LEARN CRYPTO | Blockchain & Web3


May 9, 2023


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What is special about decentralization and the internet?

How does blockchain and web3 work together?

What are dApps?

How does decentralization enable ownership of our data?

Web3 is the third version of the internet, which has evolved around users' ownership of data. The information on Web3, like cryptocurrency transactions, cannot be easily altered, erased, or shut down by any one entity. This is because Web3 users essentially own and govern the internet themselves, and interact through a variety of decentralized applications. These applications run on blockchain technology, which was built for cryptocurrency. More specifically, it was created as part of the proposal for the first cryptocurrency: Bitcoin.

Web3 apps are built on blockchains, or decentralized networks of peer-to-peer servers (nodes), or a mix of the two. Such programs are called decentralized applications, or dApps. These dApps are the more visible, interactive side of Web3. Because of the nature of existing and running on blockchain technology, information is transactional in nature. These transactions could be giving approval for a process, granting access to something, or trading cryptocurrencies (or NFTs).

So, about these transactions on the blockchain: you may say things are, indeed, exactly as they appear. The unchangeable, or immutable, distributed ledger (shared record) is a highlight of blockchain technology! On the blockchain, the exact time, date, and details of transactions and approvals are recorded and copied at the same time. This includes their senders and recipients, which are identified by their “address” or “contract.” These interactions are permanently imprinted on the network and cannot be changed or removed. That means they can be found, followed, and referenced forever. This may also have its drawbacks in certain scenarios. But overall, the Web3 community tends to rally behind the transparency and greater decentralization that blockchain makes possible.

With that being said, you must be aware! Many companies and sites are increasingly excited to talk about “Web3” or “decentralized” aspects, but they simply are not true representations of decentralization or Web3. They may even integrate Web3 technology to some degree (blockchain technology and/or peer-to-peer networks), or even provide a tool for interacting with the blockchain. What you’re accessing, however, may not be a dApp in itself. If you’ve ever seen or changed a Twitter profile picture (pfp) to a “verified NFT” for instance (those which appear as a hexagon), you’ll understand this example: Twitter is clearly a Web2 application with a single point of access to Web3. By connecting a user’s wallet, they can verify ownership of the NFT by viewing the blockchain. This does not make Twitter a “Web3 company'' or decentralized in any way.

In contrast, Web3 dApps are the real decentralized deal. They do not run on a single server nor store data in a single database. Meanwhile, Web2 applications are usually hosted on and managed by a single cloud provider: these are simple and easy to manage, but also more limited. They leave much at the mercy of the provider’s success and whatever terms they decide. Consider this scenario: if YouTube were to shut down, you simply wouldn’t have access. This could happen for whatever reason, and without notice. YouTube (as an entity) has control, and is capable of making the decision to take down the site itself, if needed, or as they see fit. If your information and data (videos, content, playlists) were only saved on their server, they would be gone forever without any consensus. That’s the saga of centralization and the Web2 world.

In contrast, decentralization of the web means multiple entities are in charge of the internet. Millions of devices may be interconnected through an open network. It cannot be owned, controlled, or managed by any single entity. As a result, the decentralized web’s information cannot be quickly pulled down or affected by an outage. This can also contribute to protecting users' information and privacy. No single individual has “control” to access the data, or shut it down: not even for “scheduled maintenance” or “safety,” as some sites do quite often.

In any version of the World Wide Web that’s built upon it, the Internet allows the most complete and complex system we have for communicating without a single, central hub: it’s the largest decentralized system of communication that has ever existed!

Key terms

Blockchain: a shared digital record (ledger) of transactions of information, linked in a way that makes it nearly impossible to alter the transactions or harm the network, because they are maintained across a decentralized, peer-to-peer network of devices.

Decentralized: when powers or authority are distributed, so a network, or otherwise, is controlled by several entities, offices, or authorities instead of a single entity or source.

Decentralized applications (dApps): Web3 applications that exist and run on blockchain technology, peer-to-peer (p2p) networks, or a mix of the two, and which can not be controlled by a centralized entity or authority.

Distributed ledger: a digital system for recording the transactions of assets in which the transactions and their details are recorded in multiple places at the same time, and may be centralized or decentralized.

QUIZ - How did you do retaining this information?

  1. What is the name of the first cryptocurrency, for which blockchain was created?
  2. a. DeFi
  3. b. Bitcoin
  4. c. Ethereum
  5. d. DLT
  6. Which statement describes what decentralization means for the Web?
  7. a. Decentralization allows users to own their own data.
  8. b. Decentralized applications are built on blockchain technology.
  9. c. No one entity controls the information on the decentralized web.
  10. d. All of the above
  11. What are dApps?
  12. a. “Definite alterations” to the web through transactions
  13. b. “Decentralization applications,” where you can turn any site into Web3
  14. c. “Decentralized applications,” built on blockchain technology
  15. d. A hand motion used to greet someone, like a fist bump
  16. True or False: Even true dApps running on the blockchain can be shut down by one entity, if it’s an emergency or for users’ safety.
  17. a. True
  18. b. False
  19. Web3 apps are different from Web2 apps in that they are…
  20. a. simple and easy to manage
  21. b. Not yet fully functional for users
  22. c. usually hosted on and managed by a single cloud provider
  23. d. built on blockchains
  24. Because it exists and runs on blockchain technology, Web3 is…
  25. a. more transactional in nature.
  26. b. overloaded with dApps
  27. c. superior to other variations of the Web
  28. d. a more dangerous place
  29. Which of these is the largest decentralized communication system that has ever existed?
  30. a. phones
  31. b. blockchain
  32. c. the Internet
  33. d. Twitter

1. b

2. d

3. c

4. b

5. d

6. a

7. c