The one thing everyone can agree on is that diving into Web3 is equivalent to drinking from a firehose.
Trying to find where to start is a challenge on its own, let alone trying to keep up with the daily launch of new projects, and the endless amount of new Alpha (insider crypto info) dumped onto Twitter and discussed in the thousands of different Discord, Telegram and Signal channels.
I put this together to help save you some time and aggravation and hopefully give you a good starting point for your Web3 journey.
First and foremost, it’s important to understand that when it comes to Web3, there are many different pillars. If you try to understand everything going on from a high level, you’re already screwed.
I’ve found that choosing one topic or pillar and then going deep on that not only helps keep the wires from getting crossed, but it also gives you an advantage in terms of generalized learnings and terms that will help when you decide to move on to the next topic.
This is by no means an exhaustive list, but here are the pillars or buckets that I’ve identified to help you bucket your learnings.
- Blockchain and Distributed Ledgers -The actual technology powering Web3, similar to the internet enabling Web2
- Bitcoin and crypto - Arguably the most popular use case and poster child for Web3
- Wallets - One of the first and arguably the most necessary tools required to engage with Web3
- NFTs - The up-and-coming "use case" ranging from digital art, digital collectables, and digital passes, but maturing into the tip of the spear for the overall concept of digital ownership.
- The Metaverse - The vision for a fully interoperable virtual world where all the previously mentioned aspects of Web3 will live and interact.
- DAOs - My personal favourite, the business, or soon to be known as the communities of Web3
Each of these pillars have an infinite number of resources, personalities, technologies, up-and-coming use cases and differing perspective but together, they make up a good chunk of what we call Web3.
The way I like to begin explaining Web3 is starting with the technology.
1. Blockchains and Distributed Ledgers
Blockchains and distributed ledgers are the technology that allow all these tools to be created and therefor new use cases and business models to develop and evolve.
From a non-technical standpoint, blockchains are simply databases or lists of data (ledgers) that now have the ability to be stored on multiple devices rather than centralized on one single device or server, hence the idea of decentralization.
By distributing the data amongst multiple locations, the decentralization of that data makes it more secure because all devices need to agree before anything on in the database or ledger can be changed, instead of a centralized system where one owner whether it be an individual or business can make unilateral decisions to alter the data.
This reminds me a lot of what happened when the internet was created. The internet is not the websites that we browse or the apps that we use, the internet is the underlying technology that allowed for the connection of networks. This connection of networks as a new technology is what made way for the tools and businesses we use today.
It’s important to note that bitcoin or crypto are not blockchains. That’s like saying email or apps are the internet.
The internet was the underlying technology that allowed creation of email and websites. Same for blockchains, the advancement in blockchain technology is what allowed for the idea of bitcoin to be brought to life.
So for the sake of this post, let’s look at the relationship between blockchain and bitcoin, the same way we would look at the relationship between the internet and email. The technology and the product are not the same, but the development of the technology allowed for latter to be created.
If we look at being able to send communication as one of the first and most exciting use cases for the internet when it came out, it’s crazy to think that with blockchain one of the first and most exciting use cases this technology gave us was the ability to create an entirely new currency.
Bitcoin was one of the first use-cases that sprung up as an application for blockchain technology. As the technology developed, the founder of bitcoin Satoshi Nakamoto saw the benefits of this technology and put together a concept of how it could be used to create a new currency. You can read the Bitcoin white paper here.
The main point I’m trying to highlight is that the development of blockchains and distributive ledgers led way to one of the first and strongest use cases of the technology which was bitcoin.
This leads us into the world of bitcoin and crypto.
2. Bitcoin and Crypto: Not the same
It took me a long time to wrap my head around all of this but the easiest place to start is to separate bitcoin from the rest of the crypto space. They are VERY different.
As a quick note, I’m not going to dive into the details about why people feel that bitcoin is a better currency than our current fiat, but if that interests you, I’d say check out the book by Saifedean Ammous called The Bitcoin Standard.
Bitcoin was created as an authentic and extreme display of what blockchain technology could do from a decentralized, immutable, autonomous, and security standpoint. Once that was created and started getting some adoption, as innovation will have it, people started seeing holes in the model and felt like they could improve on the initial concept.
This improvement came in the form of Smart Contracts. Bitcoin was developed with the single purpose of using a digital token to create a new currency. It did this by having these digital tokens be stored, managed, tracked, sent and owned transparently on the blockchain.
In summary, you can own bitcoin, you can send bitcoin, and you can rely on bitcoin to not be interfered with by 3rd parties, but that’s where bitcoin ends.
What came next changed the game and this improvement came in the form of Smart Contracts of which Ethereum has become the runaway success.
Smart Contracts improve on the idea of having tokens on the blockchain. Instead of just focusing on using digital tokens as a currency, Smart Contracts protocols such as Ethereum wanted to use blockchain and tokens to do more by enabling code to be applied to these tokens. Adding code or Smart Contracts to tokens allows for rules, customizability, compossibility and utility.
This is all fancy way of saying that with Smart Contracts you can make it so that these tokens do cool things rather than with bitcoin where you could really only send, receive and hold as a store of value.
The way to look at this is similar to the development of HTML and Java Script.
After the internet allowed for the creation of webpages, the only way you could interact with these webpages was by reading the text on the page (this is where the concept of Web1 = read).
You couldn’t click on anything, you couldn’t add videos, you couldn’t sign in, you could just read. For all of us who are non-technical, Java Script and HTLM are what allow us to interact with webpages in the way we do today. Being able to click, embed, interacts, post, send, all these actions came from the ability to code rules into these websites through HTML and Java Script. This ability to use code to allow for rules, customizability, utility, and interactivity is what lead way to all the websites we use today, and it’s what brought in the area of Web2 where the internet become read + write.
If you want a deeper dive on Web1, Web2 and Web3 I’d say listen to Chris Dixon who’s the king of mental models and helped me wrap my head around a lot of this stuff.
The same way Java Script and HTML allowed us to do more with webpages, Smart Contracts allow us to do more with blockchain and tokens.
Because Smart Contracts allowed for more possibility with crypto and tokens, people started coming up with new ways to use blockchain and tokens. Whereas bitcoin was created to be a new currency that has no owner and is not managed by any organization, Smart Contract tokens are businesses that are using blockchain and tokens to create new products, business models and pretty much exploring any and all new possible use cases for the technology.
You’ve heard the comparison between bitcoin and gold as a store of value before, but I use that comparison in a bit of a different way. If you look at bitcoin like gold, then you would look at the rest of the Crypto that are now using Smart Contracts as businesses in the stock market.
You actually can’t compare the two. Bitcoin is an unmanaged expression of a technology and an idea, whereas Ethereum, Solana, Doge, and all of the other crypto and altcoins are in a simplified description, businesses. They’re trying to create, or improve or deploy products, services, or technologies.
For the sake of the post, main thing to understand is that bitcoin is in its own world doing its own thing, and broadly speaking the rest of the crypto currencies are in a completely different category operating more closely to organized businesses.
So now that we see how blockchain is just a technology enabling the creation of bitcoin and crypto similar to the way the internet enabled the creation of email and website. And we now see the evolution and differences between bitcoin and the rest of the crypto currencies, we can dive into one of my personal favorite pillars, Wallets.
3. Wallets: Your passport into Web3
One of the most powerful arguments for bitcoin and crypto is the fact that by using blockchain technology, you can actually hold your crypto assets yourself and have full control over it rather than have a third party like a bank hold it for you.
Ask people if they own their money, most will say yes. When you ask them where they keep their money, they’ll say the banks. The key thing to understand here is that if you have your money in the bank, technically you don’t own it.
At any point in time the bank can block you from withdrawing your money, they can withdraw money without your consent, or they can block transfers of your money if they feel inclined or are influenced to do so.
This isn’t an issue for most people, but that doesn’t mean it’s not something worth thinking about.
With crypto, the tokens are stored on the blockchain. What Web3 wallets allow us to do is have an easy user-friendly way to interact with the blockchain.
You can use the website analogy again where most websites and apps are a series of databases, code, and servers that all work together to accomplish whatever the app is meant to do. Seeing as the majority of us have no interest in messing around with any of that, we develop front ends on top of these back-end systems to give an easy and user-friendly way to interact with the app. When you visit a website or open an app, you’re interacting with the front end of the app.
This is what Web3 wallets do for blockchain, instead of you having to literally interact with the blockchain directly, these wallets give you a front end so that you can easily interact with what’s going on the blockchain. Specifically, it allows you to manage your cryptocurrency that is stored on the blockchain (on-chain).
It’s really easy to go down a rabbit hole here in terms of how wallets work in regard to private keys acting as your ultimate password, or how public keys work in terms of sending and receiving things in Web3 but I’m going to do my best to stick to the high level points to give you an overview of why wallets are important. If you want a deeper dive into wallets, I’d recommend checking something like this “A Guide to Web3 Wallets”.
The main thing to understand is that when you own your wallet (aka you control your private keys), you solely have control over the assets held within that wallet. You don’t need to ask permission .
You don’t even need to use the same brand of wallet to access your assets that are stored on the blockchain, you just need to have your private keys.
This means that let’s say you use a Trezor or Metamask wallet and for whatever reason they go out of business, this scenario isn’t the same as the bank going out of business or running out of money and you being left out in the cold. If a certain wallet goes out of business or your wallet stops working, you can simply take your private keys to any other wallet regardless of brand and still access your assets on the blockchain.
Remember, your wallet doesn’t actually hold your assets, your wallet just acts as an interface for you to interact with your on-chain assets using your private keys. This is really important to understand because it underpins one of the main value props for Web3 which is the idea of truly owning things online.
Wallets were a means to an end in the sense that for bitcoin and crypto to exist, we needed a way to store our holdings. However, as with any innovative technology, we’ve recently started seeing a new use case for wallets.
When it was just bitcoin and crypto that were being held in our wallets, that’s all they were, digital wallets. But when Smart Contracts hit the scene and with the rise of NFTs, people are now holding their NFTs in their wallets as well.
Seeing as wallet addresses are public, when someone sends you a wallet address, you can actually see all of the assets that are being held in that wallet, and now that we’re seeing NFTs in the form of profile pictures (PFPs) like Cryptopunks, generative projects like Autoglyphs, and “one of one” art (referring to traditional digital artists who create one-off pieces of art and typically auction them off) from artists like Beeple, wallets are becoming a display of our interests and a place to showcase what we own.
Browsing through wallet addresses is almost becoming like browsing through social media profiles.
Personally, I think the evolution of what our wallets do, what they mean for our digital identity and how they track all our on-chain activity to be the most exciting part of Web3 right now. I’ll write another article on that at a later point.
But with that being said, this is a perfect Segway into NFTs.
4. NFTs: Non-fungible tokens
NFT stand for non-fungible token which is pretty much a fancy way of saying something that is unique, it can’t be replicated, and even if it is replicated in spirit, it would not be the same as the original.
An easy non-digital way to understand this is let’s say you had two of the exact same Pokémon cards, however one of them is considered 0001 (1st edition) and the other is considered 0002 (2nd edition), technically they’re non-fungible because even though they have the same art with the same Pokémon, one of them Is the first 0001 and the other is the second 0002 and they’re labelled as such.
So, you’re probably wondering how NFTs came about? Well, this is where Smart Contracts really began to shine.
As we moved from blockchain and distributed ledgers, to bitcoin and crypto, and on to Smart Contracts, now we could do fancy things with tokens thanks to these Smart Contracts.
One of the first things that happened is we started attaching media files to these tokens, and voila, attach an image to a digital token and you have what we’re now calling an NFT.
At the end of the day because it’s still just a token, we hold our NFTs in our wallet the same way that we’d hold bitcoin or crypto.
Personally, I think NFTs have a branding issue.
Any unique things that we own online, usually in our wallets can be considered NFTs, however when you think about NFTs you’re probably thinking about $500k pictures of monkeys, and I wouldn’t blame you.
ALL of the hype around NFTs for the past couple years have been focused around profile pictures, collectibles, and community access. But if you really want to understand the power of digital ownership, you have to look past that.
Everything from identification, contracts, memberships, data, tickets and yes art, will move online and be coupled with blockchain, and you’ll have true ownership of these things in your wallet.
In my opinion, the next NFT boom will occur when we stop calling them NFTs and we just refer to them as digital art, digital passes, digital ID, digital memberships, etc.
So with all this talk of digital ownership, where do we even use all of this? Well, tons of places. Even if it the way we used NFTs stayed the exact same way it is right now, owning these things online is a big breakthrough.
But of course, there is this idea of unleashing everything that’s in our wallet into a digital world that we know as “The Metaverse”.
5. The Metaverse: “The Metaverse”, or just virtual worlds?
I’ll start by sharing my personal opinion on this. We are a LONG way away from a true Metaverse.
Most people describe the metaverse as a virtual world where we can participate in various activities and connect with other people who are online. If that’s all the metaverse is, it’s already here.
The truth is, for something to be “The Metaverse”, it needs more than that.
Apple, Google, Meta, and many other technology and gaming companies have created virtual reality worlds. But the reason those aren’t really “The Metaverse” and the reason we’re so far away is simple.
The key to a true metaverse, one that we could call “The Metaverse”, is a creating digital world that is not owned or controlled by one entity, is interoperable with all other metaverses, and can accept all of the digital assets that we have in our wallets even if those assets were not created by the creator of said metaverse.
That is a massive undertaking and will take years before we’ll even see the beginnings of a metaverse like that.
Most notable has been Facebook changing their name to Meta to signal their new focus on “The Metaverse” but right off the bat, the idea of Meta owning their metaverse by nature makes it a fake metaverse. It’s just a virtual reality world where you’ll only be able to interact in the way Meta wants, along with only being able to use products, assets, and technologies that Meta approves. It’s actually almost the opposite of “The Metaverse”.
So yes, we’ll start seeing more and more virtual or digital worlds popping up, but they won’t be considered "The Metaverse" until they’re fully decentralized which means no single owner or controller, and are fully interoperable with ALL digital assets like tokens, art, gaming items, etc.
If you want an idea of what a true Metaverse could look like, the best interpretation has been showcased in the movie Ready Player One, I’d highly recommend giving it a watch.
The idea where all of us are interacting in a virtual world together really stems from the idea of building online communities that are actually worth being a part of. With all these new tools that Web3 has provided us, DAOs have started to take the spotlight when it comes to Web3 communities.
6. DAOs (Decentralized Autonomous Organizations)
Let’s start by addressing the elephant in the room, there are a LOT of different types of DAOs, but only very few that live up to the name.
If you want a truly decentralized and automated organization, there’s a lot of boxes that need to be checked to meet that description.
These tend to be only accomplished by some of the larger protocol projects that are essentially massive technology companies.
Think about it, to actually build out the framework for an organization that is fully decentralized, and then to implement structures to enable this organization to automate some of its functions, there’s some heavy tech lifting that needs to happen. This description is one type of DAO, on one side of the spectrum
However, for most DAOs joining the landscape today and more likely most of the DAO’s you’ve been hearing about, they hang out on the other side of the spectrum. Let's consider these DAOs as communities gathered around a shared purpose that can be anything from wanting to buy a sports team together, to a social club that hosts IRL dance parties.
In summary, these social DAOs are online communities that shares a bank account, ownership and collectively votes on the operation of the community.
This shared bank account is a key and unique aspect to what keeps all people in the DAO aligned. Because it’s a shared bank account, everyone is incentivized to act in the best interest of the DAO.
In addition to sharing a bank account, the DAO will usually provide access to tokens for its community members. Not only do the tokens allow everyone in the community to participate in the upside as the DAO increases in value, but it also allows the community to vote on how the DAO operates and what sort of things the DAO uses its shared bank account for.
You can sort of see how all of this is starting to piece together.
Blockchain was the enabling technology, the subsequent cryptos that were created are allowing these organizations to create, distribute or just track real dollar value, the idea of selling NFTs to access the DAO and then verifying that you own that NFT in your wallet are all just examples of how fast the results of this technology are all being Frankenstein'd together to create completely new use cases and businesses models. DAOs are a perfect example of that.
As a founder, DAOs are another area of Web3 that I find really exciting. If you want to dive deeper into DAOs, I’d recommend checking out my previous article on DAOs “Elements of a DAO”
So with all of that being said, this is just scratching the service of what’s going on in Web3 and I reiterate my point that going down the Web3 rabbit hole is like drinking water from a firehose. Hopefully by breaking it up into pillars or buckets you can choose where you want to start and focus on going deeper on that.
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