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Blockchain is a shared, immutable ledger that facilitates the process of recording transactions and tracking assets in a network. Blockchain is “decentralized” hence everyone in the system has equal authority. In other words we can say that not a single authority or organization controls blockchain as its “decentralized”.
Web1: The permissionless open sourced web with static content.
Web2: The permissioned web with dynamic content, where companies run your agreements on their servers.
Web3: The permissionless web with dynamic content where decentralized censorship resistant networks run your agreement and code. It is generally by the idea of user owned ecosystem where the protocol you interacts with you also own a portion of instead of solely being a product.
There are some important terminologies related with “Blockchain”
- Smart Contracts: “Smart contracts are the set of instructions executed in a decentralized way without the need of a centralized or third party intermediary”. Smart contracts give raise to Trustlessness i.e unbreakable promises. In simple terms we can say that a smart contract is an agreement, contract or set of instructions that is deployed on a decentralized blockchain. Once the smart contract is deployed, It cannot be altered, It Automatically executes and everyone sees the terms of agreement.
Smart contracts will solve society’s critical trust issues as it minimizes “counterparty risks”. counterparty risks can be explained as the likelihood or probability that one of those involved in a transaction might default on it’s contractual obligation.
Smart contracts are written in Solidity programming language.
- DeFi: DeFi or “Decentralized Finances” gives user the ability to engage with finance & markets without having to go through a centralized intermediary. according to investopedia.com “DeFi is an emerging financial technology based on secure distributed ledgers similar to those used by cryptocurrencies. The system removes the control banks and institutions have on money, financial products, and financial services.
DAOs: Decentralized autonomous organizations are group that are governed completely decentralized by a set of instruction or smart contracts on chain. taking reference of consensys.net “A DAO, or Decentralized Autonomous Organization, is a community-led entity with no central authority. It is fully autonomous and transparent, smart contracts lay the foundational rules, execute the agreed upon decisions, and at any point, proposals, voting, and even the very code itself can be publicly audited”.
Hash: A unique fixed length string, meant to identify a piece of data, They are created by placing said data into a “Hash function”. Genisis block is the first block of Blockchain, and it’s previous hash points to a hash that doesn’t exists. Taking reference of investopedia.com “A hash function that meets the encrypted demands needed to solve for a blockchain computation. hashes are of fixed length since it makes it nearly impossible to guess the length of the hash if someone was trying to crack the blockchain. The same data will always produce the same hashed value.
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