What You Need to Know About Web3: Wallets, DApps, and Tokens

Web3 is taking the world by storm and the internet is going to be a more decentralized place where users have control over their data, assets and digital interactions. But for those new to the space, it can feel like jumping into a sea of unknown terms: wallets, decentralized applications (DApps), tokens—what does it all mean and how do you actually get started?

In this post we’ll cover the basics to get you started with Web3, including the essential tools like wallets, how to use DApps and the different types of tokens you’ll encounter along the way. If you’ve been thinking of dipping your toes into DeFi or even cryptocurrency trading, this guide will give you the foundational understanding you need.

As you get into Web3, platforms like Bybit are a great entry point especially for crypto trading and DeFi. The Bybit app download is a quick and easy way to get started with Web3 and it’s beginner friendly while still having advanced features for those who want to dig deeper.

What is Web3?

First things first: what is Web3 and how is it different from the internet you’re using right now? Simply put, Web3 is the next iteration of the internet where users interact with decentralized platforms that aren’t controlled by any one entity—like the big tech companies of Web2 (Google and Amazon included).

Instead of data and assets being stored on centralized servers, Web3 uses blockchain technology which distributes data across a network. In Web3 users have direct ownership over their assets and data and interactions happen through smart contracts which are self executing contracts built on blockchain. This decentralization reduces the power of middlemen and gives more control back to users.

Get Started with Bybit

If you’re new to the Web3 space, cryptocurrency trading is a good place to start and Bybit makes it easy. With the Bybit app download you can access markets for cryptocurrencies, trade tokens and even DeFi products. The platform is designed for both beginners and advanced users so you can get comfortable with crypto and still have the option to dive deeper into more complex Web3 stuff like derivatives and staking.

Step 1: Get a Web3 Wallet

To use Web3 you’ll need a digital wallet. In Web2 you use accounts to log into apps or platforms, often with an email and password. In Web3 your wallet is your entry point to everything. Think of it as your personal keychain, where each key represents access to different DApps and blockchain networks. Your wallet also stores your cryptocurrencies and tokens which can be used for transactions, staking or voting in decentralised governance. 

There are two types of Web3 wallets: hot wallets and cold wallets.

Hot wallets are software based and connected to the internet, perfect for daily use. These are browser extensions or mobile apps like MetaMask or Trust Wallet. Hot wallets are convenient but slightly less secure than cold wallets because they are online.

Cold wallets are hardware based and store your private keys offline, much more secure from hacking. Popular cold wallets are Ledger and Trezor. Cold wallets are usually recommended for holding large amounts of crypto or valuable tokens.

Step 2: Explore Decentralized Applications (DApps)

Now that you have your wallet set up you can start exploring DApps. DApps are decentralized applications that run on blockchain networks. Unlike traditional apps, DApps don’t rely on centralised servers or companies; instead they run on smart contracts and peer to peer networks. This makes them more transparent, secure and often more private than Web2 applications.

DApps cover a wide range of services from decentralized finance (DeFi) platforms to NFT marketplaces and even decentralized social networks. Some of the listed items below are popular examples:

Uniswap

A decentralized exchange (DEX) where you can swap different cryptocurrencies without a middleman.

OpenSea

An NFT marketplace where you can buy, sell and trade unique digital assets.

Aave

A DeFi platform where you can lend or borrow cryptocurrencies without a bank.

When using a DApp you need to connect your Web3 wallet to the platform. This is different from Web2 where you create an account with a username and password. In Web3 your wallet connects directly to the DApp and that’s how your transactions or interactions become authenticated.

Step 3: Tokens and Cryptocurrencies

Another key part of Web3 is tokens. Tokens represent value on a blockchain and come in different types. Here are a few you’ll see:

Cryptocurrencies

These are the most well known type of token, with examples like Bitcoin (BTC) and Ethereum (ETH). They’re used for transactions and storing value.

Utility tokens

These tokens give holders access to specific features or services within a blockchain ecosystem. The token used on the Ethereum network to pay for gas fees (transaction costs) is ETH.

Governance tokens

These tokens allow holders to vote on decisions for decentralized projects. For example, holding governance tokens for a DeFi platform like Compound or Aave means you get to vote on the platform’s future updates or policies.

Non-fungible tokens (NFTs)

NFTs are unique, indivisible tokens that represent ownership of specific digital assets, like artwork, music or even virtual real estate. Unlike cryptocurrencies which are fungible (one Bitcoin is the same as any other Bitcoin), NFTs are one-of-a-kind, so they’re perfect for digital collectibles.

What’s Coming Next

Getting started with Web3 can seem daunting but it doesn’t have to be. By setting up a wallet, learning how DApps work and understanding different types of tokens you’ll be well on your way to this new internet. As Web3 evolves, we’ll see more applications that make using decentralized platforms easy and we’ll be one step closer to a world where we have autonomy over our money and data.