The A-Z (nearly) of Web3

The Situation: Web3 comes charging toward us with its own host of baffling buzzwords and cryptic acronyms. If the idea of the meatspace leaves you hungry for more, you will want to keep this quick guide to the key terms of Web3 close at hand.

Our recent Web3 POVs have got enterprise leaders talking. Catch up with how Web3 can finally deliver the internet’s promise of democratized experiences here, and find out what it’s going to take to make Web3 a mainstream reality, and when that’s going to happen, here.

Now get ready for the conversations your teams and partners will be coming your way with, using our helpful A-Z (nearly) of Web3.

Exhibit 1: Web3 means new competencies, technologies, and outcomes to get to grips with

Source: HFS Research, 2022. Vendor examples are representative and illustrative only

A is for airdrop, AR, and avatars, B for BAS, bitcoin and blockchain

airdrop: When free tokens are given directly to users’ crypto wallets. (see tokens, crypto)

AR (augmented reality): A digital overlay of the physical world offering additional information via a device worn over the eyes, such as goggles, or through a camera-enabled device, such as a smartphone.

avatars: Not just a blockbuster movie about blue people from alien worlds, avatars are any digital version of ourselves or who we want to be in virtual and screen spaces. Fact: The word first appeared in English in 1784 and referenced the incarnation of a god, Vishnu in particular.

BAS (blockchain attached storage): A way of saving data to a network of users’ spare hard-drive capacity rather than in centrally owned clouds.

Bitcoin: The world’s first cryptocurrency, conceived as a peer-to-peer electronic cash system out of the control of any central bank.

blockchain: A distributed and immutable digital ledger used to record transactions, delivering a reliable and transparent resource all parties can trust. Bitcoin is capitalized when referring to the ‘network’ (not the concept). The currency is lower case. Similarly, Ethereum the network is capitalized; ether, the digital currency, is lower case.

C is for CeFi, collectibles, and crypto

CBDC (central bank digital currency): A digital representation of a nation’s cash to enable greater traceability vs. cryptocurrencies or cash. As economies go digital, CBDCs mean the general public retains access to the safest form of money—a claim on a central bank—while governments get to reduce the risk of financial crimes from fraud, counterfeiting, and tax evasion. More than 40 nations are experimenting with these.

CeFi (centralized finance): All crypto trading goes through a central exchange, which maintains ownership of the cryptocurrencies, decides which coins to trade, and sets the rules you must follow. Benefits include flexibility in converting fiat to cryptocurrencies and vice versa and a more straightforward user and customer experience.

collectibles: An NFT that is unique or produced in strictly limited numbers. Its uniqueness and value are protected by the application of crypto. NFTs are often in the form of something found in real-life, such as artworks or pets. (see NFT, crypto)

crypto: Any form of digital or virtual coin or token using cryptography to make transactions secure and value protected. Cryptography is the use of math to encode and secure information.

D is for DAOs, dApps, DeFi, and DIAs

DAO (decentralized autonomous organization): DAOs are flat, member-led organizations whose rules are recorded on a blockchain. You will need to acquire a token to take part. (see tokens, blockchain, decentralized)

dApp (decentralized app): An app built on the blockchain, enabling co-creation to the benefit of all engaged, with a ledger of contributions and therefore—potentially—identification of how rewards should be shared.

decentralized: The transfer of decision-making to a distributed network.

DeFi (decentralized finance): The catch-all term for any peer-to-peer financial services on public blockchains. With no mediators to pay or shiny offices to service, costs are low. Smart contracts replace intermediaries. (see smart contracts)

DIA (decentralized information asset): A cross-chain, end-to-end, open-source data and oracle platform for Web3. (see oracle – and we don’t mean the Austin-based software giant)

E is for Ethereum, F for fiat and fungible, and G is for gas

Ethereum: A Web3 champion, Ethereum is a decentralized blockchain platform with a peer-to-peer network to execute and verify application code, known as smart contracts. It is the primary home for decentralized applications such as DeFi and NFTs. Its native cryptocurrency is ether, and those using the platform must pay in ether to transact.

fiat money: Hard cash. All the forms of money made legal tender by government decree—or fiat.

fungible: When individual units of a good or other commodity are essentially interchangeable, they are fungible. (see NFTs)

gas: Fee required to execute a smart contract or transaction on the Ethereum blockchain.

H is for hybrid cloud, I for IBC and IRL, and K for keys

hybrid cloud: Combines public cloud (with hosting outsourced to a third party such as AWS, Google, or Microsoft) with a private cloud dedicated to the end-user or an on-premises data center. (see multi–cloud)

IBC (inter-blockchain communication protocol): The relays transmitting between blockchains to create a blockchain network.

IRL (in real life): The physical universe. (see meatspace)

keys: Keys are strings of numbers or letters stored as a file. When processed by a cryptographic algorithm, they lock or unlock data.

M is for meatspace, metaverse, mining, mixed reality, and multi-cloud

meatspace: The physical counterpart of the metaverse. Do you see what they did there?

metadata: Data describing other data, such as the tags you might attach to a LinkedIn post. Metadata makes what it describes easier to find.

MetaMask: Crypto wallet on the Ethereum blockchain.

metaverse: Metaverse has come to be shorthand for a virtual space in which users can interact with a computer-generated environment and other users via digital versions of themselves. Our view is that the metaverse cannot be owned; it can only be contributed to and participated in, much like the internet. We see it as the experience interface for Web3.

mining: Verifying transactions on the blockchain by solving complex math problems. Successful miners are rewarded with cryptocurrency.

mixed reality: Blending physical and digital worlds to create new environments to test and experience. It is a hybrid of augmented and virtual reality. Applications include design, military training, and healthcare.

multi-cloud: Blended use of public clouds. (see hybrid cloud)

N is for NFTs, O for off-chain data, and oracles

NFT (non-fungible token): Tokens that can be used to represent ownership of unique items, such as art and other collectibles. Note the word “represent.” It is not equal to ownership. There can only be one record of ownership at a time, secured by the Ethereum blockchain. As such, no one can fake the record of ownership or copy/paste a new NFT into existence.

off-chain data: Data that is not publicly accessible but that can be made available to the blockchain via third-party validation. Off-chain transactions may be useful when supporting a cache of most recent values, protecting privacy, or recording instant transactions (free of the delay of network confirmations).

oracle: A digital agent that finds and verifies real-world occurrences and submits them as data to a blockchain for use by smart contracts.

P is for peer-to-peer, proof of attendance, and protocol

P2P (peer-to-peer): Represents decentralized network communications models where a group of devices or nodes are employed to collectively store and share files. All nodes are equal.

POAP (proof of attendance protocol): A unique NFT given free to event attendees, serving as verifiable proof that the holders were there. They are digital and secured by Ethereum blockchain technology.

protocol: Basic sets of rules allowing data to be shared between computers. In the case of blockchain, they consist of the regulations that are followed to maintain decentralization and secure transactions.

S is for smart contracts, and substrate, T for tokens, and U for universal information

smart contracts: Programs that run automatically on the blockchain when pre-set conditions are met. They can be used to automate workflow, executing agreements on which all parties are agreed.

substrate: A blockchain framework for building customized blockchains.

tokens: A digital asset stored security on the blockchain, consisting of rules encoded in a smart contract that grant permission or access to an asset.

universal information: Equality of access to information.

V to X takes us Virtual through wallet and Web3, to extended reality

VR (virtual reality): An immersive digital simulation of a 3D environment. The 3D environment is responsive to user interaction. Users will usually experience the environment through VR goggles— head-mounted displays presenting a small screen close to the user’s eyes.

wallet: A private digital vault in which to store, manage, and use cryptocurrency or other blockchain-validated digital assets.

Web3: The next stage of the internet, built with blockchain, with data ownership in the hands of users, Web3 encompasses the metaverse and other emergent technologies, products, and services.

XR (extended reality): The combined and total realm of virtual, augmented, and real environments informed by all interactions between humans and machines.

The Bottom Line: You’re right. There’s a lot to learn. So, it’s time to get started

Web3 ushers in a brave, complex, and exciting new world. If you have been resisting getting to grips with it in the hope that it will become important under someone else’s tenure or remit, we urge you to do yourself a favor and take the lead. Get up to speed with our Web3 POVs (How Web3 will democratize experience; and When to expect it and how to prepare), and you’ll be in a better place when Web3’s business impacts come crashing through your doors.