Web 3.0 is not an exception. As exciting it may sound to go down the rabbit hole — it might be overwhelming at times

Next few paragraphs I’ll promptly walk through the topics of web3 that might be uneasy to grasp

But before we dive in, I highly recommend having a glance at this article — explaining the evolution of the World Wide Web, to better understand the why’s & what’s of Web3.

Let’s dive in?

The Disruptor

Blockchain is a decentralized digital ledger that records any crypto transactions. It’s a database without any central authority & distributed across the network.

Transactions can be: buying & selling crypto, minting NFT, launching a DAO.

Blockchain operates with the consensus mechanism — meaning that every transaction must be verified by the majority of the nodes on the network. This creates trust, reliability & security in the system.

Examples: Bitcoin, Ethereum, Solana, Terra & etc.

Disruption of Money

$BTC is the OG of all blockchain-based assets - acting as gold in the world of software money. In crypto metrics - $BTC is stable (nobody will rug you & probably will never go to zero; salute Dan Pena) & the most reliable investment you can have, but it’s also extremely volatile compared to fiat.

$ETH, the second largest crypto asset is the native currency for the Ethereum blockhain,

Examples of blockchains: Bitcoin, Ethereum, Solana, Terra & etc.

Disruption of Finance

Decentralized Finance in a nutshell — is a banking without any intermediaries.

So you can use the functions of the traditional banks without their intervention.

You can loan, borrow, deposit liquid assets & earn yield on them without banks.

How it’s done? Smart Contracts.

Smart Contracts are the cornerstone of the Decentralized Finance which establishes the rules for transactions occurred on the blockchain.

Most of the decentralized apps are built on Ethereum: Uniswap, Compound & Yearn are the some of the instances.

1. Uniswap — decentralized exchange built on top of the Ethereum. Think of it as a Coinbase or Binance, but without the element of centralization. Main difference between centralized & decentralized exchanges: former holds your assets & has a risk of a security breach from their side. Latter doesn’t hold your money & you are the only one who is responsible for its security.

2. Compound — decentralized lending protocol (platform you can say) which allows you to lend & borrow digital assets without any intermediaries. Person A lends money to Person B with the power of smart contracts.

3. Yearn — yield aggregator which allows you to earn yield by depositing the money into various vaults (like a savings account).

https://www.odysseydao.com/articles/what-is-defi

https://ethereum.org/en/defi/

Layers

Blockchains have a scalability issue.

The root of the issue is a rate at which blockchain processes the transactions. Current rate of Bitcoin blockchain is at around 5 transactions per second (TPS). Which appears to be slow. For the comparison: Visa processes 1,700 TPS

There are existing solutions that can increase the speed of the transactions.

In a decentralized ecosystem Layer-1 refers to the underlying technology — blockchain itself. Bitcoin, Ethereum & Solana are all Layer-1s.

Layer-2, on the other hand is a third-party integration to the Layer-1. The mission statement of the Layer-2 solutions is to solve the problem of scalability by increasing the TPS.

One of the great examples of Layer-2 solutions is Bitcoin’s Lightning Network. It handles the part of the Bitcoin’s transactions & reports back to it. Hence, the Lightning Network increases the TPS of the Bitcoin blockchain.

Disruption of Organization / Human Coordination

Decentralized Autonomous Organizations are essentially an internet community with a shared bank account, established around a common mission & set of rules enforced through smart contracts.

DAOs are LLP like structures led by its community rather than management.

They are transparent & globally accessible allowing anyone from anywhere to be a part of the organization.

Most note-worthy DAOs are token-gated, meaning you have to buy community tokens in order to be part of the DAO.

My favourite DAOs:

1. IndexCoop — crypto index fund

2. BanklessDAO — media

3. Friends With Benefits—community of creatives

Disruption of Ownership

There are two types of tokens: fungible & non-fungible.

Fungible tokens are tokens you can exchange to another token. BTC to ETH is a fungible token exchange.

Non-fungible tokens can not be exchanged, because it is a record of unique digital asset.

Examples of NFTs: art (jpegs), music, domain names & etc.

Renowned collections of NFTs by trade volume:

1. CryptoPunks — 781,6k ETH ($2,6b)

2. Bored Ape Yacht Club — 323,1k ETH ($1,07b)

3. Decentraland — 252,8k ETH ($843,3m)