web3: Solving trust problems with numbers

Are crypto people eyeing the next big thing, and are you missing this opportunity? Will they lose everything in the latest get-rich-quick scheme?

To outsiders, crypto looks a lot like a casino. Its mechanics reveal something even more exciting: the blockchain.

So the question is, what do you believe more in?

  1. Institutions such as banks and governments.
  2. Internet platforms like Facebook and Uber.
  3. math

Here’s an example of what happened.

Human society first merged when institutions allowed two strangers to do business as trusted third parties. Later, the internet replaced middlemen with monopoly digital platforms. Now, blockchain uses cryptography to completely get rid of middlemen. Through the code, they unlocked the autonomous economic network, eliminated the obsolete rulers, and left the crooks with nowhere to escape.

The blockchain network brings the “new” Internet: web3.

This article can help you understand web3 in one go, it reveals:

  1. What is web3 and why is it important
  2. Cryptocurrencies like Bitcoin and ETH and their relationship
  3. what web3 means to you
  4. How to get started with web3
  5. web3 use cases: DeFi, NFTs, DAOs, social tokens, play2earn, the Metaverse

This is a thoughtful attempt to unravel the use of blockchain as a tool for building a better society.

A brief history of the web

The original internet was invented by the US government in the 1970s to protect its nuclear weapons from hackers.

They realized that, at the height of the Cold War, one computer controlling all the rockets would be a disaster. So they built a decentralized network of multiple computers.

web3: Solving trust problems with numbers

That meant the US could retain part of its “mutually assured destruction” agreement even in the event of a Soviet cyberattack.

Web1

In 1990, the Internet was a bunch of interconnected computers. web was the first application created by Tim Berners Lee.

Web1 is a huge database with a “hyperlink information system” that aggregates information on a screen from all computers in the network, and users can browse by clicking on linked text and images.

Sound familiar?

Thirty years later, 3 billion users are connected to a larger, faster, more ubiquitous network, powered by sprawling data centers. The way you click is basically the same.

In the early days, the web was a niche tool, used almost exclusively by academics. Five years later, with the introduction of browsers such as Mosaic and Microsoft Internet Explorer, browsers have seen widespread adoption.

This is the good old days of surfing the internet. You will click in. It took years to download a photo. Altavista is the default search engine. No one has thought about web design yet.

web3: Solving trust problems with numbers

Web1:

Decentralized – powered by ordinary users’ ordinary computers.

Open Source – Anyone can build on the web.

Read Only – Posting content requires some technical skills, so most users are readers.

Web1’s decentralized infrastructure symbolizes its original spirit. Anyone can post any type of information to anyone else in the world without the approval of the center staff.

Web2

Fast-forward 10 years, and the Wild West is dominated by winners, as YouTube, Facebook, and Twitter all attract huge numbers of users and talent.

For the first time, anyone can post information online. Barriers gradually disappeared and users and usage surged.The Internet benefits everyone.

web3: Solving trust problems with numbers

Later, three major shifts shaped web2 as we know it today:

Mobile: Smartphones have transformed us from working on desktops for a few hours a day to being “always connected”.Apps and notifications dominate our lives.

Social networking sites: Friendster, MySpace and Facebook let us show our faces without anonymity, making it easy to create, share, interact and recommend. We share photos with our friends, and we can also “get into” strangers’ cars through these.

Cloud computing: Amazon, Google and Microsoft make it cheap to build on the web. Now you don’t have to buy and maintain expensive hardware infrastructure because you can rent them at low cost from large data centers around the world.

The Internet has become centralized. It is essentially a set of interacting closed systems.

Big tech is ripping you off

When we are suddenly exposed to far more people, ideas, and technologies than our brains know, central platforms explode like mushroom clouds, integrating network effects into monopoly power.

As the network acquires more users, the value of the network will multiply. You join WhatsApp to chat with your friends.Mom joins WhatsApp to chat with you. Dad joins WhatsApp to chat with mom. Before you know it, the world is using WhatsApp. Can’t miss you.

In February 2021, WhatsApp changed its privacy rules, saying in a “take it or leave it” statement: It will harvest more user data for profit. Millions of people swear they don’t want to use it anymore, but few actually stop using WhatsApp at all.Because you still want to talk to mom, and mom also wants to talk to dad.

In the digital age, customer value is directly about network scale. Without users, startups cannot compete. Media, developers, and creators have no choice but to accept the truth. The attraction of the Internet is too great.

web3: Solving trust problems with numbers

The price we pay is not money, but personal data and content. Mined, sold, and fed back into secret algorithms that capture our attention and make us pay more. All under the guise of “free” and “improved user experience”.

Your self-performance = their market value.

Google, Apple, Facebook, Amazon (GAFA) control our conversations, searches, content, media and data. The open forum has become a walled garden. The Internet today is an oligarchy.

Why is web2 so bad?

We need a new kind of internet because the current internet is broken and the problem involves multiple variables.

attention economy

At first, the network was unable to exchange value. People are not keen on using credit cards online. So, the default business model is to lure users with free stuff and get their attention with ads.

Attention has become the Internet’s native currency. Websites compete for attention with algorithmically generated looping content and headlines, and you can’t stop the content from looping, nor can you stop clicking on the headlines.

web3: Solving trust problems with numbers

Cultivating attention is nothing new. The job of the media is to keep you focused. To really let you know, you’re going to turn off the TV in the real world and take action. But watching TV at least keeps us in sync with the same self-perpetuating cycle of opinion.

On web2, each of us is fed the content that triggers our personality the most. Different opinions become different facts.When your virtual world clashes with mine, Facebook’s stock price goes up. The more intense the conflict, the higher the profit. Social media connects the world together and then takes it apart. Because it’s good for business.

When clicks equal revenue, people have less incentive to tell the truth. The result is a proliferation of “clickbait,” misinformation, fake news, ad blockers, and ad blockers.

The internet is not own

The platform owns everything you create online, including the profile data you fill out, the behavioral data you generate, and the images, videos, songs, status updates, and comments you upload. Any output you make on the Platform is the property of the Platform.

No exaggeration: whenever you upload content to an internet platform, the file is copied to its servers and ownership transfers to that company. It becomes the raw material for algorithms to entice advertisers to pay. It is you who sow, and the platform is harvested.

Of course, you also have rewards. If not, the cooperation cannot continue. Sharing content online builds reputation, engages audiences, and creates connections. This social capital itself can be monetized. Artists and creators have never been able to reach a huge number of potential fans so quickly.

However, all this is not the platform’s credit, but is manipulated by the platform. They own both your work and your fans.If you leave the platform and want to grow outside of the internet, you lose everything that came before. So you have no choice but to keep spinning their money making machine.

Deplatforming and censorship

When Twitter and Facebook blocked Donald Trump’s accounts, Trump told his supporters to follow him to Parler. Next, Apple and Google removed Parler from their app stores. Amazon then delivered the final blow by kicking Parler’s website from its hosting servers. Trump is homeless in the digital world.

It works like this.

Nearly 90 percent of web storage is with four hosting providers, the largest of which is Amazon Web Services (AWS). Their data centers run the websites and apps we use every day: Facebook, Twitter, Airbnb, Uber, Reddit, Netflix, and more. We access these apps through a browser (web) and download them from a (mobile) app store.

These companies control the gates of the global creative market. You either play by their rules or don’t. They can ban your account, apps, or even your website.

web3: Solving trust problems with numbers

Even if you behave well, you can still be convicted of being in the wrong place. Censorship, as the government knows it, is easy and can be accomplished by blocking a few central servers. Take China’s Great Firewall: It’s as effective at keeping state secrets as keeping Facebook, Twitter, Google, and Wikipedia away from its citizens. If (when) Russia and India build their own firewalls, the global creative market will lose the ideas of 3 billion people.

hacker paradise

An interconnected economy that combines decentralized data creation with centralized storage offers great rewards for hackers.

Hundreds of millions of devices upload their data to a few large data centers, like a central bank with countless doors to break into. That means I can hack into my neighbor’s smart fridge and steal your bank account. That means Russian cyberterrorists can freeze ATMs in Ukraine, shut down railways and even paralyze hospitals by taking control of outdated Windows computers.

web3: Solving trust problems with numbers

The web today is a chilling example: a system is only as secure as its weakest link. The key flaw is that the weakest link cannot be fixed because new links are added every day. By design, the solution can never match the scale of the problem.As business becomes more and more peer-to-peer and device-to-device, the problem is bound to snowball into systemic bankruptcy.

Cybersecurity in its current form is like the Sisyphus myth: We keep pushing a boulder up a hill, only to have it tumble down again and again due to its weight. Here is some data. Cybersecurity brings in about $123 billion in revenue annually.The monolith of cybercrime is expected to cost $10.5 trillion annually by 2025. This is the largest transfer of economic wealth in history.

web3: Solving trust problems with numbers

Data breaches are the new standard for protecting privacy. Cyberterrorism is the new normal in geopolitics. A centralized internet brings permanent risks.

trust issues

How did we get here?

The pioneers of the Internet never thought about centralizing the web. But they ignore the core challenge of human social organization: trust.

Trust is the certainty of not being deceived. When you trust someone, you are sure that he will do what you expect.

In the savage age, this meant that, to be safe, you could only interact directly with family and friends without exchanging information and values ​​with strangers. If I don’t know you, I won’t do business with you. This capped the population of the earliest hunter-gatherer societies at around 150 people: this is said to be the maximum number of stable social relationships the human brain can manage (known as the Dunbar number).

web3: Solving trust problems with numbers

Civilization unit

The last ice age ended around 11,000 BC, when nomadic peoples settled during the Agricultural Revolution. Settling for a long time creates private property and valuable wealth (stored agricultural output). This is a clue that the other side of trust emerges. The motive for theft has never been stronger. To moderate the escalating violence between strange tribes, we thought of third parties that both strangers could trust: institutions.

web3: Solving trust problems with numbers

Institutions expand trust between strangers by keeping records of what happened. Institutions record who has how much wealth and who has how much debt, as well as information on taxes, payments, property, exchanges, and more. Records affirm truth, and truth builds trust. Governments, banks, courts, religious organizations such as churches, and private corporations have scaled human cooperation to large and complex societies by asserting a standardized narrative. A story we can all believe.

In this sense, institutions are the basic units of civilization. Without them, the offline economy cannot exist. It turns out that the first online economy cannot lack institutions either. The early web returned to the customary practice of centralized trust management shortly after decentralization began.

Gatekeeper v2

Today’s Internet organizations are not limited by time and space, reducing communication delays and dramatically reducing economic costs—opening up instant global business. They do this by letting software handle trust issues. We travel, ride and trade with strangers all over the world because our phones promise us to do so. With records like reviews and ratings, we users build a culture around a specific core interaction. This culture sets the boundaries of what each of us can do. At the very least, we won’t be deceived. At best, the collaboration never ends.

web3: Solving trust problems with numbers

Web software upends cumbersome fee-based middlemen to reward individuals on both sides of supply and demand.Strangers can conduct large-scale transactions in a peer-to-peer economy. More importantly, everyone owns the network, and platforms still take most of the revenue.

Systems keep letting us down because after all, humans are behind them

Every system that deals with power, money, and status eventually suffers from bias and corruption. Centralized internet platforms are no exception. Fundamentally, it’s human selfishness, and it’s everywhere: it’s a trait, not just a glitch. We can’t leave the trust issues to the banks, Facebook and Uber because we can’t trust everyone in the system. They are especially untrustworthy when legal and network effects can be exploited to evade competition.

This isn’t a fancy way of saying “fuck the system” or blaming the bankers and Mark Zuckerberg for all the world’s problems. The problem is with the design.

Blockchain: Math > Humans

It can be analyzed from two levels:

  1. Records measure society as a whole by constructing a centralized version of truth that everyone in a group agrees on.Crucially, the record is not truth itself, but a tool for approximating it. It is inevitable that subjective factors will creep in during the “recording” process.
  2. Society cannot trust recorders, because recorders are people, and people are born to be selfish. Prejudice is inherent, and manipulative desires are phantom-like. There are various reasons.

The word “trust” itself implies the possibility of fraud. “Trust” and “fraud” are two sides of the same coin.

How do we keep records that are objective and free from human bias? The answer, as embodied by blockchain technology, is to exclude humans altogether.

minimum viable explanation

  1. A blockchain is a decentralized digital list (ledger) that records the property people own in the network. This can be money, property ownership, medical records, anything a human wants to have.
  2. Decentralization means that every user in the network has a copy of the ledger that is updated in real time.
  3. This makes the record immutable. If someone messes with the ledger, they get ostracized by the rest of the network.
  4. With cryptography, new records (blocks) become immutable.
  5. Cryptography is an extremely complex mathematics that requires a lot of computing power.
  6. The users who provide this computing power are “miners”. They secure the ledger, get paid, and get paid in cryptocurrencies such as Bitcoin.
  7. Mining makes cryptocurrencies scarce, which gives them economic value.

web3: Solving trust problems with numbers

Blockchain comes with trust. The user does not need to trust the record as that is verified by the network. Trust exists in the system itself, distributed among all network participants. In blockchain, there are no flawed fee intermediaries. A blockchain is an autonomous online community of individual strangers. Just as society pays you to meet its needs, blockchain pays you to meet the needs of the network.

Different blockchains require different values. These values ​​can be security, storage, compute, bandwidth, attention, etc., which are beyond the scope of this article. Only you can’t think of it, no blockchain can’t contain it.

Bitcoin – Blockchain Veteran

The earliest cryptocurrency, Bitcoin, is a visual demonstration of how blockchains work. Its ledger records how much currency each user holds, and also records the rewards to miners.

1) I pay you 1 Bitcoin (BTC)

2) Everyone in the network updates their copy of the ledger with a new block that records the transactions between us.

3) New blocks are verified and encrypted by miners, and miners’ computing power services are paid in Bitcoin.

web3: Solving trust problems with numbers

Bitcoin is like a giant spreadsheet that records every transaction.

ETH – Decentralized Global Supercomputer

If Bitcoin is a spreadsheet, then ETH is a spreadsheet with macros.

‍Macro is a small application that you can use to automate tasks in Microsoft Sheets. In other words, ETH is a blockchain with its own programming language. Developers can build decentralized applications (“dapps”) on it. Just as Bitcoin’s blockchain pays in bitcoin (BTC) for securing the ledger, ETH pays in ether (ETH) for executing and validating DApp code.It’s like a giant supercomputer consisting of all the computers in ETH.

The idea of ​​a network running an application should sound familiar. ETH is a decentralized alternative to the decentralized internet. It is a new internet owned by all users, not a network controlled by a single corporate giant like Amazon.

web3: Solving trust problems with numbers

It is what the web is meant to be – uncrackable, uncensorable. Managed by users, rewarding the network in local currency for the work required. The Internet, the free market, and democracy are the trinity.

Web3: Internet of Value

Don’t limit your imagination to the decentralized nature of Twitter, Facebook and YouTube. Blockchain technology opens up a new kind of network: an economic network between people in which strangers can trade currencies, assets, and valuable data. No agency charges fees, sets terms or asks questions in the transaction.

The exchange of value follows a typical contract model, with performance and rewards. If I do X, you give me y. How does blockchain automatically verify performance and rewards? How to perform a contract in a way that guarantees 100% that no one party is deceived? Bitcoin is a good example. A “smart contract” is like a robotic vending machine, where transactions happen automatically according to an unbreakable logic.

Think art, insurance, real estate, intellectual property, credit cards, lawyers. You don’t need to go through a middleman to transact, you do it using some DApps built on top of blockchain smart contracts like ETH or Solana. Trustless, permissionless. Cheaper and faster.

Superior economic efficiency will unlock previously impossible business models and potentially completely reshape corporate models. Essentially, a company is nothing more than a network of contracts between employees, shareholders, banks, customers, and countries. All of this can be programmed on the smart contract blockchain.

web3: Solving trust problems with numbers

Blockchain enables everyone in the world with a phone and internet connection to directly, immediately and permissionlessly participate in the global economy.

web3 and you

On the Economic Internet:

1) Each user is a wallet.

2) Each file is an asset owned by the wallet.

3) Each transaction is an exchange from one wallet to another.

How to do this? Let’s understand some basics.

web2: read + write

When you sign up for Twitter as @jack, a directory called @jack is created in Twitter’s database, hosted on a central server like Amazon Web Services (AWS).

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

Each page links to other pages (homepage, profile, comments, mentions, retweets), so you can click from one page to another. Viewing and browsing tweets in this way is called “reading”.

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

Twitter is called web2 because users have write permissions. On web1, only the website owner can change the data: for the user, that’s read-only.

web3: read + write + own

In addition to reading and writing, web3 adds “owning”. ‍

Even though your tweets have your name in them, they are still in Twitter’s database. On Blockchain Twitter – let’s call it “dTwitter” – you own your tweets, that is, they are an asset in your wallet.

The mechanism is roughly like this:

1) @jack joined dTwitter by connecting his crypto wallet.

2) When @jack tweets, a new file is created and stored in a decentralized file storage system, such as a distributed file system (IPFS).

3) At the same time, a token representing the tweet file is “minted” on the dTwitter blockchain and assigned to @jack’s wallet address. It’s in @jake’s wallet, so @jake actually “owns” it.

4) @jack can transfer ownership of his tweets to other wallets.

All twitter tweets are owned by Twitter, and all dTwitter tweets are owned by its users.

You can think of tweets as an asset that increases in value as attention and engagement increase.

web3: Solving trust problems with numbers

web2 decentralized Twitter and web3 decentralized d Twitter

On web2, Twitter Inc. owns all the tweets that generate value in exchange with advertisers. When you write a tweet that goes viral, Twitter’s stock price goes up. On web3, tweets and replies are yours. You will be able to trade the attention your tweets attract directly with advertisers via smart contracts, or sell your best tweets as non-fungible tokens.

NFTs

Tokens that represent ownership of tweets are non-fungible and are called non-fungible tokens or NFTs. This means that the token is unique and cannot be swapped 1:1 with any other token: @jack’s first tweet is different from his second, like Leonardo da Vinci’s Na Lisa is different from The Last Supper.

@jack can sell his tweets by exchanging NFTs for cryptocurrencies like ETH (in fact he already does). Like dollar bills and grains like wheat, ETH tokens are fungible: you don’t care what “which” ETH token or dollar bill it is, because they’re all the same. Fungibility qualifies things as money. We value and exchange irreplaceable things with fungible things.

@jack can trade tweets in good faith, believing that the other party will send ether tokens to his wallet address after receiving the NFT. Alternatively, he could use a smart contract to transfer x ether from wallet x to wallet y whenever wallet x receives an NFT from wallet y, this is called automatic trust. This is how (mostly) NFTs of artwork images in JPEG format are traded on OpenSea, the largest NFT marketplace at the time of writing.

web3: Solving trust problems with numbers

Crypto wallets hold fungible and non-fungible tokens

As this example above shows, the concept of NFTs goes far beyond the current craze where people buy JPEG images of rocks, apes and 8-bit pixel avatars for millions of dollars. Essentially, everything you want to own – diamonds, Teslas, Pokémon cards, houses, land, paintings, songs – can be tokenized as NFTs so that ownership becomes verifiable and unstealable , programmable, divisible, easily transferable and easily encrypted for security.

There should be a dedicated in-depth study on NFTs. Please subscribe to receive it in your mailbox when I publish, or check out my visual brain dump.

Connect Wallet > Login with Facebook

To use a dapp, you connect your crypto wallet, the address where you issue your blockchain account to the dapp.

What is the difference between wallet and address?

The address is a string of numbers, such as 0xec98c7935ae1db71884969919de58cd776cc017c. Wallets allow you to do things with addresses. They have different uses.

1) A cold wallet is a hardware device used to store assets offline. For example Trezor.

2) Soft wallets are software applications used to store assets on mobile phones and/or desktops, which are less secure than cold wallets, but easier to use. For example. Exodus.

3) Hot wallets can interact with dapps as mobile apps and browser extensions. This connectivity makes their storage less secure. For example. Metamask.

Crypto wallets are linked to layer 1 blockchains such as Ethereum. Therefore, they are compatible with all dapps built on them. So, if dTwitter is Ethereum based, @jack will be able to connect his ETH wallet like he connects to other Ethereum based dapps like Uniswap (to exchange tokens) and OpenSea (to trade NFTs).

Clicking “Connect Wallet” feels as easy as logging in with Facebook. In fact, there is a big difference between the two.Until you revoke your access, as long as you log in with Facebook, you are handing over your personal data. And the dapp never gets actual access information to your wallet. Instead, you can trade tokens—both Fungible and Non-Fungible—in a cryptographically secure way. Every transaction is signed privately by both parties and recorded on the blockchain for everyone to verify.

web3: Solving trust problems with numbers

Cryptocurrency addresses are anonymous. It can store personally identifiable information such as names and pictures as NFTs, which are digital assets that belong to you and can be shared with other wallets and dapps that do not belong to Facebook.

Your decentralized domain name

Anonymity is the norm for a reason. The transparency of the blockchain means that everyone can see the content of each address. Putting your name on a wallet with 100 BTC is like drawing a target on your own back. Giving up the bank also means taking your own risk and responsibility for protecting your assets.

However, 0xec98c7935ae1db71884969919de58cd776cc017c is not very memorable. To avoid having to unlock your phone every time your friend wants to pay back a beer, open your wallet app, and copy-paste your address in the messaging app, you can combine your encrypted address with the simpler , such as gillesdc.eth.

Just like netflix.com refers to the IP address pointing to the location of the Netflix website on the server, gillesdc.eth refers to my address on the Ethereum blockchain. Specifically the address of the hot wallet that I use to interact with the dapp.Use a hot wallet just like you would a regular wallet on the go, putting only what you plan to spend in it. Precious things are best kept anonymous, in soft wallets or offline cold wallets protected by biometrics and 2FA (soft wallets), a cryptocurrency equivalent to a vault.

Registering your encrypted domain gives you a prototype web3 experience:

1. Buy the tokens you need from exchanges like Coinbase to buy the domain name you want. You need ETH to buy .eth domains and SOL to buy .sol domains.

2. Transfer the tokens to a compatible hot wallet. I use Metamask for ETH and Phantom for SOL.

3. Navigate to the dapp corresponding to the domain name (.eth for ENS, .sol for Bonfida) and connect your wallet.

4. Search for the domain name you want and complete the transaction from your wallet.

More detailed instructions.

Step-by-step guide to registering an ETH domain name

https://medium.com/the-ethereum-name-service/step-by-step-guide-to-registering-a-eth-name-on-the-new-ens-registrar-c07d3ab9d6a6

Step-by-step guide to registering your SOL domain name

https://bonfida.medium.com/an-introduction-to-the-solana-name-service-5e0134dbf56e

web3 field

Smart contracts unlock new modes of trade, work and play. The following is an introduction to its development direction.

DeFi (Decentralized Finance)

DeFi is the way of Wall Street for cryptocurrency.

DeFi dapps let you exchange, invest, earn, lend, borrow and insure financial assets directly with other users. Bankers are made by coding: smart contracts that automatically verify both ends of transactions on the blockchain, cutting costs, overhead and bias. As of October 2021, over $200 billion in total asset value has been locked in DeFi protocols. (What is Total Value Locked (TVL) in DeFi?)

web3: Solving trust problems with numbers

Stablecoins – Stablecoins are digital tokens pegged to commodities like gold or fiat currencies like the U.S. dollar. For example, 1 USDC token can be exchanged for 1 “real” US dollar. Old-world assets have acquired the characteristics of cryptocurrencies: they become programmable in smart contracts and, as a result, can be used in DeFi protocols, DAOs and DApps.

Uniswap – Despite the decentralization requirements, most tokens are still traded on centralized exchanges like Coinbase.And Uniswap fulfills the promise of web3: direct peer-to-peer currency transactions.

Aave – Aave is a cryptocurrency lending protocol. Cryptocurrency holders can earn high interest by lending. Borrowers can get loans without a credit check by putting in cryptocurrencies as collateral. In the event of default, the collateral is sold to cover the loan.

NFT (Non-Fungible Token)

A token is irreplaceable when its value is considered unique, that is, when it is not interchangeable 1:1 with another token.This is a cognitive problem: dollar bills all have unique serial numbers, but qualify as fungible because each bill has the same purchasing power. If you’re a collector and you care about serial numbers, that’s another story.

In this sense, NFTs are just tokens with influential serial numbers. For example, if you issue 1000 participation tokens for a giveaway, if the higher the number, the higher the chance of winning, then the tokens are irreplaceable. If the token numbers are not important, they are fungible.

As I write this, NFTs have become hard to ignore. But when people and companies spend millions on cypherpunks and boring apes, two important features of NFTs tend to get overlooked in the cacophony.

First, NFTs are on-chain tokens that prove ownership of off-chain assets. They are not assets themselves. Everyone can right click + save a Cryptopunk .JPG, but only one wallet can hold its NFT.

Second, NFTs are not synonymous with digital artwork or digital assets. Everything you want to own can be tokenized to make ownership verifiable, non-stealable, programmable, divisible, easily transferable, and easily cryptographically secure. This includes the Mona Lisa, Tesla and your house. Digital artwork is just the tip of the iceberg that will continue to tokenize every asset on the planet.

web3: Solving trust problems with numbers

Iceberg with NFTs

Boring Ape Yacht Club (BAYC) – BAYC is a community of Boring Ape NFT holders. This is a striking example of how NFTs can be tied to access and exclusivity, as well as social status.

Ethereum Name Service (ENS) – When you register an Ethereum domain name, its NFTs are minted and stored in your wallet.

Audius – Audius is web3-Spotify. Artists flow directly to listeners, with no music labels and companies in between.Ownership of songs stored on IPFS is recorded on-chain as NFTs. Streaming revenue goes to whoever owns the NFT.

possess ideas

NFTs free creators and consumers from the monopoly of the platform.

When you post pictures, videos and audio files online, you copy and paste their ownership to Facebook & co in accordance with the terms of service.

With NFTs, creators retain ownership of their content without restricting its dissemination. No matter how far or widely these files are replicated on the web, their origin and ownership are forever tracked on the blockchain. Regardless of the platform, the content is endless.

On web2, when the content on a certain platform is on fire, it is the platform that makes a profit. Verifiable NFT ownership reverses this relationship, redirecting all future cash flows from an idea to its creator – as defined in a smart contract. It’s now in the creator’s interest for their work to be virally copy-pasted. Every copy, share, display, use and promotion accumulates the cultural value of the original idea. NFTs capture ideas as assets, so they become ownable and tradable.

See Mirror for how NFTs are reshaping digital ownership.

Mirror is a decentralized publishing platform with tools that help creators express, share and monetize ideas in a web3 way. You can publish articles on-chain, mint and auction NFT editions for them, crowdfund new projects, share revenue with collaborators, and tokenize your community. The $WRITE token gives creators ownership of the Mirror DAO.

You can read this article on-chain, as well as support my writing by collecting its NFTs. Maybe it will be more valuable in the future, who knows.

DAO (Decentralized Autonomous Organization)

As mentioned earlier, organizations can be reduced to a synchronized network of contracts.

  1. Employees are paid for completing tasks.
  2. Customers pay for products and services.
  3. Banks lend under certain conditions of repayment.
  4. Shareholders invest in exchange for shares in the organization’s activities.

DAOs put this idea into practice, automating the transfer of value through smart contracts. Managers are programmed through code that is democratically agreed to by token holders. Each member owns a small portion of DAOs assets and can participate in decision-making in proportion to their token holdings according to the contract.

Taking economic and social characteristics into consideration, the DAO model makes companies more like communities, and communities more like companies.

web3: Solving trust problems with numbers

The DAO – The first DAO was a venture capital fund launched in 2016, named DAO. People can buy DAO tokens with ETH and have the right to vote on where the DAO’s collective funds will be invested. Investors will profit from dividends and rising DAO token prices. Unfortunately, the underlying smart contracts have a critical vulnerability: they can be exploited by hackers. Not so unfortunate, after all, hackers exposed vulnerabilities that we can’t have. While the DAO hack initially posed a threat to the nascent Ethereum protocol, it also eventually strengthened the Ethereum protocol.

MakerDAO developed the DeFi protocol and released a stablecoin called DAI. In fact, including the aforementioned Uniswap and Aave, many teams building web3 applications are structured like DAOs.

PleasrDAO is a collection of NFT (NFT, the full name of Non-Fungible Token, which refers to a non-fungible token, which is used to represent digital assets) enthusiasts, who pool their resources to obtain rare items. Notable acquisitions include Snowden NFTs, original dog meme images and an extremely rare Wu Tang clan album. Each member owns a portion of these NFTs proportional to the number of tokens they hold.

social token

Tokens capture the economic value of community members, subjecting them to the laws of supply and demand. As more and more people want to join, the price goes up. In addition to acquiring certain rights, tokens may also represent: ownership, voting rights, exclusive access rights. When the prospect of rising demand attracts investors, prices are higher.

This is true for ETH holders, but also for any group of people. Brands, artists, creators and influencers can all transform communities in the economy through tokenization. I myself can airdrop $GIL tokens to subscribers and mint NFTs of the works I write. The more readers I have, the higher the economic value. It would be even worse if the token could also unlock exclusive content, discord groups and events, or other fun stuff.

Socios enables sports teams to monetize their fan base using Fan Tokens. In addition to accessing team decision-making surveys, giveaways and rewards through “superfan”, fans can also purchase tokens to gain a sense of belonging to the club. Football superstar Lionel Mesi reportedly boosted the price by receiving part of the signing bonus paid in PSG fan tokens when he signed for the Paris club in August.

Mirror is a decentralized publishing platform with tools to help creators express and share their ideas and translate them into a web3 style. You can post for them on on-chain, mint, and auction NFT versions, crowdfund new projects, share revenue with collaborators, and write tokens for your community to give creator ownership.

Earn P2E while playing

Next, you can gamify the community by rewarding achievements with tokens.

If you’ve ever owned a Pokémon, a World of Warcraft weapon, and a FIFA player pack, you’ll understand the value of digital assets. With blockchain, digital assets become economically scarce. There is only one Pikachu in Crypto Pokemon.And it doesn’t have a central company. Game developers keep taking cash from players by endlessly copying game items out of nothing. Instead, scarce assets are monetized, profited, and traded among gamers in the right economy. Yes, your kids can make a living by playing video games.

Axie Infinity is a blockchain game where players breed, raise, fight and trade cute animals called “Axies”. Players get tokens (owned as NFTs) that they use to breed it. Players survive in the game by trading it and tokens. As this example shows, the game economy is so complex.

Metaverse

Metaverse is a virtual world that is linked and created by scientific and technological means, a virtual world that maps and interacts with the real world, a digital living space with a new social system)

The human-to-human economy, NFTs, tokenized communities, and play earning converge in the so-called Metaverse: a virtual world where people work, play, and live together.

Think about what happens on screen in our lives:

  1. Work – whether it’s working in a building or on a laptop and phone. Whether it’s a conference room or meeting on Slam and Zoom.
  2. Community – We care more about those who are online than those who are offline. People spend more time socializing on Instagram, Twitter, Discord and Reddit than in bars.
  3. Play – There are now more people playing online games than offline sports.
  4. Identity – More people care about how we look online than in real life. We express ourselves through profiles, tweets and stories.

For digital jobs, games, friends and identity, blockchain adds digital assets and ownership.

If the prospect of living in the cloud gives you shivers, remember that in sci-fi virtual worlds, the main reason people are dystopia is its design and the central power that controls them. This is the web2 version of the Metaverse: a virtual Facebook.

The crypto Metaverse is open, decentralized, constructed by the collaborative creativity of all its creators, and distributed economically through a supply and demand mechanism. A world without natural constraints and domination mechanisms can create tribes, atmospheres and markets for everyone. You haven’t found yours yet? This is where your creation and connection begin. You don’t need anyone’s permission.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/web3-solving-trust-problems-with-numbers/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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