My Favorite Web 3.0 Analogies
5 analogies to help anyone understand crypto a little bit more
Hey everyone!
I hope y’all had a great Super Bowl Sunday! The Super Bowl is always a bittersweet moment for me since it is the biggest event each year for my greatest hobby/passion (football), but it also marks the conclusion of this passion for the next seven months. However, I will now have a lot more time on weekends to produce more content for my 12 Cities, 12 Months journey (slacking as work picked up: I apologize to my faithful followers).
Here are my rankings for this year's Super Bowl (not that they matter, lol):
- Game: 8/10 —I wouldn't say I liked how the defenses played on both sides (defensive coach bias coming out here) and the ending was kinda unclimactic, but there was great back-and-forth action overall, with excellent QB play from both sides (the only mistake was the Hurts fumble).
- Halftime Show: 7.5/10 — I am not a huge Rhianna fan, so I didn’t realize she hadn’t made music in a few years at this point, but I completely forgot how many hit songs she’s made. I really wanted to hear S&M and Unfaithful (neither were played) and almost thought Kanye was gonna come out when she played “All of the Lights” and “Run This Town” back to back. Overall, solid performance, but definitely not the most exciting one I’ve ever seen.
- Commercials: 5/10 — Quick note: As someone who is passionate and currently works in the blockchain/crypto industry, it was kinda funny to see the stark contrast in the number of crypto ads from last year to this year (thanks to Sam Bankman-Fried and others). Overall, I was kinda disappointed by this year's advertisements. The repeat advertisers like Doritos, Budweiser, E-Trade, and more did a good job for the most part, but there were a few ads that just annoyed me more than anything (maybe that was the point?). Not many memorable ones, not many complete misses…just 🤷
Ok, enough off-topic talk…ON TO THE BLOG!
The Importance of Analogies
Overall, there are not many topics I would consider myself significantly more knowledgeable in compared to the average human being to the point where I could reasonably and accurately teach that individual about said topic (prob only sports and Web 3.0 tbh). However, when I try to describe these topics to those that are less educated on the matter, and use lingo native to those topics, I typically get these kinds of reactions:
Thus, I’ve found it much more effective and efficient to use analogies to help explain these points. Don’t believe my completely unproven take on the matter, then I’ll back up this claim with a study that showed the effectiveness of using analogies in the acquisition of scientific concepts among students with learning disabilities (yes, I did just copy & paste the title).
If you need more reasoning, here is ChatGPT explaining why:
By comparing the unfamiliar concept to something that is more familiar, analogies can help the listener or reader to form a mental image or model of the topic, which can make it easier for them to grasp and remember.
Analogies can also help to highlight similarities and connections between different concepts, which can aid in learning and problem-solving. They allow us to draw on our prior knowledge and experiences to understand new information, and to see the relationships between different ideas.
Overall, analogies are a powerful tool for communicating complex ideas in a way that is accessible and relatable, and they can help to bridge the gap between someone’s existing knowledge and a new or unfamiliar concept.
Even though I’ve written two blogs regarding learning Web 3.0 as a beginner (How to Learn Web 3.0 in One Day, Top 5 Concepts to Help Your Parents Understand Web 3.0), I figured it would be a good idea to go over the top analogies I use to help understand Web 3.0 a bit better. If you walk away from reading this with a somewhat better understanding than you did before, I will have considered my job done. Here are my top 5 analogies:
Each Blockchain is its Own Nation-State
When I try to explain how there are multiple and different blockchain networks (aka Bitcoin vs. Ethereum), they typically get conflated with their crypto counterparts (BTC & ETH). This is to no fault of the everyday person, however, as they mainly see the words “Bitcoin” and “Ethereum” next to an extremely volatile price chart.
The best analogy I’ve found to explain this is to think of separate blockchains as their own nation-state/country. Let’s take the US and England as an example. To purchase goods and services in the United States, you must use the native currency of the US, aka the dollar. Likewise, in England, people typically have to use the Pound to purchase items and transact with each other.
Think of Bitcoin as the US and Ethereum as England. To make a transaction on the Bitcoin network, you must pay for that transaction using BTC, the native asset to the Bitcoin blockchain. Similarly, to complete an action on the Ethereum network, your must pay for that transaction in Ethereum’s native currency, ETH (the same idea applies to the NEAR blockchain that I am supporting at the NEAR Foundation).
Side note: This is why cryptocurrencies like BTC and ETH shouldn’t be seen as securities: they are commodities that are required to make transactions on the network, not stocks.
Blockchain Interoperability is Like Email Interoperability
Imagine that you could only send emails using a Gmail account and could only communicate with other Gmail accounts. That would be frustrating and limiting, right? Thankfully, this problem is solved: email providers use the Simple Mail Transfer Protocol (SMTP) to send messages between servers, and the Internet Message Format (IMF) to format messages. This allows messages to be sent and received across different email systems, regardless of the provider.
Blockchain interoperability can be thought of the same way. In this context, interoperability means that information and assets can be transferred between different blockchains, allowing users to access decentralized applications and exchange information across multiple networks. Similar to how being able to send emails to any email service is an improvement over only being able to send emails within a single email platform, blockchain interoperability can be thought of as breaking down the silos between different blockchains.
With interoperability, users can take advantage of the benefits offered by different blockchain networks and access a wider range of services, creating a more integrated and inclusive blockchain ecosystem. This can have far-reaching implications for the way we transact and exchange value online, making it easier for people to use different blockchains and benefit from their features.
Self-Custody as Your Digital Piggy Bank
One hurdle that I commonly come across is explaining how people don’t actually own the crypto they have on Coinbase, Binance, or any other crypto exchange.
The majority of people (at least in the West) believe all the cash they have in the bank is their money, and only their money. However, if you attempted to withdraw all the money in your checking and savings account at once, would the bank easily be able to give you that money in cash? With my current account balance, probably, but for many people, that wouldn’t be the case. This is because banks have custody over your funds (they basically control your money).
In the current financial system, people can still take control of their money by using something that helped them save up for that sweet bike they wanted growing up: a piggy bank.
Thus, owning assets on the blockchain is basically like having a digital piggy bank. However, the one difference is that, unlike a piggy bank, you can still have access to financial tools (aka borrowing, lending, etc.) when you self-custody your funds on the blockchain rather than storing them in a fragile, pink container.
Stablecoins are Cash in Your Wallet but on the Internet
Out of all the blockchain/crypto/Web 3.0 topics and ideas I try to explain to people, stablecoins (or crypto tokens pegged to the value of the US dollar) are one that people usually understand without too many headaches. However, one common critique when explaining how stablecoins are a great way to transfer value between two people online is that Venmo, Cash App, etc. can already do that.
To explain the difference, think of stablecoins as cash in your wallet. Cash in your wallet is yours and only yours (you have custody over this money, not banks) and can be transacted in a peer-to-peer fashion. Basically, I can give you cash without any middleman facilitating that transaction for us (Venmo for example).
Stablecoins are like a digital form of cash as you are the valid owner of those tokens (like you are the true owner of cash in your wallet) and you can still transact with people directly without having to use a third party. Using stablecoins on the blockchain, you can get all the benefits of peer-to-peer transactions while also receiving the ease of use benefits that Venmo provides by utilizing the internet. It’s a win-win if you ask me.
A Blockchain is like a Bulletin Board for the Internet
One of the benefits of blockchain technology that is extremely rare with today’s version of the internet is the transparency blockchain provides. A great way to think about how the idea of transparency could be beneficial is to think about the school-wide bulletin board you had in middle school.
Just like how the bulletin board made information about events, schedules, and announcements easily accessible to all students, blockchain technology makes transaction data easily accessible to all users on the network.
In the same way that anyone could walk up to the bulletin board and see what was happening, anyone with access to a blockchain can view and verify every transaction that has occurred on the network. This provides a high level of transparency and accountability, as all users can see and track the movement of assets and verify that they have been transferred to the intended recipient.
Moreover, just as the bulletin board allowed for a sense of community and shared knowledge among students, blockchain transparency promotes a sense of trust and cooperation among users on the network. With everyone able to view the same information, users can work together to ensure the accuracy and integrity of the blockchain, creating a more secure and reliable system for everyone involved.
Thanks for reading this week’s blog! I am kind of in a rush to publish this one as I am already publishing it a day late and am about to attend a Mardi Gras parade in a few hours (apologies for any typos). I’ll be spending the next week in NOLA, so if you are in town for Mardi Gras festivities and want to hang out, feel free to hit me up! Until next week!
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