From A to MetaVerse: Distinguishing Key Terms Within Web3 and Blockchain
Crypto. Blockchain. Tokens. With So Many Web3 Words Flying Around, It’s Important to Understand What They All Mean.
You’ve heard all of the buzzwords throughout recent years: tokens, blockchain, metaverse, or altcoin. Then there’s all the lingo, like shill, FUD, or Rekt.
We’ll save the buzzwords and jargon for another day.
More importantly, this article will focus on the foundational terms within web3 and how they all come together. It’s easy to get confused with the difference between crypto and tokens. And, wait…they live on the blockchain? And what actually is the metaverse? (No, it’s not part of the Marvel Cinematic Universe.)
What’s important to know is that there is a science and form to all of the web3 madness. Understanding it will help you navigate things successfully and stay informed of the latest technological innovations while allowing you to partake in the excitement. In particular, knowing how it all works will help you understand why web3 is truly the future of the Internet and how your brand might be able to leverage this technology to build communities.
Read on for a quick-and-easy rundown of web3 and crypto terms that’ll have you impressing and confusing your colleagues in no time.
Glossary of Key Terms Within Web3
Let’s start with the big one. In its most basic definition, web3 is an iteration of the Internet in which information is decentralized. In today’s Internet, which includes social media, your information is owned, held, or stored in a centralized server or location that belongs to a company, person, or other entity. Your Facebook or Twitter passwords are stored within their servers. The same goes for any other login info.
The basic tenet behind web3 is that information is not owned, or centralized, by a business entity. Instead, it’s decentralized, meaning it doesn’t belong to anyone but the person who holds that data. Most arguments in favor of web3 state that it features increased data security, autonomy for the individual vs. the corporation, and is more scalable. In short: web3 gives power to the person, rather than something else.
If web3 is the heart or hardware of the next evolution of the Internet, then Blockchain is the nervous system or software. A (note: not the, because there are more than one) blockchain is the underlying technology built on web3 principles that allow digital assets (cryptocurrency, tokens, NFTs, etc.) to be created, distributed, stored, and exchanged.
Now for the semi-scientific bit. Decentralization in blockchain works by assigning data ownership, exchange, or storage within “blocks” as transactions. These data blocks are all connected, forming the “chain” in blockchain. Instead of being stored centrally or owned by any entity, these blocks form a ledger of data that can be viewed publicly and cannot be altered.
Yes, you heard right: data can be viewed publicly in a blockchain. Then how is that secure, you may ask? Well, while people can see your public address and digital assets, they can’t see any personal identification information or alter your data. That’s the whole point — since blocks are all connected and form a chain, altering one piece of data affects the entire chain. And that’s just not possible or in anyone’s best interest.
So, in essence, a blockchain is a public ledger of data that records each time somebody transacts or exchanges assets.
Now that you know that web3 is the principle of decentralization and blockchain is the technology that makes it possible, we can define a digital asset class. Digital assets include cryptocurrency, tokens, and NFTs. Each of these three assets is an item that can be created, exchanged, and stored digitally as blocks on a blockchain. The blockchain is the operating system that enables you to trade assets and record transactions. See? Simple — you’re getting it.
Cryptocurrency is likely the asset that you’re most familiar with. It’s your Bitcoin or Ether. These are native assets of their respective blockchain. Other examples include Litecoin, ADA (Cardano), and XRP (Ripple). These assets are born with and are native to the blockchain and are the main currency with which transactions occur — similar to stocks. They can also serve as a store of value similar to a fiat currency, such as Bitcoin. Cryptocurrency can also be used to pay for transaction fees on the blockchain, such as exchanging for another asset or trading. (Note: Mint is almost entirely disconnected from the speculative value of cryptocurrency with our projects.)
Tokens are not native to the original blockchain. Instead, they are built as part of additional platforms or protocols built on blockchain technology. They are a separate asset class that you are likely familiar with already but might not know. For example, tokens built on Ethereum (or ERC-20 tokens) include Link (Chainlink), Shib (Shiba Inu), Polygon (Matic), and Mana (Decentraland). While the native cryptocurrency asset of Ethereum is Ether, these tokens are built as products that run on specific programmed protocols and for a singular purpose.
Tokens can also serve as a store of value but are often used to facilitate the exchange of data pertaining to a specific project built on the blockchain, like spending Mana to buy or own property in Decentraland. You’re using Mana as the token to facilitate this program, but the entirety of Mana and Decentraland is built on the Ethereum blockchain.
Here’s where we at Mint get excited. NFTs are simply another asset class. They are visual assets a person owns on the blockchain, the same as holding crypto or tokens. The difference is that NFTs are visual. However, everything else relies on the same principles as any other blockchain asset. They can be traded and exchanged — bought or sold.
The reason why we’re so excited about NFTs is that they offer unique use cases for the public because they can be visual. Because of this, brands can leverage them to build web3 communities where consumers actually own a stake of brand IP, giving them more incentive to engage. In essence, NFTs can be marketing tools like anything else. We even built an NFT Marketing Playbook to teach brands how to begin incorporating NFTs as community-building tools. Brands have already successfully been utilizing them in many exciting use cases — including as digital assets that actually give fans exclusive event access and more. The opportunities are endless.
The Metaverse was first coined in the 1992 sci-fi novel Snow Crash by Neal Stephenson. It combines “meta” and “universe.” In recent years, the term has become synonymous with web3 and virtual reality, particularly due to Facebook’s rebrand as Meta and involvement in the Metaverse.
In web3, the Metaverse refers to the congruence of blockchain and newer technologies like virtual reality. Decentraland, a blockchain project where you can explore your virtual universe, is a part of the Metaverse. Users can purchase clothing, houses, and plots of land just like in real life. You might recall a program called Second Life, one of the earliest iterations of virtual reality.
The Metaverse is virtual reality in a decentralized blockchain environment. So, everything you on is listed on the blockchain, just as if you were holding other digital assets.
There’s So Much to Explore
Now that you know some of the basics, hopefully, you realize this technology has many interesting applications. People appreciate that they have stronger control over their information, and brands can take part by creating content that people can own as well.