There are so many terms under the web3 umbrella and they can be a bit confusing, right? Let's take a trip around the glossary of jargons as we intensively explain what they are all about.
While web1 came with the advent of the internet, web2 with social media and web3 is here with the revolutionary blockchain technology. Web3 has been greeted with great enthusiasm and its lack thereof in almost equal measure. The former CEO of Twitter, Jack Dorsey tweeted "You don't own web3. The VCs and their LPs do. It will never escape their incentives. It’s ultimately a centralized entity with a different label.” But even with such, we cannot deny just how great this evolving field is. With such skepticism, we sure do know that taking web3 to where it ought to be will not take the next one year or five or a decade! but it's this gradual steps that will see a fully decentralized world wide web. The blockchain technology is based on value transfer. Cryptocurrency has been making strides and changing how value and transfer is moving from a centralized version to a decentralized one. This in itself is proof that web3 will not take place in the future, its here, its evolving and unfolding right before our eyes. Almost every facet of our lives is set to be changed with this advent, from banking the unbanked, to the energy sector, healthcare, governance, voting, logistics and so much more...
Against that backdrop, let's look at the terms surrounding web3. Like we said, web3 is based on blockchain technology which is based on decentralization. Blockchain is a digital ledger of transactions that is duplicated and distributed across the entire network of computer systems on the blockchain. What is that supposed to mean? Look at it this way, we have a chain made of blocks whereby every move, every transaction that is taking place is 'made known' to every other partaking ledger in this digital ledger. This then means that transactions are more secure, transparent and can also be easily traced. The decentralization of blockchain means that assets can be seamlessly exchanged without the need for a third party. The Distributed Ledger Technology DLT comes in then in the sense that there is no central administrator in all of this. DLT is defined as a database that is consensually shared and synchronized across multiple sites, institutions, or geographies, accessible by multiple people.
The smart networks concept in blockchain is based on strictly encrypted algorithms which ensure the secure transfer of assets across the internet. An example is the transfer of bitcoin. In smart networks transfers and transactions are based on top-notch intelligence. So then, what are smart contracts? They are programs stored on a blockchain that run when predetermined conditions are met. Smart contracts can be applied in buying, lending and borrowing among other transactions that need all the parties to be fully sure of the intended outcome before going further. Solidity is a high-level object-oriented programming language that is a great tool to write smart contracts, which are self-executing code that enable complex automated functions.
So we have the smart networks and smart contracts which avails the need for smart assets. Smart assets are virtual currency tokens that could to be traded by use of smart contracts. They are always stored on a public database and cannot be altered. Before looking at cryptocurrency, you've probably heard of DAOs. Decentralized Autonomous Organizations involve a group of persons who have entered into a contract. DAOs are very instrumental in transacting cryptocurrency transactions.
So then, what are all the crypto buzzwords? Cryptocurrency is a digital or virtual currency that is secured by cryptography. Crypto means 'secret' in Greek. Therefore, cryptography means the secret writing that uses encrypted data and code used to secure the virtual currency. Cryptography ensures secure transactions and diminishes the chances of a single transaction being credited as double. The first decentralized cryptocurrency was Bitcoin which was released as open source back in 2009 after being invented in 2008 by Satoshi Nakamoto. Since then there have been other cryptocurrencies such as Dogecoin, Binance and more... With cryptocurrencies comes the DEFI, Decentralized Finance, DEX Decentralized Exchange, mining and all. Lets look at them. DEFI involves borderless, trustless, peer-to-peer financial tools being built on public blockchains without the use of banks. DeFi apps are built to be open and interconnected, allowing them to be used in conjunction with one another. DEX then is a peer-to-peer cryptocurrency exchange built on the blockchain. A DEX is run by its users and smart contracts instead of an intermediary figure or centralized institution. Mining then is essential since it is the process of adding transactions to the large distributed public ledger of existing transactions, they then proceed to be validated digitally. The blockchain miners are connected to each other in a decentralized manner thus forming a chain. Mining has been criticized for its energy intensive nature which poses great environmental danger and impact. Mining and the crypto industry itself is not short of scams and frauds as well.
You've heard of Nodes, they are computer devices connected to a blockchain network. Since blockchains are distributed peer-to-peer networks, nodes come together to create the network’s infrastructure.
Web3 has a full glossary of terms used around it, some such as WAGMI and YOLO which you use in your daily vocab, they have different meanings in the blockchain world. To learn further on all this I'd recommend this glossary of web3 terms which is however alphabetically ordered. Via this link. Having read this article, I'm positive you'll be able to wrap your mind around the alphabetical ordering.
Thank you for reading, comment and let me know your thoughts and I'll see you in my next article. Bye.