A Simple Explanation of Web3, Crypto and Blockchain

Web3, Crypto and Blockchain Around the World

Table of contents

What is crypto?

Crypto, short for cryptocurrency, is digital money which is maintained by a decentralised network of computers. In contrast, most of the currency we know today is maintained by a central authority, such as the Federal Reserve.

Bitcoin is the first example of a cryptocurrency, created by an unknown person or group of people using the name Satoshi Nakamoto in 2008. Other notable examples include Ether and Dogecoin.

What is blockchain?

A blockchain is digital ledger of records which is decentralised and immutable. Blockchains are decentralised in that a peer-to-peer network of computers reach consensus without a centralised authority. Blockchains are immutable, which means that transactions cannot be changed easily after they have been recorded. Blockchains are often also public and open, meaning that anyone can join and contribute, as well as read, write and audit the activities of the network.

A blockchain is essentially a database which is kept updated by a peer-to-peer network. Groups of transactions are called blocks. Each block is linked to a prior block, forming a chain.

Cryptocurrencies are currently the most popular application of blockchain technology. There is a difference between a cryptocurrency and the blockchain it runs on. For example, Ether (ETH) is the native cryptocurrency of the Ethereum blockchain network.

What is web3?

Web3 is a future vision of the internet which gives ownership to users. The term was coined in 2014 by Ethereum co-founder Gavin Wood. A 2020 post on Twitter says it best.

Web1 (1980s-early 2000s) was read-only. Users consumed static content which was built on open protocols. Examples include directories like Craiglist.

Web2 (early 2000s-today) is read and write. Websites emphasise user-generated content. Examples include social media platforms (e.g. Facebook), blogs (e.g. WordPress), wikis (e.g. Wikipedia) and video sharing websites (e.g. YouTube). Most of the traffic and value accrues to a small number of companies.

Web3 is read, write and own. Web3 envisions an internet which is owned by the builders and the users. Web3 is orchestrated using tokens which give users property rights and the ability to own part of the internet. There are two types of tokens: fungible and non-fungible. Fungible tokens are interchangeable (e.g. cryptocurrencies such as Bitcoin and Ether). Non-fungible tokens (NFTs) are unique.

What’s the difference between crypto, blockchain and web3?

Web3 is a broader term which refers to the vision of the future internet. This vision is orchestrated through tokens, which live on blockchains such as Ethereum. Crypto refers to the digital money that would be used in this vision of the internet. However, many people use these terms interchangeably, and they will certainly evolve. As of 2022, crypto is still the most popular term.

Web3Vision of the internet which gives users ownership
CryptoDigital money maintained by a blockchain
BlockchainDecentralised ledger of records

Learn more

Introduction to Web3 by the Ethereum Foundation, a non-profit organisation which supports Ethereum

What is web3? by Peter Yang from Odyssey DAO, a learning community for Web3

Web3: in a nutshell by Eshita Nandini from Messari, a crypto research company

Why web3 matters by Chris Dixon from Andreessen Horowitz, a venture capital firm

Making sense of Web3 by Josh Stark from the Ethereum Foundation

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