If you are new to Web3, you may be feeling overwhelmed by all the buzzwords and jargon that are used to describe this new technology. But don't worry, you are not alone. Many people are just starting to learn about Web3, and it can take some time to understand all the different concepts and terms.
This blog post will help to explain some of the most common Web3 buzzwords, including terms like decentralised finance (DeFi), decentralised applications (dApps), and non-fungible tokens (NFTs). By the end of this blog, you should have a better understanding of these terms and how they are being used in the world of Web3, blockchain and cryptocurrency.
The metaverse is a term used to describe a collective virtual shared space, created by the convergence of the physical and digital worlds. It is a concept that is often associated with science fiction, but is increasingly being discussed in the context of emerging technologies like virtual reality (VR), augmented reality (AR), and blockchain. The metaverse is seen as a potential future where people can interact with each other and with digital objects in a fully immersive and interactive online environment. It is envisioned as a global digital platform that will allow people to create, share, and experience a wide range of virtual experiences.
A blockchain is a digital ledger of transactions that is distributed across a network of computers. Each block in the chain contains a record of multiple transactions, and once a block is added to the chain, it cannot be altered.
This allows for a secure and tamper-proof way to store and transfer data without the need for a central authority.
Non-fungible token (NFT)
A NFT is a non-fungible token, which is a unique digital asset that represents ownership of a digital item, such as a piece of artwork or collectible. Unlike traditional cryptocurrencies, which are interchangeable and have the same value, NFTs are unique and cannot be replicated. This makes them ideal for representing ownership of digital items that have value because of their uniqueness.
A digital wallet is a piece of software that allows users to securely store their cryptocurrencies and make transactions with them. It works by generating a unique, cryptographic address for each user, which is used to send and receive digital assets. This address is stored on the blockchain, and because the blockchain is transparent and immutable, it allows users to easily and securely manage their digital assets without the need for a central authority.
Smart contracts are self-executing contracts with the terms of the agreement between buyer and seller being directly written into lines of code. The code and the agreements contained therein are stored and executed on the blockchain. Smart contracts allow for the automation of digital transactions, which can help to make them more secure, efficient, and transparent.
They can be used for a wide range of applications, from simple financial transactions to more complex business processes. Because they are stored on the blockchain, smart contracts cannot be altered or deleted once they have been created. This helps to ensure their integrity and enforceability.
AI, GPT and ChatGPT
Currently taking the world by storm, ChatGPT is a language model chatbot built by OpenAI and is built upon GPT (Generative Pre-trained Transformer). GPT is a machine learning model that uses deep learning techniques to generate natural language text. ChatGPT uses GPT-3 specifically and is an advanced version of the GPT model that has been trained on a massive dataset, allowing it to generate text that is often indistinguishable from that written by a human. In simple terms, ChatGPT is an AI model that can generate human-like text based on the given prompt and it can be fine-tuned to perform specific tasks.
GPT-based models, like GPT-3, will likely have a major impact on the development of Web3 and decentralised technologies. GPT-3, in particular, has been used in a variety of ways to improve the functionality of decentralised applications, including natural language processing for decentralised finance platforms, content generation for decentralised social media, and automating smart contract development.
Layer 1 refers to the underlying infrastructure of a blockchain network. This typically includes the protocols, rules, and consensus mechanisms that govern how the network operates and how transactions are processed and verified. Layer 1 is the foundation upon which other layers of the blockchain are built, and it is often considered the most important and fundamental layer. It is sometimes called the "base layer" or the "network layer" of a blockchain.
Layer 2 refers to additional protocols or technologies that are built on top of a blockchain's underlying layer 1 infrastructure. These technologies are designed to improve the scalability, efficiency, or functionality of a blockchain network, and are often referred to as "off-chain" solutions. Technologies built within Layer 2 can help to increase the throughput of a blockchain network, reduce transaction fees, or enable new use cases that are not possible on the base layer alone.
In order to add a transaction to a blockchain, it must be verified by other users on the network. This verification process requires computing power, and users who contribute their computing power to the network are rewarded for their efforts.
However, this process also requires a fee to be paid. This fee, called a "gas fee," is paid to the users who verify the transaction and add it to the blockchain. This fee is designed to incentivise users to continue contributing their computing power to the network and to prevent spam or malicious transactions from clogging up the network.
In simple terms, gas fees are the fees paid to users who help verify transactions and add them to the blockchain. These fees are an important part of how a blockchain network functions and are essential to its security and stability.
Decentralised identity (DID)
Decentralised identity, also known as self-sovereign identity, is a digital identity that is owned and controlled by the individual, rather than by a central authority such as a government or corporation. This means that the individual has full control over their personal information and data, and can choose how and with whom to share it.
The goal of decentralised identity is to give individuals more control over their personal data and to enable more secure and efficient digital interactions.
Decentralised application (dApp)
A decentralised application is a type of software application that runs on a decentralised network, such as a blockchain. Unlike traditional applications, which rely on a central server to function, dApps are distributed across a network of computers, which makes them more resistant to censorship and downtime. dApps can be used for a wide variety of purposes, such as creating a digital currency, managing supply chain logistics, or building a social network.
Decentralised finance (DeFi)
Decentralised finance, or DeFi, is a financial system that is built on top of a blockchain. This means that it is not controlled by any central authority, such as a bank or government, but rather is managed by a network of users who interact with each other directly using smart contracts.
DeFi allows for the creation of financial applications and services that are open, transparent, and accessible to anyone with an internet connection. This can include everything from lending and borrowing, to trading and investing, to insurance and prediction markets. The goal of DeFi is to provide people with greater access to financial services and to enable more inclusive and efficient financial systems.
Decentralised storage is a way of storing data that involves distributing the data across a network of devices, rather than storing it on a central server. This means that no single device or entity has complete control over the data, making it more resistant to things like data breaches and outages. In general, decentralised storage systems are designed to be more secure, reliable, and scalable than traditional centralised storage systems.
Decentralised governance is a system in which decision-making power is distributed among multiple parties, rather than being concentrated in a single central authority. This can take many forms, but the general idea is that decisions are made through a collaborative, participatory process that involves multiple stakeholders. In a decentralised governance system, power is distributed among various users, such as individuals, organisations, or communities, who all have a say in how decisions are made. This can make decision-making more transparent, inclusive, and democratic, and can help to prevent abuses of power.
Decentralised exchange (DEX)
A decentralised exchange (DEX) is a type of cryptocurrency exchange that operates without a central authority. This means that it is not controlled by any single entity, such as a company or government, and instead relies on a distributed network of computers to facilitate the buying and selling of cryptocurrencies. In contrast to centralised exchanges, which are more common, decentralised exchanges allow users to retain control over their funds and personal information, making them more secure and private. However, they often lack the features and liquidity of centralised exchanges, which can make them more difficult to use.
Proof-of-work is a type of algorithm used by some blockchain networks to achieve distributed consensus. In a proof-of-work system, network participants (called "miners") compete to solve complex mathematical problems in order to validate transactions and add them to the blockchain. The first miner to solve the problem is rewarded with a certain number of tokens or cryptocurrency. The difficulty of the problems is adjusted over time to ensure that the network processes transactions at a steady rate.
Proof-of-stake is a type of algorithm used by some blockchain networks to achieve distributed consensus. In a PoS system, the likelihood that a user will be chosen to add a new block to the blockchain is proportional to the amount of cryptocurrency that they hold. This means that users with a larger stake in the network (i.e. those who hold more of the network's cryptocurrency) have a higher chance of being chosen to add a new block, and therefore earn the reward associated with that block.
In contrast to proof-of-work (PoW) systems, which use mining to achieve distributed consensus, PoS systems do not require users to perform any computation in order to add new blocks to the blockchain. This means that PoS systems are typically more energy-efficient than PoW systems.
In simple terms, PoS is a method for achieving distributed consensus in a blockchain network that does not require mining. Instead, users with a large stake in the network have a higher chance of being chosen to add new blocks and earn rewards.
Overall, the benefits of web3 are numerous and wide-ranging. By providing greater security and privacy, enabling more decentralised and inclusive applications and services, improving business operations, and enabling new economic models, web3 has the potential to revolutionise the way we interact with the web, and create new opportunities for growth and innovation.
Web3 also has the potential to revolutionise the healthcare industry, with blockchain technology being decentralised and secure, it makes it an ideal solution for storing sensitive data like patient records while also only allowing access to authorised parties.
Blockchain could also be used in the clinical trial process, from recruiting participants to storing data and sharing results. All parties involved in a trial would be able access data in real-time and ensure data integrity.
Medical research is also another area within healthcare that could benefit from a blockchain based solution. By potentially facilitating a more efficient and secure sharing of medical research data among researchers, institutions and companies, that could lead to faster and more impactful discoveries.