@gillesdc 
WEB3

The Internet Of Value

Don't limit your imagination to decentralised versions of Twitter, Facebook and YouTube. Blockchain technology unlocks a new kind of web: a human-to-human economic network in which strangers can trade currencies, assets and valuable data. No institutions charging fees, setting terms or asking questions for making it happen.

Value exchanges follow a prototypical contractual pattern. There's a performance and a reward. If I do X, you give me Y. Bitcoin provides a simple example of how blockchains automatically verify both performance and reward, fulfilling the contract with 100% guarantee that no party gets duped. These "smart contracts" are like robot vending machines. Trades are automated according to a logic that can't be breached.

Think art, insurance, real estate, intellectual property, credit cards, lawyers. You'll be able to trade it all without middlemen, using dapps built on Ethereum or other smart contract blockchains like Solana instead. Trustless and permissionless. Cheaper and faster.

The superior economic efficiency will open up previously impossible business models and possibly reinvent companies altogether. At its core, a company is but a mesh of contracts: with employees, with shareholders, with banks, with customers, with the state. All can be programmed on smart contract blockchains.

Blockchains allow everyone in the world with a phone and an internet connection to participate directly, immediately and without permission in the global economy.

How web3 works

On the economic internet:

  • every user is a wallet.
  • every file is an asset owned by a wallet.
  • every exchange is a transaction from one wallet to another.

How? Let's build some intuition.

web2: read+write

When you sign up for Twitter as @jack, a @jack-named directory is created in Twitter’s database — hosted on a central server like AWS.

Every time @jack tweets, a new page is added to the @jack directory in the Twitter database. When I like @jack’s tweet, I update the underlying database page with +1. When @jack mentions me in a tweet, the page is linked to my profile page. Adding and changing pages is called ‘writing’.

Each page is linked to other pages (home, profile, comment, mention, retweet) so you can click from one page to another. Viewing and browsing tweets this way is called ‘reading’.

On your screen, the user interface of Twitter’s web and mobile apps makes the experience of reading and writing intuitive and effortless.

Twitter is web2 because users have writing permissions. On web1, only the owner of the site could change the data: for users, it was read-only.

web3: read + write + own

To reading and writing, web3 adds ‘owning’.

As much as your tweets have your name on them, they’re still in Twitter’s database. On a blockchain-Twitter — let's call it 'dTwitter' — you own your tweets: they're assets in your wallet.

The mechanics would go something like this:

  • @jack joins dTwitter by connecting his crypto wallet.
  • When @jack tweets, a new file is created and stored on a decentralised file storage system like the InterPlanetary File System (IPFS).
  • At the same time, a token that represents the tweet-file is ‘minted’ on the dTwitter blockchain and allocated to @jack’s wallet address. It sits in @jack’s wallet and so @jack effectively ‘owns’ it.
  • @jack can transfer ownership of his tweets to other wallets.

Whereas all Twitter tweets are owned by Twitter, all dTwitter tweets are owned by its users.

You can think of tweets as assets that accrue value as a function of attention and engagement.

On web2, Twitter the company owns all tweets and trades the generated value for money with advertisers. When you write a viral tweet, Twitter’s stock price goes up. On web3, tweets and returns are all yours. You’ll be able to directly trade the attention your tweets attract with advertisers via smart contracts, or sell your best tweets as NFTs.

NFTs

A token representing tweet ownership is non-fungible, a Non-Fungible Token or NFT. That means the token is unique and not 1:1 interchangeable with any other token: @jack’s first tweet is different from his second tweet the same way Da Vinci’s Mona Lisa is different from The Last Supper.

@jack can sell his tweets by exchanging the NFTs for a cryptocurrency like ETH (in fact he did). Like dollar bills and grains like wheat, ETH tokens are fungible: you don’t care ‘which’ ETH token or dollar bill it is because they are all the same. Fungibility qualifies things as money. We use fungible things to value and exchange non-fungible things. 

@jack could trade tweets in good faith, trusting the other party to send Ether tokens to his wallet address upon receiving the NFT. Or, he can use a smart contract that is programmed to transfer x Ether tokens from wallet x to wallet y as soon as wallet x receives the NFT from wallet y — automated trust. That’s how NFTs of (mainly) artwork .JPEG images are traded on OpenSea, the biggest NFT marketplace at the time of writing.

As the example suggests, the concept of NFTs reaches far beyond the current craze that sees people buying .JPEG images of rocks, apes and 8-bit avatars for millions of dollars. Essentially, everything you’d care to own — diamonds, Teslas, Pokémon cards, houses, land, paintings, songs — can be tokenised as NFTs so ownership becomes verifiable, unstealable, programmable, divisible, easy to transfer and cryptographically secure.

NFTs deserve a very own deep-dive. In progress

Subscribe to get it in your mailbox when I publish, or check out the visual brain dump I'll base it on.

How to use Web3

Connect wallet > Sign in with Facebook

To use a dapp, you connect your crypto-wallet, i.e. you signal the address of your blockchain account to the dapp. 

What’s the difference between a wallet and an address?

An address is a series of numbers, e.g. 0xec98c7935ae1db71884969919de58cd776cc017c. Wallets allow you to do things with addresses. They come in different purposes:

  • Cold wallets are hardware devices used to store assets offline. Example: Trezor.
  • Soft wallets are software apps used to store assets on a phone and/or desktop. Less secure than cold wallets but easier to use. Example: Exodus.
  • Hot wallets can interact with dapps as mobile apps and browser extensions. That connectivity makes them less secure for storage. Example: Metamask.

Crypto-addresses associate with layer 1 blockchains like Ethereum. As such, they’re compatible with all the dapps built on it. So if dTwitter were Ethereum-based, @jack would connect his ETH wallet, as he would to other Ethereum-based dapps like Uniswap (to swap tokens) and OpenSea (to trade NFTs).

Clicking Connect Wallet feels as easy as Sign in with Facebook. Under the hood, there's a big difference. Whereas signing in with Facebook effectively hands over your profile details until you revoke access, a dapp never gets actual access to your wallet. Instead, you transact tokens — fungible and non-fungible — in a cryptographically secure way. Each transaction is privately signed for by both parties and recorded on the blockchain for everyone to verify.

A crypto address is anonymous. It could store personal identifiers like names and pictures as NFTs: digital assets that are yours to share with other wallets and dapps — not Facebook’s.

Your decentralised domain name

Anonymity is the standard for a reason. Blockchain transparency means everyone can see what each address holds. Putting your name on a wallet with 100 BTC is like painting a target on your own back. Giving up banks also means assuming risk and responsibility for assets ourselves.

Yet, 0xec98c7935ae1db71884969919de58cd776cc017c doesn't exactly roll off the tongue. To avoid having to unlock your phone, open your wallet app and copy-pasting your address in a messaging app each time your friend wants to pay back a beer, you can link your cryptic crypto addresses to an easy-to-market domain name, like gillesdc.eth.  

The same way netflix.com refers to the IP address points to the location of the Netflix site on a server, gillesdc.eth refers to my address on the Ethereum blockchain. Specifically the address of the hot wallet I use to interact with dapps. Use hot wallets like you use regular wallets on-the-go: only put in what you plan to spend. Treasures are better kept anonymous, in soft wallets protected by biometrics and 2FA (soft wallets) or offline cold wallets — the crypto equivalent of a vault.

Registering your crypto domain name make for a prototypical web3 experience:

  1. Buy the tokens you need to purchase the domain name you want from an exchange like Coinbase. You’ll need ETH for .eth domains and SOL for .sol domains.
  2. Transfer the tokens to a compatible hot wallet. I use Metamask for ETH and Phantom for SOL.
  3. Navigate to the domain name dapp (ENS for .eth and Bonfida for .sol) and connect your wallet.
  4. Search the names you want and complete the transaction from your wallet.

More detailed instructions:

Next page

VI.

Web3 tour

DeFi, NFTs, DAOs, social tokes, Play2Earn, Metaverse.

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