Web3 Fundamentals: Key Concepts Everyone Should Understand
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Your roadmap to understanding Web3 is here. This article outlines 100 crucial concepts that will aid in unraveling the complexities of Web3.
To improve readability, I will present these topics across several blog posts.
# 1. Blockchain A blockchain is defined as:
- An immutable record of data or information
- Composed of blocks that are cryptographically linked
- Distributed among a network of computers, known as nodes
- Formed in a peer-to-peer network configuration
- Utilizing a consensus mechanism to validate the ledger's state
# 2. Block A block serves as a singular unit of data that connects to other blocks, creating a blockchain. For instance, within the Bitcoin blockchain, each block includes transaction data and a reference to the preceding block. Blocks are interlinked through cryptographic methods, ensuring that any alteration to one block affects all subsequent blocks, rendering the blockchain tamper-proof.
# 3. Web3 Web3 represents a decentralized, permissionless, and trustless version of the internet. In Web3 applications, known as Dapps or Decentralized Applications, data is stored not in private databases but on a blockchain, which allows anyone to write, read, prove ownership of resources, and verify data.
# 4. Decentralized Network This refers to a network of nodes that are not under the control of a single organization or entity. A blockchain is sustained by a decentralized, peer-to-peer network.
# 5. Peer-To-Peer Network (P2P) A P2P network consists of computer nodes that interact to share tasks and maintain a synchronized state among peers. These networks may operate with or without a central authority. In the context of blockchain maintenance, no central authority exists, as peers reach a consensus through established mechanisms.
# 6. Consensus Mechanism This is a protocol through which various nodes in a multi-node system agree upon a common state. In blockchain, this pertains to reaching a consensus on the validity of the next block to be added. Common consensus methods include Proof of Work (PoW) and Proof of Stake (PoS).
# 7. Cryptographic Hashing / Hash Function This process involves converting data of any size into a fixed-size output using a hash function. A hash function is a deterministic, one-way mathematical process. Common hash functions include RipeMD and SHA. The output is consistent and easy to generate, yet challenging to reverse. For example, the SHA256 hash for the string ashish is 05d08de271d2773a504b3a30f98df26cccda55689a8dc3514f55d3f247553d2b, but reversing this operation is nearly impossible without brute force.
# 8. SHA (Secure Hash Algorithm) This family of widely used hash functions is provided by the National Institute of Standards and Technology (NIST) in the USA. The SHA-2 family, including SHA-256, is prominently utilized in the Bitcoin blockchain.
Read more about them below:
- Secure Hash Algorithms - Wikipedia <https://en.wikipedia.org/wiki/Secure_Hash_Algorithms>
- How SHA-256 Works Step-By-Step <https://blog.boot.dev/sha-256>
# 9. Keccak-256 This cryptographic hash function is employed in the Ethereum blockchain. The SHA-3 family of hash functions is a subset of the broader Keccak family.
Read more about it here: SHA-3 - Wikipedia <https://en.wikipedia.org/wiki/SHA-3>
# 10. Fungible Asset vs. Non-Fungible Asset A Fungible asset is interchangeable with others of its kind. For example, one penny is equivalent to another penny. Similarly, a Bitcoin is the same as any other Bitcoin.
Conversely, a Non-fungible asset possesses unique value and cannot be substituted for another. For instance, the original Mona Lisa painting is irreplaceable and cannot be equated with a mere printed copy. Non-fungible tokens (NFTs) exemplify unique digital assets on the Ethereum blockchain.
Read more about NFTs here: Non-fungible tokens (NFT) | ethereum.org <https://ethereum.org/en/nft/>
Thank you for reading! Stay tuned for the next installment!