Today, Web3 promises to build verifiability into core networks, enabling content and programs to link directly to each other without intermediaries, governed by decentralized protocols.
The promise of Web3 is that such a decentralized architecture will give their users more ownership of their data, and enable them to browse web content without advertisements or a centralized platform monitoring their activity. In short, it promises anonymity and privacy.
For content creators, Web3 will enable them to distribute content peer-to-peer, as well as give them more opportunities to monetize such content directly, rather than relying on intermediary platforms. To put it more bluntly, Web3 promises to decentralize the internet, much like how Bitcoin has decentralized money and payments.
The issue is that it remains to be seen how such decentralized, peer-to-peer networks can survive and protect against hacks – how exactly will they afford to manage infrastructure, and how can security be guaranteed?
Maintaining security in a decentralized world
In a decentralized world, making updates to address security problems is harder. And while users get to maintain control over their identities and web activity, the lack of intermediaries makes it difficult to fight back against hacks.
With Web3, transactions cannot be changed or reversed after they’ve been completed, so mechanisms have to verify if they should occur in the first place. Security mechanisms have to be laser accurate about verifying whether these transactions should occur in the first place.
And then there are other issues such as misinformation and disinformation. While decentralization makes censorship by a centralized authority more difficult, it also gives rise to low-quality and inaccurate information. Who’s there to stop bots and trolls? Such a platform could quickly become very spammy.
And while distributed networks may have security benefits of their own, they are not immune to software exploits, bugs, or even human error. With decentralized networks and Web3, there is a significant amount of money locked in DeFi applications, and these can be attacked by hackers directly. This makes for a highly incentivizing environment for hackers.
Centralized exchanges can provide security for a Web3 world
Such security issues can be daunting to the average user. This is why most of them stick to centralized exchanges. At the end of the day, most users want a trading experience that can offer them many tokens to trade, and a platform that is easy-to-use and secure. So in a decentralized Web3 world, where does a centralized exchange like Huobi Global fit in?
Huobi Global believes that centralized exchanges can act as simple onboarding portals between Web2 and Web3. After all, centralized exchanges tend to be where the majority of users access cryptocurrencies for the first time, and are where the bulk of them store their money.
Huobi Global plans to enable users to create decentralized identifiers, or DIDs, which are widely considered prerequisites for users looking to access the metaverse. As verifiable, decentralized identities, DIDs will enable users to connect all of their virtual assets and NFTs, while providing the security, ownership and interoperability that a centralized exchange has to offer. In addition, these identities will also act as a gateway to future Dapps, or decentralized applications and games.
In January 2022, Huobi Global launched a Lunar New Year campaign to encourage users to sign up for DIDs. Those who registered were eligible to receive tiger-themed NFT avatars, in addition to special access to new token listings, high-yielding asset management products and special blind-box draws.
Such a campaign reflects our commitment to furthering Web3 and the development of the metaverse. We do believe that Web3 will be the future of the internet, and are genuinely excited about all of the possibilities that a decentralized internet has to offer. At the same time, we recognize that there are significant challenges, specifically with regards to security. We believe that centralized exchanges like us have what it takes to shepherd users through the transition to Web3.