Web3 101
Blockchain
Blockchain is a technology that securely stores and shares information across a network of computers. It works like a digital ledger, linking information in "blocks" that are connected in a chain. Each participant in the network has a copy of the blockchain, ensuring decentralized control without a central authority. This structure makes it highly secure because altering any data would require changing it on all copies simultaneously, which is extremely difficult. Blockchain is most famous for cryptocurrencies like Bitcoin, but it's also used in various industries for transparent and efficient record-keeping, supply chain management, digital identity verification, and more.
Polygon
Polygon, formerly known as Matic Network, is a layer 2 scaling solution for Ethereum. It aims to address Ethereum's scalability issues by providing faster and cheaper transactions while retaining Ethereum's security and decentralization benefits. Polygon achieves this by using sidechains, which are separate blockchains that run alongside the Ethereum main chain but with their own consensus mechanisms. These sidechains can process transactions quickly and then batch them back to Ethereum, reducing congestion and gas fees on the main network. Polygon also supports various scaling techniques like Plasma chains and optimistic rollups, making it versatile for different types of decentralized applications (dApps). Overall, Polygon enhances the Ethereum ecosystem by improving scalability, usability, and cost-effectiveness for developers and users alike.
Smart Contract
Smart contracts are self-executing contracts with the terms of the agreement directly written into code. They run on blockchain technology and automatically execute actions when predefined conditions are met. This automation eliminates the need for intermediaries and reduces the risk of fraud, as the contract's execution is transparent and irreversible once deployed. Smart contracts enable decentralized applications (dApps) to operate autonomously, offering a secure and efficient way to facilitate transactions and enforce agreements across various industries, from finance and supply chain management to gaming and digital identity verification.
On-chain Transaction
An on-chain transaction refers to any transaction or interaction that occurs directly on a blockchain network. In the context of cryptocurrencies and decentralized applications (dApps), on-chain transactions involve transferring digital assets (tokens or coins) or executing smart contracts directly on the blockchain. These transactions are recorded and verified by nodes (computers) on the blockchain network and are secured through cryptographic principles. On-chain transactions are publicly accessible and immutable, meaning they cannot be altered once confirmed and added to the blockchain. This transparency and security are fundamental aspects of blockchain technology, ensuring trust and accountability in digital transactions without the need for intermediaries like banks or payment processors.
Crypto Wallet
A cryptocurrency wallet, often simply referred to as a crypto wallet, is a digital tool that allows users to securely store, send, and receive cryptocurrencies like Bitcoin, Ethereum, and others. Functioning similarly to a physical wallet for traditional currencies, a crypto wallet manages a user's public and private keys, which are essential for interacting with blockchain networks. Public keys serve as addresses where others can send cryptocurrencies, while private keys provide access to those funds and must be kept secure. Wallets come in various forms: software wallets, which can be desktop or mobile applications, hardware wallets that store keys offline on a physical device, and even web-based wallets provided by cryptocurrency exchanges. Choosing the right type of wallet depends on factors such as security preferences, convenience, and the level of control over funds desired by the user.
Crypto Token
A crypto token is a digital asset or unit of value issued and managed on a blockchain platform. Unlike cryptocurrencies such as Bitcoin or Ethereum, which operate as native currencies on their respective blockchains, tokens can represent a wide range of assets or functionalities. Tokens are created using smart contracts on blockchain networks like Ethereum, Binance Smart Chain, or others that support token creation standards (such as ERC-20 or BEP-20). They can represent various digital assets, including utility tokens used for accessing services within a platform, security tokens representing ownership in a real-world asset, or even non-fungible tokens (NFTs) that certify ownership of unique digital items like art or collectibles. Tokens are transferrable between users and can be traded on cryptocurrency exchanges, offering flexibility and programmable functionality beyond simple monetary value.
Stablecoin
A stablecoin is a type of cryptocurrency that is designed to maintain a stable value relative to a specific asset or a basket of assets, typically fiat currencies like the US dollar or commodities like gold. Unlike other cryptocurrencies such as Bitcoin or Ethereum, which can experience significant price volatility, stablecoins aim to minimize price fluctuations. This stability is achieved through various mechanisms, such as pegging the stablecoin's value to a reserve of the underlying asset (e.g., USD-backed stablecoins are backed by actual US dollars held in reserve), algorithmic adjustments, or a combination of both. Stablecoins are often used as a medium of exchange, a store of value, or a unit of account in crypto transactions, providing users with a reliable means to transact and hold value in the crypto ecosystem without being exposed to the volatility typical of other cryptocurrencies.
IPFS storage
IPFS, or the InterPlanetary File System, is a decentralized storage network that aims to change the way files are stored and accessed on the internet. Unlike traditional centralized servers, where files are stored in specific locations, IPFS distributes files across a network of nodes. Each file on IPFS is given a unique cryptographic hash, which allows anyone to access and verify its content without relying on a specific server. This decentralized approach improves file availability and reliability since files can be accessed from multiple nodes simultaneously. It also enhances censorship resistance because content stored on IPFS cannot easily be removed or blocked by centralized authorities. Overall, IPFS represents a shift towards a more distributed and resilient internet infrastructure.
Tokenomics
"Toknomics" is a term derived from "token economics" and refers to the economic principles and incentives that govern a cryptocurrency or token ecosystem. It encompasses the design, issuance, distribution, and management of tokens within a blockchain-based platform or project. Toknomics typically includes aspects such as token supply dynamics, distribution mechanisms, token utility within the ecosystem, incentives for users and stakeholders, governance rights, staking mechanisms, and token burning or minting policies. Effective toknomics are crucial for aligning the interests of stakeholders, fostering adoption, ensuring sustainability, and maintaining the overall health and growth of the ecosystem.