of the internet’s backend.

Blockchain and cryptocurrencies are working to further the Web3 revolution, as their goal is to facilitate permissionless, decentralized, and trustless interactions.


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Linda Rosencrance
Technology journalist

Linda Rosencrance is a freelance writer and editor based in the Boston area, with expertise ranging from AI and machine learning to cybersecurity and DevOps. She has been covering IT topics since 1999 as an investigative reporter working for several newspapers in the Boston metro area. Before joining Techopedia in 2022, her articles have appeared in TechTarget, MSDynamicsworld.com, TechBeacon, IoT World Today, Computerworld, CIO magazine, and many other publications. She also writes white papers, case studies, ebooks, and blog posts for many corporate clients, interviewing key players, including CIOs, CISOs, and other C-suite execs.