11 terms you need to know to understand Web3
April 24, 2023
At a top level, this tech is what Web3 is based on. A blockchain is a decentralised ledger that is used to store data across a network of computers, rather than at a central depository. Blockchains allow for improved security, transparency and immutability.
Digital assets used as a medium of exchange, maintained by blockchains rather than central banks or other authoritative bodies. Cryptocurrencies use cryptography to secure transactions and control the creation of new assets. Well known types of crypto include Bitcoin, Ethereum and Elon Musk’s ‘memecoin’, Dogecoin.
As the name suggests, these are apps built on blockchain networks rather than centralised servers. They are typically open-source and transparent.
Organisations built on open-source code and governed by the users, who are guided by rules encoded on the blockchain.
A fee required to execute and validate a blockchain-based transaction. Prices fluctuate according to the complexity of the transaction and the level of activity on a network.
Some suggest thinking about the metaverse as a key social aspect of Web3. A metaverse is a virtual world where users can socialise, interact, play games, conduct meetings and participate in events, via their avatars (virtual representations of themselves). Popular iterations of metaverses you may have heard of include games and virtual worlds, such as Fortnite, Roblox, The Sandbox and Decentraland.
The process of verifying transactions and adding them to a blockchain. Miners use their computers to perform this work and are often rewarded with cryptocurrency for their efforts.
The process of creating and registering a digital asset on a blockchain.
Digital storage for private keys that are linked to blockchain assets such as cryptocurrencies and NFTs. Wallets come as a software application or a hardware device known as ‘hot’ and ‘cold’ wallets respectively. Users can send digital assets to wallets via a public key, but only wallet holders have access to the contents via private keys. Popular examples of wallets include Metamask, Coinbase, Ledger and Trezor.
Web3 is all relatively new, as is the tech that defines it. It can be easy to feel intimidated and confused by the amount of unique terms that have become part of the Web3 lexicon as it and the subculture that surrounds it. The quickest way to understand how it all works – and how to utilise it – is to familiarise yourself with the terminology as quickly as possible, and get hands-on. The more you read and the more conversations you can follow, the quicker you will understand. Join Twitter Spaces or Discord servers, attend Web3 networking events, or get yourself involved in a project that interests you to better learn how the tech works and familiarise yourself with the conversations that take place. Everyone in the Web3 world is in learning mode, so the more knowledge-sharing opportunities you can be a part of, the better.
Want to learn more? Download our free Web3 glossary here!