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Comprehensive Collection Of Commonly Used Words In Web3 And Their Meanings

Introduction

Hello everyone, my name is Afoma Orji, I am a front-end developer, technical writer, and Web3 enthusiast and today I am going to be sharing with you common words that are used in the crypto space and their meanings.

Why would I be doing this?

This is because it is raining Web3 everywhere; on Twitter, real-life discussions, Google searches, YouTube, literally everywhere and when you decide to pay close attention to those real-life conversations or try to get a basic understanding of what is being talked about by reading tweets on Twitter or you bumped into an article on Google, you could end up being more confused than you were before trying to understand what it could be all about because there are certain keywords and phrases that are used that you are not familiar with and this leads to a break in concentration or something like that.
So, I noted down important keywords that mostly come up in Web3 discussions and decided to read up and share with you their meanings in a simplified manner, to make learning easier and more fun.
This article was simplified to make it understandable even for people who are completely new to Web3.
So get a glass of milk and enjoy!

Web1

It is the first phase of the web, characterized by its read-only content with very few creators (mainly developers who built websites containing information to just be read) and more users (only being able to read content on web pages without being able to interact with and contribute to it). Hence, a one-way communication platform.

Web2

It is the second phase of the web, succeeding Web1 and preceding Web3. It is characterized by its dynamic nature. Users not only consume content over web pages but can also interact with the web pages and create content themselves without even having any software development knowledge. This generation of the web is also known for birthing social media platforms.

Web3

It is the third phase of the web, succeeding Web2 which succeeded Web1. It is characterized by its decentralized nature and the use of blockchains and cryptocurrencies.

Metaverse

This word has been used a lot in crypto spaces, however, it is very likely those who use it in their sentences don't know its meaning. It is a genral term for online spaces that allow people to communicate in a more interactive way than a traditional application or website. Common applications of it is in the use of virtual reality (VR) gadgets and virtual environments (for discussions and video games).

Blockchain

Blockchain is a technology that facilitates the existence of cryptocurrency, it is characterized by having a shared, replicated ledger, which comprises growing units of records called blocks which once validated and time-shaped cannot be altered.

Ethereum

It is the programmable blockchain that lets you execute smart contracts. On the ethereum blockchain, one can send crypto coins and make payments without the need for intermediate agencies like banks.

Blockchain network

It is a group of interconnected devices that exchange information with no central point of information storage, hence, no controlling party. Here, information is shared among nodes on the network which own multiple identical copies of the network's information.

Sharding

It is the splitting up of the blockchain into many different pieces in order to have a more scalable, secure, and decentralized system. It solves the problem of traffic on the blockchain while ensuring maximum security and a decentralized system.

Web3-compatible

It is a term that refers to the ability of browsers, websites, and applications to interact with the blockchain.

Cryptography

It is the study and science of techniques employed to secure information and communication. A common example of this would be the encryption of a message or personal details in a form with an algorithm by replacing the readable letters with other characters in order to completely alter any meaning or context of the initially readable letters or words.

Multichain

It is an open-source fork of Bitcoin that is created to build and deploy private blockchain applications that operate either within or between organizations.

Nonce

A cryptographic nonce is an arbitrary number that can only be used once in a cryptographic communication.

IPFS

InterPlanetary File System is a distributed file system protocol that utilizes content-based addressing (finding and storing data based on its content and not by its location).

Crypto economics

It is the study of the production, sales, distribution, purchases, and policies that happen in a decentralized digital economy.

Token economics

It is the study of the protocol that governs the production, distribution, sales, and purchases of assets that have been converted into tokens.

Tokenization

It is the process of converting valuable assets into tokens for use on the blockchain.

DAO

Fully written as Decentralized Autonomous Organization. It is a leaderless organization of people with the same mission who have entered into a contract with one another to attain the same goal, which can be learning about Web3, buying an artifact, and so on, and it usually exists to raise money for a specific purpose. Decisions are made by the entire community, through votes, rather than by a single entity.

DeFi

Fully written as ' Decentralized Finance ' refers to any number of financial transactions that are performed on a blockchain.

Transaction

Any activity that causes changes to the blockchain, like adding an extra block to the blockchain, sending crypto coins to an account, minting an NFT, or deploying a smart contract is a transaction.

Cryptocurrency

Popularly called crypto is a virtual and digital currency whose decentralized record of financial accounts is secured with cryptography and is used for the payment of goods and services.

Coins

They are digital currencies that are created to be alternatives to fiat currency, which have their own blockchains and which can be used to make purchases and other transactions on the blockchain. Example: Ethereum

Bitcoin

It is the first decentralized digital currency and it relies on peer-to-peer technology and cryptography and transactions done with it are registered on the blockchain.

Ether

ETH is a cryptocurrency- digital money that can be used for transactions on the internet.

Tokens

It is a digital asset that doesn't have its own blockchain but rather uses another crypto coin's blockchain as its backbone and can be used to make utility purchases on the blockchain. Example: USDC, NFTs.

NFT

It is written fully as Non-Fungible-Token. As the name 'Non-Fungible' implies, it's a token created on a blockchain whose attributes are irreplaceable and that links to a piece of data (music concerts, medical records, digital arts, and so on).

Double-spending

It is a consequence of a computing error that results in illicitly spending the same crypto coin more than once before the previous transaction has been confirmed.

Mining

It is the process of creating new crypto coins by solving complex mathematical equations. The first computer (miner) to find the solution to the problem is awarded the next block of coins and the cycle continues. When a person invests in a cryptocurrency, the details of the investment are entered on the blockchain. However, the process is complete only when a miner verifies the transaction as legitimate. Once that is done, the transaction is locked into the blockchain for everyone to see and the transaction is complete. The verification process requires miners to solve complex equations. Every successful transaction leads to new coins entering into circulation.

Minting

During the process of mining, new coins are produced, this is called minting.

Smart contract

They are trustless contracts written by computer programs that self-execute when defined conditions have been met.

EVM

Fully written as Ethereum Virtual Machine, is a virtual CPU that runs smart contracts. It happens when developers create smart contracts which are written in Solidity and then get compiled into byte code so that they can be read by the EVM.

Solidity

It is a statically-typed compiled programming language for implementing smart contracts.

Decentralized Application

A decentralized application is a program that is built on a peer-to-peer network of computer nodes (servers) instead of a single server, and it is made up of a smart contract (as the backend) and a front-end user interface.

P2P (Peer-to-Peer)

Peer-to-Peer technology is a system characterized by the communication between individual parties without an intermediary party between them.

Wallet

Digital wallets, unlike traditional wallets, do not store currency in them but rather provide the owner with tools that are needed to interact with the blockchain, like sending, buying coins, purchasing with tokens, minting NFTs, etc. There are different categories of wallets: soft, hard, and paper wallets, which, based on their mechanism are further grouped into hot and cold wallets.

Seed phrase

A string of words, usually 12 or 24 words (private keys), that is used to regain access to a crypto wallet in case of the loss of a wallet.

Keystore file

A computer file that stores the private key, the file can be accessed by use of a password.

Proof of work

It refers to a method of creating coins and recording transactions on the blockchain, done by mining- where a new transaction would be broadcasted to the network and the first miner to compute a hash value that matches the transaction's value will be rewarded with crypto coins and the transaction will be recorded into a block and added to the blockchain.

Proof of stake

It is a method of validating coins on the blockchain. The validation of coins is directly proportional to the staking power of the participants, the greater the number of blocks (stake) of the participants, the greater their validating power. The validators are rewarded with a transaction fee.

Proof of authority

It is a consensus method of validating coins on the blockchain which is based on the reputation of the limited number of pre-approved validators.

Proof of history

It is a method of validating transactions on the blockchain done by taking the output of a transaction, which is already hashed, as input for the next hash, and because the hashing takes a specific period of time, validators can easily check how much time has passed, hence, no need for a conventional timestamp. Due to the structure of this model, humans are not needed for validation.

Proof of participation

This system requires participants to lock in their crypto assets in order to get registered on the node. Once the gathered tokens are used for transactions, every registered member gets equally rewarded.

Airdrop

It is a marketing stunt that involves sending coins or tokens to wallet addresses in order to promote awareness of a DAO, or new virtual currency.

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