Written by Megan Aw
Web 3.0. It’s a common term in the twenty-first century, but what exactly does it mean? For the millennials, web 3.0 seems too early for its time; for the Gen Zs, it amounts to nothing more than the meteoric rise and fall of the occasional “joke” coin. To many of us ‘laymen’, the complicated maze of blockchain, cryptocurrency, and various “3.0” functions may seem impossible to break into without professional experience.
But when is it really the “best” time to get into blockchain? Everyone has to start somewhere, and oftentimes for a highly technical topic like this, that means the internet! From “Dapps” to “ITOs”, this article will simply introduce some of the most common and critical terms to kickstart your web 3.0 journey!
The terms discussed in this article are:
- Web 1.0, 2.0 and 3.0
- Bitcoin and Ethereum
- Gas and Gas Price
- ICO and ITO
The term “web 3.0” was first coined by reporter John Markoff in 2006, and it referred to a new evolution into which the internet was developing. Some would call this a paradigm shift of evolution, yet others would call it a return to the original web.
Why? The original web (1.0) was characterized by static websites and personal web pages, with advertisements even being banned while viewing different sites. This meant that the internet was very much “separated” from its users, leaving a high level of privacy and security that is not necessarily present today. To put it summarily, there was little user interaction and sites were mainly meant for reading purposes rather than any data collection.
This would change dramatically with the arrival of web 2.0, where dynamic user interaction and “personalisation” became commonplace. With the increase in connectivity between people and corporations all over the world, content creators — both software developers and media influencers — flourished rapidly. Giant platforms like Youtube and Facebook took the stage, and open-source software was able to be spread all over the world. While undeniably beneficial, it has created controversial problems in user privacy and safety.
Web 3.0 promises to usher in a return to user control through its “decentralised” formula, where users maintain control over their own personal data via the modern inventions of blockchain technology. From our previous article on blockchain [hyperlink to “Blockchain 101” by Gia], we’ve established that blockchain technology is a decentralised method of recording information, whereby transactions are noted on an openly-shared network that anyone can access. In this way, there is no governing authority who needs to oversee the process. As a key development of information and data-storing technology, blockchain is the foundation on which web 3.0 is built: it creates a system where users can hold and share their own sensitive information online without going through an intermediary, allowing for various potential branches into industries where such direct control is integral — decentralized finance (DeFi), for example.
Cryptocurrency is a form of digital money. Unlike traditionally printed currency, cryptocurrencies have no physical form and are not regulated by any one authority. Think of it this way: where a typical US dollar would be regulated and printed by the US government alone (making it susceptible to corruption, theft or misplacement), a cryptocurrency token would be recorded openly on the blockchain network. Since all users can view this transaction recorded online, it theoretically cannot be silently hacked, stolen or lost.
This digital money comes in the form of “coins”, each type having their own differing value. For example, at the time of this writing, BTC (Bitcoin) is worth US$37798.80. Much like the stock market, the variations in demand and supply organically push the price of these coins up and down.
Bitcoin & Ethereum
Moving on to two famous cryptocurrency-related names: Bitcoin and Ethereum. Both are strongly related to cryptocurrencies, but they belong to two different generations of blockchain, and hence have different functionalities.
Bitcoin was the original pioneer of blockchain cryptocurrency and functions only as a digital coin that represents monetary value. It first began trading in 2009, and was created to serve the function of Peer-to-Peer digital transactions, as an online alternative to physical currency. As such, it is known as blockchain 1.0 (the first generation).
On the other hand, Ethereum is an entire blockchain framework on which applications, extensions and even smart contracts can be built. Similar to Bitcoin, Ethereum also has a cryptocurrency token on its network, named Ether. Because of its many functions and abilities to execute code (rather than just recording digital transactions like Bitcoin does), it was dubbed the second generation — blockchain 2.0.
Decentralised Applications (DApps) work in a similar manner as traditional web applications, except for the fact that they retrieve information needed from a blockchain network or directly from nearby computers connected to the blockchain, eliminating the need for a central database. As such, no one entity (think companies like Twitter or Facebook) can have full authority and access to control the data of the individual users.
Decentralised Autonomous Organisations (DAOs) are automated governing bodies created by developers that execute certain actions or protocols when the pre-embedded criteria is met. This way, no manual action is needed to govern the blockchain network and helps to save on manpower while reducing the risk of human error. The rules for the DAO’s actions are typically decided by a shareholders’ vote. However, DAOs are currently still very much in an early stage of development and are susceptible to various virtual attacks.
Gas & Gas Price
Gas is the term used to describe the “delivery fee” for having a cryptocurrency miner process your transaction. When you attempt to make a cryptocurrency transfer, high-speed computers (the miners) rush to be the fastest to record your transaction on the blockchain. As such, a higher gas fee will make the miners give your transaction priority and complete it first, resulting in faster processing time. Similarly, a lower gas fee makes it less of a priority, slowing the processing time. Gas price is determined by the market, and moves up and down depending on the number of miners available and the number of transactions awaiting recording. Typically, you can choose within a range of gas prices depending on the speed of processing you require.
To prevent malicious intentions to slow the system or increase gas price by flooding it with transactions, the gas fee is always collected, regardless of whether the transaction was successful. Try to think of it this way: when a delivery man brings you your parcel, he is paid the delivery fee, whether or not the item inside was accurately packaged by the seller.
Initial Coin Offering (ICO) & Initial Token Offering (ITO)
Similar to a traditional Initial Public Offering (IPO), ICOs are an offering to sell a portion of new cryptocurrency coins in advance to raise capital, typically in the early stages since the coin’s inception. The difference lies in the fact that IPOs sell traditional stocks of the company, while ICOs sell their new coins instead. For ITOs, tokens that usually afford some benefits related to applications/projects on the Ethereum blockchain are offered in place of cryptocurrency coins worth a flat value.
Ultimately, blockchain technology has provided an incredible avenue for the growth of the internet, one that promises to solve the myriad of privacy and security-related problems the current web 2.0 is struggling to face. While addressing the most common terms, this article is but a shallow endeavour into the constantly expanding, future era of the internet. Endless possibilities still stretch far ahead!
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