Confused about all the “Web3” articles that have been crossing your social media feeds? We were too! So we decided to try to compile some of the most interesting articles, learn the difference between a DAO and an NFT, and try to be a helpful guide to what could turn out to be the biggest technology innovation in decades … or, in the wrong hands, a pyramid scheme that would make Bernie Madoff blush.
This is a pretty long article, but that’s because the topic itself is so meaty, and because we’ve decided to try to make it accessible to those who truly know almost nothing about Web3. In the next post, we’ll actually discuss the education applications.
Primary Resources
Because there are so many articles about Web3, and Web3 in the context of education, we decided that rather than a long series of links, we would use an innovative new curation tool, Readocracy, to create some ‘reading lists’ of all the research we did for this article.
We are also indebted to Bhaumik Patel and his work with the amazing Crypto, Culture and Society education DAO for curating this terrific Web3 Starter Pack. What’s an education DAO, you ask? Read on and find out!
Web3 terminology can be a beast- an unholy combination of different specialized vocabularies- technology, accounting, economics, law, government and finance, with lots of acronyms. While a few terms are relatively self-explanatory, like ‘digital wallet’ (where you store your digital currency), most others are quite opaque.
We know that there are approximately a gazillion other such articles and videos on the internet already for crypto beginners, but for us, too many of them are off-putting. They are either written by true believers to evangelize and recruit new Web3 acolytes, by skeptics who spend the whole time telling you why Web3 is a sham without defining it, or by insiders who use the complex technical and economic jargon that alienates true beginners.
This last issue is a classic example of one of our favorite concepts in instructional design: “The Expert Blind Spot,” in which experts end up talking right over the heads of beginners by making large mental leaps without explaining them. We’re newcomers to Web3 ourselves, so we do our best to avoid that here.
So, in alignment with one of our other favorite instructional design concepts, the pretraining principle, which recommends explicitly front loading core concepts and vocabulary to ensure no one gets lost in the details later, let’s do a quick crash course in some of the most common and important concepts and terms in Web3.
If you’re already knowledgeable about Web3 vocab, you may want to skip this post and stay tuned for the next one. If not, hope this helps!
What is Web3?
In the software world, when a new version of a program or operating system is released, it gets a version number. A small update to software is called a “point release” (such as going from Version 1 to Version 1.1), while a major update gets a fully new number (going from Version 1.0 to Version 2.0).
The term Web3 really means “Web Version 3.0”, which implies a vision for a fully new version of the internet; the term was coined by Gavin Wood in 2014, but has caught fire in the last year.
So, in this mental model, what are Web1 (AKA Web Version 1.0) and Web2 (AKA Web Version 2.0), you ask? Great question!
What is Web 1.0?
Web 1.0 refers to the ‘read-only’ internet of the 1990s, when sites like AOL or Yahoo! News would ‘publish’ information designed to be consumed by others. Of course, the internet was never truly read-only, but this refers to the era of the internet where one needed to be able to develop a website from scratch to put anything online.
What is Web 2.0?
Web 2.0 refers to the ‘platform’ era of the internet (the one most of us are still living in) in which many of the most popular internet properties offer anyone the ability to create and publish content.
Modern social media sites like Tiktok, Facebook, Twitter, Youtube, Linkedin or Instagram, and old-school social media and web building sites like Friendster, Myspace or Geocities are all, at heart, just publishing platforms.
Marketplaces like Airbnb, Etsy, and Ebay, or open-access educational sites like Udemy, Skillshare and Teachable, are also platforms, and as such, are totally reliant on user contributions.
In the Web3 philosophy, when a user like you or me adds content or data to a Web2 platform, the platform then, for all intents and purposes, ‘owns’ that content. The platform can save your content to their servers, often permanently. They can censor and remove your content if it violates their ever-changing terms of service. Then can and do bake your content into their search and discovery algorithms and promote or bury it.
And most importantly, these platforms profit off of user content, either by:
Taking a cut of online sales
Like Apple’s App store, Google Play, Amazon, Airbnb, Etsy, Ebay, Udemy
Selling the eyeballs and data of people watching content to third parties for advertising purposes
Like Facebook, Instagram, Google/Youtube, Reddit, Vimeo, news sites
Offering in-app purchases to users to enhance their abilities
Like dating sites like Hinge or Tiktok, which generates $110m a month by selling coins that users can give to others
Charging a subscription fee to access certain tiers of content
Like Linkedin’s recruiter tool, Medium, and online dating sites like Match or eHarmony
In the Web3 philosophy, platform companies take ownership over, and get astoundingly rich off of, our user-generated content. Which isn’t really fair, is it?
OK… so what is Web3 again?
Web3 refers to the vision of a ‘read-write-own’ era of the internet, in which users maintain full ownership over their content and data outside of their reliance on platforms and can contribute to decision making.
Besides ‘decentralized,’ Web3 advocates use terms like ‘permissionless’, ‘transparent’, ‘trustless’, ‘frictionless’, and ‘censorship-free’ to describe their vision of the new internet. One interesting aspect of the Web3 population is that it includes people from very different political philosophies, from libertarians who believe want to do away with central oversight, including taxes or regulation, to socialists who love the idea of communal governance and shared ownership.
The current Web3 community includes both economic libertarians and idealistic socialists; it can feel a bit like “Wall Street” meets “Occupy Wall Street.”
The Web3 vision is almost always associated with the creation of blockchain technology, which allows any piece of content or data to be inextricably linked to its current owner. In the Web3 vision, an influencer or artist (or educator) can make content, own it outright, and sell or rent it to others directly, without giving any cut to any platform.
For a popular example of how this plays out in practice, consider the 2021 story of the Disaster Girl meme, which you may have seen bouncing around last year.
In 2005, David Roth took a photo of his daughter Zoë Roth in front of a controlled burn. It looked like this:
When the Roths uploaded the picture online, it hit a nerve as a visual signifier of ‘revenge’ (or at least, ‘schadenfreude’). In 2007, the photo began being turned into a wildly popular meme, which meant that people would make copies of the photo, add their own text to it, and then republish it online. An example of some of the memes:
In the Web2 world, meme-friendly platforms like Reddit or 4Chan were profiting by selling ads against all the user-generated “Disaster Girl” memes, while David and Zoë Roth had no way to profit off of the repurposing and mass distribution of their own content.
Web3 ethos, David and Zoë Roth should really ‘own’ that content, which would mean putting the photo into a transparent, verified digital contract that proved her ownership and paid her royalties for its use. She did just this in April 2021 by turning the photo into a digital asset, which she sold for 180 Ether (a digital currency worth between $400,000 and $500,000.)
What is a Blockchain?
The official definition of a blockchain is a “system in which a record of transactions made in bitcoin or another cryptocurrency are maintained across several computers that are linked in a peer-to-peer network.”
Let’s break it down:
‘Record of transactions…’: This means a series of receipts showing money going back and forth, which is known in economics as a ‘ledger’. If you’ve ever run a business, or balanced a checkbook, or even looked at your own bank statement, you’ve dealt with a ledger.
‘Made in bitcoin or another cryptocurrency…’: This means that the transactions are made using digital currency, rather than actual dollars, euros, pesos or yen (which are what economists and Web3 folks call ‘fiat’).
‘Maintained across several computers that are linked in a peer-to-peer network’. This means that the information in the ledger is distributed, and every computer in the network has a copy.
A single transaction is a ‘block’ and the series of transactions is a chain. Thus: blockchain. And if you hear Blockchain/Web3 folks talk about the ‘distributed ledger’, this is all they really mean; a record of transactions that everyone has an up-to-date copy of.
If it’s that simple, why is this considered a world-changing technology?
Short answer; because there is no central authority. There is no bank, or loan provider, or credit card company, that has to ‘approve’ any given transaction; instead, each transaction is approved, or declined, entirely by the network itself, which is composed of computers, not people.
It’s important to note that there is more than one blockchain; any group can make one and build off of it. There is the original blockchain on which Bitcoin was launched, but there is also an Ethereum blockchain, a Solana Blockchain, a Parity Blockchain, and many more.
It also must be stated here that while Web3 and Blockchain technology are usually mentioned in the same breath, many of the core philosophical ideas behind Web3 can exist outside of a Blockchain. The ideas that individuals should own their own data, that transactions should be transparent and decentralized outside of platforms, and that decisions can be made by consensus, have been advocated by tech luminaries like Tim Berners-Lee and Jaron Lanier and tried in various non-Blockchain contexts.
What is Decentralization?
Decentralization is the main philosophical tenet of Web3: it’s the idea that many essential aspects of our lives are ‘centralized,’ meaning they are run by intermediaries who control our money, data, and political representation, among other aspects of our lives.
Banks are a “centralized” finance system- they can make money off of your deposits, or shut your accounts down, or charge you fees as they please. Social media platforms are ‘centralized’; they can use your data and behavior to sell targeted ads or kick you out if you violate their rules. Governments are ‘centralized’, in that you have to express your political views through a representative rather than getting to vote directly on each issue, and apply to them to get permits and licenses.
In contrast, in a decentralized world, these entities would be disintermediated and individuals could interact directly. For example, you can transfer money with needing to write a bank-issued check or charge a company-owned card.
What is a DAO?
DAO stands for “Decentralized Autonomous Organization”, which is the expression of Web3 advocates’ desire for a decentralized system that places more power into the hands of the community. DAOs are community-led with no central authority; they rely on all members of that community to vote on critical decisions about the future of the DAO. These rules are then encoded, making them trackable and transparent to all members (and potentially other external players ie. auditing bodies). The community sets the rules for how members will join the DAO. There are DAOs where you can participate without purchasing its cryptocurrency and DAOs where you can only join if you first buy a coin.
What is a Token?
In the Crypto/Web3 finance world, a token represents anything you can own, buy or sell: what the accounting and finance worlds call an “asset”. Tokens are one of the core innovations of the Ethereum blockchain, which allows there to be an infinite number of different tokens ‘minted’ that make use of the Ethereum blockchain. There are hundreds of tokens that run on the Ethereum Blockchain. (source)
Many of these tokens are created as digital currencies; while they have no physical representation in real life, they are often visually represented by a standard symbol, and a three letter watchword to represent which type of token they are.
Other tokens are individual collectible items which have singular value- they are ‘non-fungible’ tokens, or NFTs.
Tokens are linked to an existing Blockchain through a piece of code called a “smart contract”, which dictates how the token works.
Just as you would say that $100 is worth €88, you can also say that 100 ETH is worth 7 BTC, which means that 100 Ether is equivalent in value to 7 Bitcoins. (source)
Some notable tokens built on the Ethereum blockchain: from l-r, the Binance token (BNB), the Omisego token (OMG) the Uniswap token (UNI) and a Cryptopunk NFT.
What is a Coin?
Coins are a specific type of token- the one currency that is ‘native’ to each particular blockchain (source). For example, Ether is the native coin that runs on the Ethereum blockchain, and Bitcoin has its own blockchain as well.
Examples of ‘native’ coins to various blockchains, from L-R (Bitcoin, Ether, Solana, Polkadot)
What is an NFT?
NFT is an acronym of “Non-Fungible Token”.
In legalese, ‘fungible’ means able “to replace or be replaced by another identical item; mutually interchangeable”. An example of fungibility; if a stranger at a vending machine asked you to exchange his wrinkled dollar bill for your crisp one, it’s a reasonable request; every dollar bill has the same value, and can be replaced by any other dollar bill. The same is true of most coins and tokens in Web3.
However, if the same stranger then asked to exchange his daughter’s first baby tooth for your daughter’s first baby tooth, that’s a very different (and frankly, weird) offer. That’s because your daughter’s first baby tooth is completely unique and one-of-a-kind, and has nothing in common with the stranger’s.
As unique items, NFTs have a specific type of value due to their scarcity. In the case of the baby tooth, it’s mostly sentimental value. However, non-fungible assets can have enormous value- because they’re irreplaceable and unique, they can carry whatever value people attribute to them, particularly when they’re items of historical or artistic significance; consider an original Basquiat painting, or the ruby slippers from The Wizard of Oz, or a hand-written letter by Abraham Lincoln. At the end of the day, an NFT is basically a ‘unique asset’.
What is a Smart Contract?
Web3 enthusiasts tend to gush over this concept, as it has single-handedly enabled the creation of a huge decentralized finance ecosystem (known as Defi).
When you enter into a legal ‘contract’ (or sign one), you’re committing to a particular set of rules and laws- if you don’t show up for work, they have a right to discipline and/or fire you. If you buy a house, you and the seller enter into a contract together with provisions that you will both follow. But, notably, if one party doesn’t fulfill their obligations, someone will have to ‘enforce’ the contract, which is why there is a whole field of Contract Law.
What makes a smart contract “smart” is that it is self-enforcing; a set of rules and laws written in computer code that will automatically execute itself without the need for any lawyers or enforcers.
For example, let’s say Alice lends Bob 3 ETH (that’s the native coin Ether, remember?) using a smart contract that stipulates that Bob will pay back the loan, with interest, in a year. If Bob doesn’t pony up, the contract itself will pull the coin out of Bob’s wallet and return it to Alicem, with no intermediaries of any kind needed.
That’s not all. In essence, Smart Contracts, written in the Ethereum created coding language Solidity, are a toolbox that enables a whole ‘operating system’ to be built on the Ethereum Blockchain.
For example, as we’ve seen, the whole concept of ‘tokens’ (tradable assets) is enabled by Smart Contracts, as well as the development of specialized programs known as decentralized applications, or dApps.
What is a Web3 Protocol?
You might already be familiar with the term protocol; its application is not unique to web3. Protocols are basically just rules to verify that data being shared is legit. In Crypto, there are many different types of protocols; They are primarily used to track every bitcoin transaction and then verify it. This is done automatically (what is called “self-verifying”) and is accomplished by lots of computers running the same protocol through a network. Protocols are a common language that enables the exchange of digital currency; without them, it would be impossible to verify the original source and validity of the digital currency.
What is Mining?
Mining is the process used to validate a block of transactions using high-powered computers. Now, what does that actually mean?
Let’s back up… so remember how all the data and movement of transactions in cryptocurrencies are tracked and recorded? They’re also encrypted to protect that currency and make sure that it’s not subject to cybercrime. To protect it, it’s encoded with a complex set of mathematical equations, and to be able to validate the transaction, those equations need to be solved using high-powered computers. That process is known as mining.
The abiding metaphor here is that, just as human miners go down to extract material from beneath the earth, computers are ‘put to work’ doing what computers do best- solving computations- and as a reward for that computational work, they are rewarded through the creation of new cryptocurrency. Computers are also put to work validating existing transactions.
This is one of the main reasons why Web3 has had problematic climate issues; the energy required for all those computers to do all that computation is vast.
Note: Not all cryptocurrencies require mining. Because of the environmental impact of running high-powered computers in large networks some cryptocurrencies have evolved their model and there is also a suite of options that are non-mined and therefore more environmentally friendly.
What is the Metaverse?
The Metaverse is a vision of a new immersive version of the internet. In the same way that technology permeates much of our lives today, the idea behind the Metaverse is that individuals will live lives inside of the Metaverse through embodied avatars.
One core concept to the Metaverse, compared to other ‘virtual worlds’, is that it will be entirely integrated, just like the current internet. The same way every website lives on the same Internet (with the exception of nutty things like the dark web), the idea is that all the parts of the Metaverse will also be integrated; the same Metaverse will be used for education, socialization, entertainment, retail, government, work, and so on.
This concept of a persistent, embodied virtual world has been around for decades in:
Sci-fi literature such as William Gibson’s Neuromancer (1984) and Mona Lisa Overdrive (1988), Neal Stephenson’s Snow Crash (1992), Sword Art Online (2009) and Ready Player One (2011).
Movies such as Tron (1982), The Matrix (1999), Avatar (2009) and Ready Player One (2018) and more.
Open world social games and worlds populated by avatars representing real people like Animal Crossing (2001), Second Life(2003), World of Warcraft (2004), Final Fantasy XIV (2013), Fortnite (2017) and countless others.
Linden Labs’ Second Life is an early vision of a immersive Metaverse in which people use embodied avatars to learn, socialize, shop and more.
The difference between individual games and the future vision is that the Metaverse aspires to be the single virtual world that connects all other virtual worlds, much as the internet is the single entity that connects all other sites and platforms.
This might sound a little dystopian, but in fact many aspects of the Metaverse already exist; anyone who has tried on a Oculus head set, played a video game that uses VR technology, or tried Ikea’s AR application that allows you to try out furniture in your space has already experienced elements of the Metaverse.
The metaverse is a massively scaled and interoperable network of real-time rendered 3D virtual worlds which can be experienced synchronously and persistently by an effectively unlimited number of users with an individual sense of presence, and with continuity of data, such as identity, history, entitlements, objects, communications, and payments.
Wait, what does the Metaverse have to do with Web3?
Great question! Depends on who you ask.
It we take Web3 as a stand-in term for ‘the next version of the internet’, you can imagine how both an ‘embodied’ internet in which we are all avatars and a ‘read-write-own’ internet in which we don’t rely on central platforms, could be either parallel or intersecting visions of the future.
There are some projects that explicitly combine the two visions, such as Decentraland, "a fully decentralized virtual world that doesn’t have any central leadership, based on the Ethereum blockchain.”
That said, the original coinage of the phrase “Web3” referred to the ‘decentralized’ version, and most other terms here will use that as the core reference, whereas the “Metaverse” concept, most recently popularized by Facebook’s major pivot to being “Meta”, is much more recent.
Here are a few more quickie terms you might see with brief definitions, but we’re going to hope that you feel ‘pre-trained’.
Proof of Work and Proof of Stake are two different models of mining and finding “consensus”, meaning they are rules that tell all the different computers how to agree or disagree when verifying new transactions on a blockchain.
ERC-20 is a template token that contains rules used to create other Ethereum tokens.
Gas Fees - the price you pay to execute a contract on the Ethereum blockchain. The price of “gas” changes and is driven by supply and demand.
Whew- we’re going to stop there.
In the next post, we’ll truly begin talking about how these ideas work the context of education. Power to the people! Death to the internet! Long live the internet!
Very interesting
Great Summary Daniela, thanks!