Web2 and Web3: The Paradigm Revolution of the Internet

In December 2024, Hong Kong HashKey Exchange Collaborated with Virtual Seed Asset Management (VSG) to launch Hong Kong's first virtual asset multi-strategy fund that accepts stablecoin deposits. Its trading system has passed ISO 27001 (information security) and ISO 27701 (data privacy) certifications, and uses separate storage for hot and cold wallets. In 2024, it processed more than 42,000 compliant transactions and intercepted risky transactions worth $8.90 million. This practice is a typical application of Web3 technology in the financial field - reconstructing the trust mechanism of the Internet through decentralized architecture, which is in sharp contrast to the centralized model of Web2.

First, technical architecture: the game between centralization and distribution

The technical architecture of Web2 is based on centralized server clusters . For example, the database of an e-commerce platform centrally stores user information and transaction records, and server downtime may cause service interruption. Web3 adopts a layered distributed architecture.

• Blockchain layer : For example, Ethereum achieves data immutability through PoS consensus mechanism, TRISA (Travel Rules Information Sharing Architecture) accessed by HashKey Exchange exchanges cross-border transaction data in real time, and intercepts 1,763 transactions involving sanctioned addresses such as Tornado Cash in 2024.
• Smart Contract Layer : Automated protocols written in Solidity, such as the DeFi protocol Compound, automatically adjust lending rates through smart contracts without human intervention.
• Distributed storage layer : IPFS stores data sharding on global nodes, and HashKey Exchange's hybrid storage model encrypts sensitive data chains, reducing data storage costs by 35% while meeting the GDPR right to be forgotten.

From Bitcoin's PoW to Ethereum 2.0's PoS, the consensus mechanism is constantly optimized. PoW verifies transactions through computing power competition, with high energy consumption and low efficiency; PoS verifies transactions through staking tokens, reducing energy consumption by 99.95% and improving transaction processing speed. The KYT system of HashKey Exchange, combined with the 400 million address tag library, utilizes the efficient verification ability of PoS, and has an accuracy rate of 97% in identifying risky transactions.

Core Features: Data Sovereignty and the Reconstruction of Value Distribution

In Web2, user data belongs to the platform. For example, a certain social platform can arbitrarily ban accounts and delete content. Web3 allows users to control data through the Distributed Identity Protocol (DID).

• Zero-knowledge proof : Users can selectively disclose educational information when job hunting, without having to submit it to each platform repeatedly.
• Traceability of compliance : After the VATP license upgrade of HashKey Exchange, the formal verification results of smart contracts are directly submitted to the Hong Kong Securities Supervision Commission, realizing the transparency of the compliance process.

Web2's business model relies on advertising and platform commissions. For example, a certain ride-hailing platform takes 25% of drivers' order revenue. Web3 achieves value circulation through token incentives and DeFi protocols.

• Play-to-Earn mode : Axie Infinity players earn cryptocurrency profits through games, with daily trading volume exceeding tens of millions of dollars.
• Automated Financial Services : Decentralized exchanges (DEX) such as Uniswap implement asset exchange through smart contracts, and users directly interact with the liquidity pool, avoiding the single point of risk of centralized platforms.

Application scenarios: comprehensive penetration from finance to social governance

DeFi protocols such as MakerDAO generate stablecoin DAI through smart contracts, allowing users to obtain loans without relying on banks. HashKey Exchange's compliance framework integrates European Union MiCA and US SEC rules, reducing compliance costs by 40% and processing over 42,000 compliance transactions in 2024.

DAO executes decisions through smart contracts, and members participate in governance through token voting. For example, a DAO allocates $10 million community fund through a quadratic voting mechanism to ensure that minority voices are taken seriously. HashKey Exchange's KYT system is connected to the platform to monitor fund flows in real time and intercept risky transactions.

NFT (non-fungible token) provides a unique identifier for digital content. The OpenSea platform allows artists to directly sell their works and the income is automatically distributed to the creators. The cold wallet of HashKey Exchange adopts a 2-of-3 multi-signature scheme to ensure the secure storage and compliance of NFT assets.

The essence of Web3 is to reconstruct the trust mechanism of the Internet through technology. From the cross-chain authentication of HashKey Exchange to the automated compliance engine of Chainlink, the industry is undergoing a transformation from "wild growth" to "rule reconstruction". Users need to be vigilant: platforms that are not connected to the KYT system or have not passed the System and Organization Controls may lead to asset traceability risks due to compliance blind spots. In the future, with breakthroughs in technologies such as Quantum Computing and neural symbol systems, Web3 may push the Internet into a new era of "value Internet".