Web 3.0

Web 3.0 is the third-generation stage of the internet that provides autonomy to users alongside the promise of immersive experiences. In simple terms, you can think of web 3.0 as a collection of principles, practices, and trends which will define the next generation of our internet usage. The central theme of web 3.0 focuses on decentralization, thereby excluding any centralized sources of assets such as money, like modern banks.

Airdrop is a marketing technique in which cryptocurrency developers introduce new projects by sending native tokens directly to the wallets of users. The process is generally one of the most common approaches followed by new crypto projects to enhance awareness about their project. In addition, airdrops can also drive better prospects for the adoption of new cryptocurrencies while garnering the trust of users. 

Alpha is a critical term in the world of web 3.0 and refers to sensitive or insider information, generally pertaining to the value of digital assets such as cryptocurrencies and NFTs. The Alpha for a specific cryptocurrency or NFT denotes the amount of return on a specific investment beyond the return facilitated by a specific market or any other benchmark. Crypto users can get a competitive edge with information about Alpha.

Ape in the context of web 3.0 refers to any individual investing massively in a cryptocurrency, particularly in response to hype. Generally, an ape does not invest adequate time in researching an asset. However, the term does not indicate any negative connotation for a user buying crypto in bulk. On the contrary, the collective strength of apes in crypto can surely result in rising prices of overhyped cryptocurrencies. 

Blockchain is one of the leading technologies on the web 3.0 scene, especially focused on driving decentralization. It is actually a publicly-accessible digital ledger used for storing and transferring information without any central authority. It serves as the core technology foundation for developing cryptocurrency protocols such as Ethereum and Bitcoin, alongside driving many other use cases in different industries.

Distributed Ledger Technology or DLT is a significant category associated with web 3.0 and includes any type of distributed network working on achieving consensus on specific information. Blockchains are basically distributed ledgers, although they are not the only type of distributed ledgers. You can find many other distributed ledgers that don’t use chain-coded architecture and follow the Directed Acyclic Graph for consensus. 

The foundation of every crypto wallet focuses on the public and private key pair, which are essential requirements for all web 3.0 technologies. Custodial wallets take control of your private keys, while non-custodial wallets allow users to control their private keys. In the case of non-custodial wallets, you have complete custody of the wallet. On the other hand, in the case of a custodial wallet, the wallet provider or a third party takes control of it.

Decentralization is the core theme underlying the introduction of web 3.0 technologies, and it focuses on taking away control from centralized institutions. The philosophy of decentralization revolves around allocating decision-making privileges to every user or participant in a network rather than one or a group of individuals. In simple words, decentralization helps in removing intermediaries that are usually required in information exchanges.

A decentralized application or dApp is a non-custodial or autonomous application that enables users to incorporate preprogrammed functionality. dApps work on a distributed ledger with multiple different levels of programmability. Decentralized applications are developed by leveraging distributed protocols and a user interface, bringing both web 2.0 and web 3.0 technologies together with support for various DLT use cases.

Cryptocurrency, generally referred to as crypto, is a variant of digital currency you can use as a medium of exchange. The virtual currency employs encryption to safeguard and authenticate transactions alongside regulating the creation of new virtual currency units. Cryptocurrencies are vital components for web 3.0, especially as many systems involve cryptocurrency for monetary rewards to contributors in web 3.0 projects. 

A centralized exchange is basically a centralized organization or entity allowing users to purchase, sell or trade with different crypto assets. Users take on a certain level of risk when leveraging a centralized exchange as the exchange takes care of managing the private keys of the users. Irrespective of the high levels of security, any type of centralized exchange is not immune to cyber-attacks, thereby presenting threats for a user’s private keys.

Decentralized exchange is basically a decentralized application that enables users to trade in different crypto assets with each other. The peer-to-peer transactions on the decentralized exchanges allow users to interact directly with the network. Users don’t have to worry about a middle man like in the case of centralized exchanges. One of the notable examples of decentralized exchanges is Uniswap.

A decentralized Autonomous Organization or DAO refers to a governance structure suitable for web 3.0 projects. DAOs employ a governance token that enables token holders to vote anonymously on the direction of a project and its future developments. Decentralization is an important requirement in web 3.0 projects, and many projects under development have discarded the traditional governance models to welcome DAOs.

Smart contracts are basically decentralized applications capable of responding to different events through the execution of business logic. Any individual could view and audit the smart contract, which is generally written in Solidity programming language. The foremost advantage associated with smart contracts refers to the ease of interacting with other smart contracts for creating an ecosystem of decentralized protocols in the growing web 3.0 landscape.

Non-fungible token or NFT refers to a class of unique, indivisible, and non-interchangeable digital assets on a blockchain network. Each NFT features a distinct cryptographic signature as proof of its originality, and it retains information about the creator and additional metadata. NFTs have introduced important improvements in utility for the intellectual property landscape, especially for content creators and designers.

Decentralized Finance or DeFi is a broad term encompassing various financial services such as borrowing, trading, lending, and other activities on a blockchain network. DeFi presents a favorable deviation from centralized finance by bringing in the elements of decentralization, which take away the need for intermediaries like banks. In addition, DeFi also focuses on improving accessibility to financial services for everyone in the world.

Ethereum is an open-source distributed network that provides the foundation for developing decentralized applications and smart contracts. Apart from hosting the world’s second most popular cryptocurrency, i.e. ETH, Ethereum also enables developers to create new dApps with programmable features. Smart contracts created on Ethereum serve as the foundation for DAOs and many decentralized apps. 

Proof of Work is the initial consensus mechanism leveraged in distributed ledgers and is the preferred choice underlying Ethereum and Bitcoin. The mechanism involves validators or miners who use computational resources to verify transactions and secure the network. The process of mining basically focuses on solving mathematical puzzles, and miners receive rewards for solving the puzzles faster than others. 

Proof of Stake is a new type of consensus mechanism that allocates validation and network securing privileges to validators. The validators in the Proof of Stake consensus are basically token holders in the project. Depending on the number of tokens they hold, validators get the respective weightage in consensus for the network. You can find different Proof of Stake consensus mechanisms, albeit with base-level network security.

Diamond hands is a term suitable for any crypto holder who is extremely bullish about a particular asset. Such crypto holders do not have any plans for selling a particular asset irrespective of market volatility or extreme price fluctuations. If you find anyone holding to their cryptocurrency even as it falls down 40% on a daily basis, then you can verify that they have diamond hands. Many people have different reasons for diamond hands. 

FOMO or Fear of Missing Out is the feeling of anxiety arising from the feeling of missing an opportunity. Generally, the definition of FOMO in investing points towards investors buying assets after it has experienced considerable growth in price. Investors generally put in their investments so they can get in and out before the arrival of a pullback. The most prominent setback with FOMO is the lack of research before investing by following the hype.

Metaverse is the three-dimensional virtual world concept that combines physical and virtual realities in an immersive experience. As one of the frontrunners in web 3.0 technologies, the metaverse aims to bring the internet in 3D to all users. The metaverse allows users to interact with each other and various digital solutions in the form of avatars while enjoying the privileges of decentralization and security. 

Fractionalization basically refers to the process in which you lock an NFT in a smart contract. After locking the NFT in the smart contract, you can divide the NFT into smaller parts. Now, you can issue the smaller parts as fungible tokens. With the help of fractionalization, you can lower the price of ownership of NFTs. In addition, fractionalization also allows community ownership of the artwork and other digital assets. 

Layer 2 solutions or protocols are the ones developed over a blockchain mainnet or the base layer or layer 1. The primary objective of developing layer 2 solutions focuses on improving cross-chain communication, privacy, and scalability. One of the most striking highlights of layer 2 solutions is the compliance with consensus mechanisms followed by the mainnet, unlike the sidechains which feature their own consensus mechanisms.

Node is practically any device connected to a specific blockchain network. Different nodes feature unique levels of responsibility and have unique tasks. They can help in verifying transactions, documenting the blockchain history, or transferring data, among many other functions. Since blockchain networks are basically distributed peer-to-peer networks, nodes combine with each other to create the network infrastructure. 

Seed Phrase is the string of words leveraged as a master password to access the crypto wallet. A single crypto wallet could include multiple accounts with individual private keys. Therefore, a seed phrase offers a better ease of accessing all accounts with the same password. The seed phrase is offered to users upon the creation of a wallet, and you must safeguard it at all costs so you can recover your assets in emergency situations.

Shilling refers to the process of heavy promotions of a cryptocurrency, crypto stock, or digital assets to increase their adoption, alongside driving formidable growth in its price. Such type of promotion generally happens through spamming on social media and it carries a negative connotation. Any person performing the act of shilling is known as a shill, and they play a crucial role in driving crypto awareness. 

Master Node is the blockchain node responsible for verifying and relaying transactions alongside storing the complete history of the blockchain. In addition, the master node can also participate in voting and governance for the blockchain and other associated operations. The master nodes are generally working on a collateral-based system that has considerable similarities to the Proof of Stake consensus model.

Due diligence refers to the process of carrying out your own research on a specific cryptocurrency, stock, or asset before making any investments in it. Carrying out due diligence on your own is essential and significantly crucial in comparison to making investments on the basis of another individual’s suggestions or actions. Due diligence is one of the best practices for ensuring better-informed decisions in crypto investments. 

Cold wallets are offline devices used for storing cryptocurrencies, and they are simple hardware devices or sheets of paper. The cold wallets contain the private keys to crypto-assets of users on a blockchain network. Without connectivity to the internet, cold wallets provide a better approach to cryptocurrency storage with enhanced security. Cold wallets provide complete control over your crypto, albeit with the risk of physical damage or loss.