What is the Core Technology of Web3?

A Comprehensive 2025 Explainer of Web3

The internet has evolved over time. It all started with Web1, composed of “read-only” static web pages. Then, during the late 1990s and the early 2000s, Web2 arrived: it is the internet we know today, based on “read-and-write” interactions, eventually dominated by social media and user-generated content on centralized platforms. But as of 2025, we are entering the era of Web3, a new paradigm often described as "read-write-own." This fundamental shift will bring the internet into a more decentralized, equitable, and user-controlled era. But what is the engine driving this transformation? This article will explore the core technology of Web3 in a clear, straightforward way, using bullet points to explain easily and in detail all the key components that are contributing to tomorrow’s internet.

What is Web3?

Before plunging ourselves into the Web3.0 technology, it's crucial to understand that the Web3 is built upon the principles of decentralization and blockchain technology. Unlike Web2, where a few large corporations control the platforms and user data, Web3 aims to distribute that control back to the users themselves. It represents a new iteration of the internet, communally owned and operated by its builders and user, who are free of charge and free of external control. At the same time, it solves many of the security issues that critically plagued the previous system.

This vision is guided by a few foundational principles:

• Decentralization: Instead of data and applications living on servers owned by a single company (like Google or Meta), they are distributed across a peer-to-peer network of computers. This eliminates single points of failure and control.
• Data Ownership: You, the user, control your own data and digital assets. Your identity, money, and property are yours to manage through a personal crypto wallet, not an account that can be suspended or deleted at a platform's whim. All your internet accounts can be safely stored and managed on your own terms. 
  
  
• Trustlessness: Interactions and transactions are verified by a secure and transparent protocol, instead of trusting a third-party intermediary like a bank or tech company. As software developers say, the code is the law: there is no possibility to break the system. The more the technology progresses, the more all the interactions get safer than they are today, as we are currently exposed to the risks of scams.  
  
  
• Permissionless: Anyone can access the Web3 network and build applications or services on it without needing approval from a central authority. This fosters cooperative innovation and novelty. 
  
  

What is the core technology of Web3 and how does it work?

Web3 is not identifiable with a single technology. Rather, it consists of a collection of interconnected technologies and protocols that work in concert to create a decentralized online experience, collectively known as “stack. Let’s break down the essential layers of this stack.

The Foundational Layer: Web3 Blockchain Technology

At the base of the Web3 technology stack is the blockchain network layer, which replaces the old centralized databases of Web2. All Web3 application is built on top of a blockchain architecture.

• What it is: A blockchain is an advanced and distributed database, that is, a digital ledger  shared and synchronized across many computers in a network. They can be used to create an immutable and transparent record of data, since, when a transaction or piece of data is added, it is cryptographically secured and cannot be altered. Somehow they became famous with the birth of cryptocurrencies, which often use Web3 blockchains as base infrastructure. 

• How it works for Web3: Blockchains serve as the decentralized and secure backbone for everything else. Once the code is operational, it removes the need for central authorities to validate transactions or prove ownership. The networks itself automatically handles and secures these transactions. Web3 offers various benefits, as enhanced security, better traceability and increased efficiency. 

The Second Layer: Smart Contracts
 
If the blockchain is the foundation, smart contracts are the automated rules and logic that operate on top of it. Smart contracts can perform all kind of functions without the need for manual intervention.

• What they are: Smart contracts are self-executing programs with predefined rules and conditions written directly into code. They are stored on the blockchain and are executed automatically upon fulfilling some terms and criteria, provided that predetermined conditions are met. 
  
  

• How they work for Web3: They are the engines that power decentralized applications (dApps). They automate agreements, enforce rules, and handle transactions without the need for a human intermediary, enabling complex operations from financial trades to governance votes. By reducing costs and eliminating intermediaries, they have become the protagonists of the business digital revolution occurring on the web3.

 Owning Digital Assets: NFTs, Identity and More

• What they are: The ownable goods are assets that exist purely in digital form, primarily as cryptocurrencies and Non-Fungible Tokens (NFTs). Otherwise said, NFTs are unique digital assets, built on top of a blockchain, that represent ownership of specific items.
  
  

• How they work for Web3: Cryptocurrencies (like Ethereum, Bitcoin and so on) act as the native currency to pay for transactions and incentivize network participants. NFTs represent verifiable ownership of a unique digital (or even physical) item, from art and collectibles to game items and digital identity credentials.
  
  
• Freename Example: A perfect example of a user-owned digital asset is a Freename Web3 domain. Traditional domains of Web2 are leased by a centralized authority, and the user must routinely pay a fee to be allowed to use it according to his own wishes. A Freename Web3 domain, instead, is an NFT you truly own in your wallet, serving as your unified digital identity, website address, and simplified payment destination across the Web3 ecosystem.

The Connectivity Layer: Oracles and Decentralized Networks

• What they are: Oracles are services that act as a secure bridge, feeding external, real-world data to smart contracts. Decentralized storage networks provide distributed file storage.
  
  

• How they work for Web3: Oracles allow dApps to react to real-world events (e.g., stock prices, weather data). Decentralized storage allows websites and dApp front-ends to be hosted in a way that is resistant to censorship and single-point-of-failure outages.
  
  

  The Web3 Ecosystem: Examples, Economy, and Opportunities
  
  

This core technology stack enables a vast and rapidly growing ecosystem of applications and opportunities that are changing how we interact online. Here’s a quick overview:

• Web 3 examples: Web3 powers diverse applications, from DeFi (Decentralized Finance) which offers banking services without banks, and GameFi (Play-to-Earn gaming) where players own their in-game assets, to DAOs (Decentralized Autonomous Organizations) that are collectively owned and managed by their members. A primary use case is digital identity, exemplified by Freename's Web3 domains, which provide a single, user-owned name for your entire digital life.
• What is Web3 in crypto? The ecosystem runs on crypto. Cryptocurrencies are the native "fuel" used for nearly everything: paying for transaction fees (gas), participating in project governance, incentivizing network security, and as the primary currency within dApps. They are part of the Decentralized Finance real-life applications of Web3 services.  
• How to invest in Web3: Getting exposure to the ecosystem can range from acquiring core cryptocurrencies of major blockchain platforms (like Ethereum or Bitcoin) and purchasing unique digital assets (like NFTs or valuable Web3 domains), to investing in the stock of public companies that are building Web3 infrastructure. Before making any investment, it is very important to trust your intermediary and to understand what you are paying for. 
• Web3 jobs: This new internet is creating a burgeoning job market with high demand for new roles. Careers are opening up for Smart Contract Developers, Web3 Community Managers, dApp UX/UI Designers, Product Managers, and Growth Marketers who understand the unique dynamics of decentralized communities.

In sum, the core technology of Web3 is not one single invention, but a powerful stack of decentralized components: blockchain, smart contracts, digital assets, and connectivity protocols working together. Each layer contributes to the ultimate vision: building a more equitable, transparent, and user-centric internet where individuals have true ownership of their data and identity.