Web3 for beginners: How the decentralized Internet works

Web3 is a decentralized vision of the Internet that gives users ownership over their data, identities, and digital assets. Built on blockchain technology, Web3 challenges the centralized models of Web2 platforms like Facebook and Google by offering peer-to-peer (p2p) alternatives without middlemen.

With Web3, you can participate in decentralized applications — called *dApps *— without handing over your personal information. It’s designed to be trustless, transparent, and more resistant to censorship. But this new Internet also comes with new risks, and privacy must be protected at every layer.

Thankfuly, privacy tools built on the same principles of trustlessness, open source, and decentralization can help. So let's see how.

Web3 vs Web2: What’s the difference?

Web2 has dominated the Internet until today: largely Big Tech platforms own the underlying infrastructure of our apps, control our data, and monetize our behavior.

It includes major social media platforms like Facebook, Instagram, Twitter (X), as well as the first versions of decentralized DePIN apps like Uber and AirBnB which quickly became centralized enterprises.

In contrast, Web3 uses blockchain to enable decentralized apps that are run by code and governed by communities.

Key features of Web3

• Blockchain-based architecture: A decentralized ledger that records transactions securely and transparently across a network of computers.

• Token ownership and rewards: Digital tokens give users ownership stakes or incentives in decentralized applications.

• Decentralized identity systems: Self-sovereign identity models that let users manage credentials without relying on centralized platforms.

• Public ledgers and transparency: All actions and transactions are recorded on a visible, immutable ledger.

• User-controlled wallets instead of platform logins: Crypto wallets act as secure login systems and enable direct interaction with dApps, without sharing personal information.

This puts power back in the hands of users. But if Web3 is not paired with strong privacy protection tools, as Nym has long argued, it can be a trainwreck in the making for personal data.

How does Web3 work?

In Web3, users interact directly with applications through crypto wallets. These wallets serve simultaneously as identity authentication, payment method, and access point. Smart contracts — self-executing programs stored on the blockchain— handle the backend logic. They automatically enforce rules and execute transactions without the need for a centralized authority.

Most dApps are built on public blockchains like Ethereum or Solana, where code and data are openly visible. This is great for transparency, but it can also compromise privacy without additional protections.

The uses of Web3: From DeFi to digital art

The rise of Web3 has led to a wave of experimentation and new economic models that don’t rely on centralized intermediaries. These use cases range from financial tools to identity systems — all powered by blockchain and smart contracts.

Web3 has unlocked entire new industries:

• DeFi (Decentralized Finance): Platforms like Uniswap and Aave offer lending and trading without banks

• NFTs: Non-Fungible Tokens are blockchain-based assets that represent unique items — often digital art — with verifiable ownership and scarcity.

• DAOs: Short for Decentralized Autonomous Organizations, these are community-led entities that manage resources and make decisions via transparent on-chain voting.

• Identity authentication: Tools like ENS (Ethereum Name Service) replace email logins with self-owned credentials.

Each use case expands what’s possible online. But they also introduce new data exposure risks.

Benefits of Web3: Ownership, Autonomy, and Openness

When used securely, Web3 offers:

• Data control: Your wallet = your identity

• ** Censorship resistance**: No single point of failure

• Financial access: Permissionless platforms available 24/7

• Transparency: Every transaction and rule is on-chain

How to access Web3 safely and privately

Navigating Web3 isn’t as simple as opening a browser tab. It requires a layered approach to security that accounts for both blockchain transparency and internet metadata.

Here are some concrete things you can do to protect your identity and data from surveillance:

1. Use a privacy-focused browser like Brave or Tor

2. Download a crypto wallet (e.g., MetaMask, Rabby). Consider using a burner wallets for high-risk or experimental apps

3. Connect through a decentralized VPN like NymVPN to protect your IP address

4. Never share personal info in dApps or forums

This setup improves anonymity while letting you explore what Web3 has to offer.

Web3 Is transparent — But that doesn’t mean it’s private

Transparency is a double-edged sword. While it allows users to audit smart contracts and trace fund movements, it also makes every transaction part of a permanent, public ledger. This can be risky if wallet addresses are ever linked to real-world identities.

Blockchain records are public and permanent. Wallet addresses can be traced across transactions, and even pseudonymous activity can be linked with enough data.

To stay private:

• Prefer decentralized exchanges (DEXs) over centralized ones

• Avoid reusing wallet addresses tied to your identity

• Route all traffic through a decentralized and mixnet-based VPN like NymVPNto avoid metadata leaks

Tools like Tor or decentralized VPNs can add another layer of anonymity.

Risks of Web3: Scams, surveillance, and data leaks

Because Web3 is open, it’s also unregulated. Smart contract bugs, phishing sites, and social engineering attacks are common. And while apps are decentralized, your network data is not — that is, unless you make it so with decentralized metadata protections.

Privacy matters in Web3 even more than Web2

Privacy isn't just about hiding information: it's about preserving freedom in a networked world. Web3’s decentralized design offers strong security guarantees, but it also introduces visibility that could be exploited without protective layers.

Decentralization alone doesn’t equal privacy. You might control your identity and assets, but if your wallet is tied to your real IP, your activity can still be tracked.

You've already turned to Web3 for decentralization, why not take decentralization even further with protecting your data? In the end, the more decentralized your privacy stack, the harder it is to surveil you.