Are you beginning to learn the language of Web3? Want to sound like an expert on your way to becoming one? Here are 8 Web3 terms to know and use.
First things first: Web3 refers to the next generation of web technology, and is based on decentralization, peer-to-peer networking, and cryptography. In short, it’s a new way of using the internet that gives users more control over their data and privacy. The language of Web3 is vast but you can quickly learn it. Here some terms you’ll need to know before you become fluent:
A public blockchain is a decentralized network that anyone can join by downloading the software and becoming a member of the network. Public blockchains are often referred to as permissionless because there are no barriers to entry. Ethereum, Bitcoin, and Litecoin are all examples of public blockchains.
A private blockchain is a decentralized blockchain network with access restricted to those who have been invited or approved by the network administrators. Private blockchains are often referred to as “permissioned,” because membership is determined by the administrators.
Cryptocurrency is a medium of exchange. It exists digitally and uses a decentralized system to record transactions and issue new units. The currency is fungible—or mutually interchangeable—which makes them useful for blockchain transactions. They can be considered either “coins,” and used in much the same way as money with any merchant that accepts it as currency, or as “tokens,” and valid with one specific merchant.
A decentralized app, or dApp, is an application that runs on a decentralized network. Unlike traditional applications, dApps do not have a central point of failure, making them more resistant to hacking and fraud.
4) Decentralized Finance (DeFi)
While the traditional financial industry revolves around institutions such as big banks and the Federal Reserve, decentralized finance (DeFi) is a financial system that is powered by a number of distributed actors and organizations working independently or in tandem.
5) Distributed Ledger Technology (DLT)
Distributed ledger technology (DLT) is the underlying technology used to create power blockchains. DLT refers to a type of database that is spread across multiple locations or devices, making it more resistant to centralized control and data breaches.
The most popular platform for creating dApps is Ethereum, a decentralized platform that runs smart contracts.
7) Layer One
A layer one network is a network that acts as infrastructure for other applications, protocols, and networks to build on top of.
8) Smart Contracts
A smart contract is a digital contract that is stored on the blockchain. Smart contracts are written in code and are self-executing, meaning once the conditions of the contract are met, the contract will automatically execute the terms of the agreement.