• June 30, 2025
• Written By: sparkster

The battle for users between Web2 and Web3 apps has been going on for years now. Yet, Web2 giants like Meta, Google, and Amazon continue to dominate. The status quo has not changed much despite Web3 promises a better Internet that rewards users for their participation.

We have already discussed in a previous post if Web3 is just all hype. Although some decentralized projects have disappeared since that post, the core promises of Web3 still remains. Among the promises are a more democratized version of the Internet that can provide more freedom from the monopolistic powers of corporations and governments.

Let’s gain a better understanding then of the competing concepts around Web2 and Web3 in this post. We can then better deduce the future of Web3.

Understanding the Competition: Web2 vs Web3

The first version of the Internet that arrived in the 1990s did not gather much interest from the people. The need to be online only became more apparent when Web2 burst into the scene in the early millennium. This was when social networking sites became all the rage and is still very much a steady trend today.

What is Web2?

Web2 gave birth to user generated contents, a game changer that brought in the masses of users worldwide. Corporations took advantage of this mass behavior to gain massive profits, which was achieved by monetizing off users’ data.

Basically, Web2 represents a centralized Internet that is largely controlled by a handful of corporations. This Internet prioritizes efficient data collection and targeted advertising. What’s wonderful about this current version of the Internet is its stable infrastructure and connectivity performance.

Most Internet users report high satisfaction from using Web2 apps that have been around for a long time. However, this efficiency comes at the cost of user data ownership and consumer privacy.

What is Web3?

Web3 on the other hand promises decentralization. Built largely on blockchain technology, it aims to give users ownership of their data. The decentralized nature of Web3 will enable users to gain more control over their personal data, digital identities and monies.

However, decentralized apps (dapps) often suffer from:

• Poor user interfaces and performance compared to Web2.
• Complicated onboarding (e.g., wallet setup, private key management).
• Regulatory uncertainties that hamper user trust and business growth.

Despite these hurdles, the competition for signups is real. While Web2 has billions of users, Web3 is rapidly carving out niches in finance, gaming, and digital identity. According to a July 4 report from blockchain analytics platform DappRadar from a CoinTelegraph article, the number of users using Web3 applications reached a record high in the second quarter. The number of daily unique active wallets (dUAW) was approximately 10 million over the quarter, a 40% increase from the first quarter and the highest number ever reached.

Web2 vs Web3: Which One Will Win?

Web3 Growth Trajectory (2025–2027)

Regulatory Clarity in Major Markets

Recent trends indicate that the growth of Web3 will be closely tied to how governments address emerging technologies. Blockchains and digital assets in particular are buzzing in tech news these days. For example, in the past 18 months, significant developments have shaped the Web3 landscape:

• In the United States, the FIT21 Act passed in 2024 created clearer jurisdiction between the SEC and CFTC for digital assets. The bill provides a framework that separates utility tokens from securities. This gave crypto and Web3 startups more confidence to operate domestically.
• MiCA (Markets in Crypto-Assets), the comprehensive regulatory framework established by the European Union came into force in 2024. The new regulations offer standardized licensing and disclosures across EU states.
• Asia, especially Hong Kong, Singapore, and South Korea are racing to become Web3 hubs. There are a growing number of entities providing favorable tax regimes, regulatory sandboxes, and innovation funds.

Institutional Adoption

Several Web2 companies have launched or invested in Web3 ventures, which is a strong indicator of continuing growth.

• Visa is gearing up to launch VTAP (Visa Tokenized Asset Platform in 2025). The platform aims to enable banks to mint, transfer, and manage fiat-backed tokens and stablecoins.
• PayPal’s PYUSD was introduced in August 2023 via Paxos. By mid-2025, its market cap reached nearly $1 billion across Ethereum and Solana.
• Practical use cases include B2B payments, remittances and integration into loyalty schemes.
• Coinbase removed fees for PYUSD transactions and enabled USD redemption, further fueling PYUSD adoption alongside USDC.

Infrastructure and UX Improvements

Internet users are creatures of habits and they are reluctant to give up their creature comforts of using Web2. This trend is still very much prevalent despite the offerings of rewards to jump into Web3.

However, improvements are underway to entice more users into the decentralized Internet. Protocols like Account Abstraction are making Web3 more accessible. Wallets are becoming more user-friendly, putting aside care for seed phrases and getting the best gas fees. Meanwhile, various Layer 2 solutions (e.g. Optimism, Arbitrum) and new chains (e.g., Aptos, Sui) are addressing scalability.

Taken together, these changes suggest that the next two years will likely see moderate and steady user growth. Some Web3 sectors that are expected to expand are:

• Cross-border payments and DeFi
• On-chain gaming and digital collectibles
• Decentralized social media platforms
• DAO-driven collaboration tools

Will Web2 and Web3 Never Cease to Compete?

Scenario #1: Web3 as a Complementary Layer to Web2

The most realistic outcome is that Web3 will augment Web2 by offering decentralized backends. For example, Internet users who are concerned with data privacy, censorship or identity theft can opt to use technologies and dapps such as:

• Data storage – Interplanetary File Service (IPFS)
• Identity – Ethereum Name Service (ENS)
• Finance – DeFi protocols and stablecoins
• Social – Mastodon, Steemit

In time as Web3 becomes more integral with Web2, most layman users may not even know they’re interacting with Web3. For example, social platforms may begin to offer Web3 identity logins or token-gated content without promoting it as blockchain.

Scenario #2: Web3 Collapses

A global regulatory crackdown or a major security breach like a catastrophic DeFi hack could possibly erode trust in the entire Web3 ecosystem. However, with increasing institutional and governmental support, this scenario seems unlikely.

There are also theories about quantum computing could break the encryption of cryptocurrencies, thus rendering the entire market useless. Although this case is not completely illogical, but the prediction is similar to the so called Y2K doomsday which came to naught.

Scenario #3: Web3 Supplants Web2

It is highly unlikely that Web3 will ever fully replace Web2. For example, although the current form of Internet has given people more voice, it is unrealistic to hope for a Internet that is not governed by any authorities. Such a free for all Internet will cause chaos around the world and will not be sustainable.

For instance, we must never forget that any digital spaces with its pseudonymity nature would always motivate people to be dishonest for self-gain. Even if people are generally honest, we still have to take into account greedy behaviors that seek to exploit the resources of others.

Web2’s centralized infrastructure is too entrenched, and users still prioritize convenience over sovereignty. The slow growth of Web3 indicates that Internet users are creature of habits and deep rooted habits that satisfy creature comforts are difficult to change.

Conclusion: The Internet is Becoming Hybrid

The battle between Web2 and Web3 is not zero-sum. Instead of replacing each other, they are forming a hybrid Internet. If you are already a Web3 user, you’d likely have encountered at least one of the following:

• Using a Web2 app like a browser that can integrate Web3 features e.g. digital wallets, NFT access, etc.
• Use a dapp interface that is similar Web2 apps, which helps to onboard new users.
• Dapps giving you more choices and control over how your interact with digital services.

In the next two years, we can expect to see steady growth in the Web3 industry as more regulatory clarity comes onboard. Internet users should also be able to access more user-friendly tools that can offer more intuitive experiences.

As such, the real winners will be those who can build applications that bridge the best of both worlds. There are surely a wealth of untapped opportunities that entrepreneurs have not yet realize, for example around the metaverse realm.

Are you ready to embrace the multitude of opportunities offered by the rising Web3?