web3 is re-writing everything. An introduction.
Originally published on Mirror.xyz
Happy Monday 🚀
Anyone who knows me knows that writing is not one of my best skills - but I'm forcing myself to do it because I want to share how fundamentally different I see the world now that I understand the things in this article - so that maybe you’ll see it too.
TLDR : this has completely changed the way I look at the internet / business / the world.
This all started when I went to the NFT NYC Conference a few weeks ago to deep dive into NFT/Blockchain/web3. I came away with the most crystal clear understanding of the future, the need to build a decentralized web, and how there’s so much work to be done to fulfill its vision.
If we go back and look at the most important events in the history of the web, you'll recall being hesitant to start a .com business in the late '90s or join social networks in 2007 - but you'd realize that it was the correct decision. Today, you and all of us face another critical moment: whether or not to embrace web3.
web3 provides the framework and technology to create an open, shared decentralized internet, where users control their own data, have a democratic voice in how the services they use are governed, and share in the ownership of those services.
Before we get into it please take a moment to subscribe for more deep dives + web3 exploration adventures.
Why is that important?
Setting aside the current backlash against big tech, web3 will make it possible to create decentralized organizations, which are radically transparent communities led by the concept of shared ownership, governance, and purpose.
So any organization that doesn't offer this, is at a disadvantage because people will choose to engage with decentralized governance. After all, they own their data and can help shape all levels of the organization.
If we look back at the previous iterations of the web, you may remember being hesitant to purchase a .com in the late '90s, or secure your social accounts in 2007 - this is another one of those pivotal moments, although this one feels much much bigger…
“Just like brands had to move from one-way media communications (TV, billboards) to two-way communication (FB/IG/TikTok) with the dawn of social - they now need to understand that web3 goes deeper, creating a shared economy and brand. Creating a reason for individuals to come together and dictate what your brand does in the future”
Wait ok, you're probably thinking, meh, IDK, but give me 20 min to read this article and see what you think, comments welcome @timnotjim
Over the past couple of weeks I've been connecting with people after the conference and have been explaining these concepts, everyone I talk to leaves the call with the same comment…
A deep dive into the main concepts of web3
The point of this article is to provide a primer for all of the fundamentals of web3 beautifully sketched here…
This Includes blockchain networks, crypto-wallets, NFTs, and DAOs. Diving into use cases and examples.
I hope this provides context to people who are maybe not familiar with the subject or are trying to understand how these things fit together.
Blockchain network
A technology that allows many computers to work together to form a ledger that is virtually impossible to alter.
There are many blockchains but here are 2 popular ones Ethereum & Solana, they are examples of decentralized data networks that exist today;
Ethereum allows new concepts like smart contracts, think a legal contract but written as code and stored on the blockchain for everyone to see. It has a higher transaction rate of around 25 transactions per second. Ethereum has a cost, it is called gas. Gas is incurred when you add data to the Ethereum blockchain. This fee goes to all of the hundreds of computers around the world that validated your transaction using the Ethereum protocol. The majority of NFTs that exist today, use Ethereum to validate their tokens, but other networks are becoming popular.
Solana is one of the newest blockchains released in Summer 2021 (and the fastest yet). It uses a fundamentally new way to verify transactions on the blockchain, giving it a theoretical throughput of over 750k transactions per second (for reference the Visa network has a theoretical throughput of 1.7k transactions per second). Not to get into the technical details but the Solana protocol has been able to implement "the arrow of time in math.” allowing transactions to be verified on the Solana Blockchain without all of the computers in the network needing to process the transaction, meaning transactions happen much faster.
There are many many thousands of additional blockchains which all serve specific purposes, think of blockchain as a catchall term for many different computer programs and global networks creating ledgers. Note: Bitcoin is on the Bitcoin Blockchain, although its main use is to minting/ recording bitcoin allocation.
Read more
Article on the incredible launch of Solana over the summer of 2021
Polkadot is built to connect private, public, and consortium blockchains
web3
The next major evolution of the internet that is democratic and decentralized.
web1 is when the internet was primarily used for email and communications and the read-only web, we were consumers of content. Think Yahoo, Amazon, Netscape.
web2 can be defined as the social web since users were creating and responding to content, it became a participatory Internet. Think social media platforms LinkedIn, Facebook, Twitter.
web3 is a decentralized internet where users control their personal data, identity, and destiny - it allows read, write, and authentication.
We're now in the early stages of the web3 era, the maturity of blockchain technology enables web3 to verify and put data on a decentralized network (Blockchain).
The web3 combination of decentralization, blockchain, and structure is a fundamental change in the structure of organizations, meaning that no one company (See FAAMG) stores and controls that data.
With the addition of crypto wallets, users now have control over what organization has access to their data, this fundamentally changes the concept of the internet as we use it today.
And while it may be relatively easy for some blockchain-based companies to transition from web2 to web3, it's not so easy for any non-blockchain company (Aka 99.99% of companies). Financial, legal, business model, and structural issues are too difficult to overcome for many companies who operate in this space.
Or in other words, there is an entire web3 internet to be built...
Read more
Crypto wallet
A "virtual wallet" it not only holds your cryptocurrency, but it also contains other tokens or NFTs that you have purchased.
Similar to how you sign into a 3rd party site using Google or Facebook sign-in, a web3 application will allow you to sign in using your wallet, the big difference is that you hold your data, and you control what information gets shared.
Since your web3 data will go with you, to any site you want to go to your entire life goes with you.
For example, when you log in to Netflix, it knows all the shows you have watched so it can suggest new shows, but you don't only watch shows on Netflix. A web3 version of this scenario would allow you to log in using your wallet and if you wanted to then share your viewing history from any of the platforms you use - providing more data to create a richer experience and better recommendations.
Another way to think about it is a web3 identity card or international passport, allowing you entry into different worlds, allowing the site to see what's in your wallet, which can unlock features or functionality.
Your wallet will usually have an address, which is on the blockchain and is the address where you can send and receive currency and tokens, but also receive tokens or funds.
(Not to go too deep) but wallets also don't have to have their own specific wallet address. In the same way, your debit card in your wallet gives you 'virtual' access to the cash in your account, wallets can also read the contents of other blockchain addresses you own. To check this out install Rainbow below.
Read more
Metaverse
Is a shared digital world that we can all share and visit, it uses avatars to represent people.
Ok, I don't want to get into this too much, because there's a lot to unpack and it deserves its own article. I only mention it here to provide context as you will have no doubt heard about it in similar conversations around web3...
The Metaverse is a collection of persistent virtual worlds, meaning that they constantly live and evolve even if you're not "logged in". Think of the Metaverse as a series of connected digital worlds that you can connect to using your crypto wallet, and the items in your wallet can then interact with things in the Metaverse.
So if you have purchased an NFT jacket, perhaps you can wear that jacket in the Metaverse, or it gives you access to a special area in the Metaverse which is reserved for people who own the jacket, or a similar product from the same collection. If you own an NFT art piece perhaps you can display it in your Metaverse 'home'. Since your wallet is connected you can purchase/sell items directly to other people in the Metaverse.
The vision is that over time you can do everything in the Metaverse that you do in real life, like visiting places, playing games, working, and meeting people.
Right now you could think about playing Fortnite as a Metaverse type world but the vision is that the virtual and physical worlds are intertwined, for that to happen we need the widespread adoption of wearable AR/VR Glasses, being developed by Apple, Facebook, and others.
Read more
A great point of view about the value chain of the Metaverse
The Sandbox, a virtual world where players can build, own, and monetize
NFT
(A non-fungible token) is a unique token or record on the blockchain that cannot be exchanged for any other token.
First it's helpful to understand fungibility, something that this guy (who's constantly trying to steal my look) was first telling me about at Cannes Advertising in 2019, but I was too drunk on Rose to pay attention…
Here's a great explanation about fungibility that I've stolen from my colleagues at rehab.
Money is fungible 💸
A £10 note is replaceable/fungible.
If we swap notes, we both have the same amount of money and nobody is worse off.
£10 is replaceable by 2x £5 also.
The Mona Lisa is non-fungible 🖼
You can not swapping the OG for a replica or print is not equivalent
A lot of Mona Lisa comparisons in the NFT world.
Since every transaction on the blockchain has a unique ID number, NFTs run on the blockchain, meaning each digital item has a unique ID number. Therefore it's non-fungible.
Therefore, we can represent something as one of these unique IDs and mathematically prove who owns it.
If we know the owner of an asset then we can provide that owner with a wide range of utility including access to a physical or digital event to gameplay.
NFTS can range from JPG images of funny animals, user-generated content, exclusive pieces of content, or a virtual representation of a physical item. Future applications allow NFTs to function like mini applications when combined with blockchain smart-contract platforms.
Read more
DAO
(Decentralized autonomous organization) is a collection of individuals working together to accomplish a goal, all of whom are governed by a common set of regulations imposed via blockchain technology.
What's exciting about a DAO is that it fundamentally changes the way groups of humans come together to serve a common goal, or in other words, it's a completely new way of creating a company, business, organization, or team. One that's completely transparent, has a built-in shared economy for all participants and allows everyone to have a say in the future of the organization.
The transparency of the Dao allows for people who have never met each other to come together under a single shared vision and reduces fraud.
Let’s explore some DAO's
A few real-life, recent, and most famous DAO's to help you to better understand the concept:
Constitution DAO
A few days ago this DAO was unsuccessful in its mission to purchase one of the thirteen remaining copies of the US constitution at a live auction at Sotheby's New York. However, what they accomplished in a week was incredible, and not possible without web3.
Their mission was to buy the US Constitution and allow the people who contributed to the project have a say in its governance, where it was displayed etc. Anyone in the world could join the DAO, contribute Ethereum to the project, the amount contributed by an individual was correlated to a token, called $PEOPLE.
One token = One vote, so the more you contributed, the more $PEOPLE tokens/ votes you owned.
While this DAO didn’t offer fractional ownership of the Constitution (I believe there was a mistake in the initial setup of the DAO due to lack of time they had to research) it is possible for token owners in a DAO to not only have a say in the governance but also own a part of the asset itself.
ENS Domains
Similar to how URLs and domain names let you navigate the web by typing in an easy-to-remember phrase like timnotjim.com (which is then decoded through name servers to send traffic to the actual server address 99.83.190.102).
ENS Domains is a service that provides a lookup service for web3 objects, mainly wallet addresses. For example, my Ethereum wallet address is:
0x7cbC330Bf0B9479D320170B21F8ca9e88399FC16,
A little hard to work with, so ENS allows me to buy (web2 domain names are rented, but a web3 address is owned and verifiably yours on the blockchain) an Ethereum address, I grabbed timnotjim.eth. Anyone any web3 application or person can send things to my wallet using that address. Easy.
On the 8th of November, ENS did something incredible, they announced that ENS would be creating a DAO and $ENS cryptocurrency to govern key aspects of the ENS service and that anyone who had purchased a domain name through them would be awarded tokens in the company, a web3 way of thinking, giving back to the early supporters who helped to make the company a success and giving them a say in the future of the service.
This is how they split up the allocation of tokens, reserving 25% of tokens to be Airdropped (think automatically sent to your crypto wallet), through a publicly available calculation based on the length of time you had owned and your future registrations. They also allocated tokens to active discord users, contributors, and translators.
So my simple timnotjim.eth domain purchase equated to around 95ENS which I collected, or in other terms, I now own 95 out of 100 million ENS tokens, which I can use to vote on future governance issues, or sell them on a crypto exchange, as I write this $ENS is trading for $49.59 USD making my ~$200 domain name purchase now worth ~$4k USD. I'm going to keep them to have a say in the future
A great example of web3 development moving to decentralized ownership.
Read more
Thanks + Inspiration
Thanks to Packy, Teddy, Robin, Takunda & the Rehab team, Andreessen Horowitz, Jay, Piers, Dan, Greasy Fringe for your help + inspiration.
Let's build the future 🚀