Blockchain: The Dawn of Web3
It all started back in 2009, when Satoshi Nakamoto released a paper Bitcoin: A Peer-to-Peer Electronic Cash, introducing Bitcoin, the first successful cryptocurrency that integrated the idea of blockchain that had been on the sidelines since 1991.
Emergence of Bitcoin ₿
Bitcoin was introduced as an alternative to fiat currency. Bitcoin blockchain has bitcoin cryptocurrency, and it was focused on buying/ selling/ trading of digital money. Bitcoin still leads the market capital with a cost approx $ 67,737.63, which is a lot of money!
Why Bitcoin was successful?
We live in a world where wealth, power and data is exercised by a few. Here are various important factors why we are not fully financially free in today’s world of Web2:
Centralized banks can sometimes enforce policies that limit personal financial control, making it difficult for individuals to have full autonomy over their own money.
In cases where banks face financial instability or bankruptcy, there is a risk that the money we’ve saved could be affected.
Customer data is often used by large institutions, sometimes without explicit consent, for purposes like sharing with third-party services or even for internal AI training.
Contributors in the current system may not always receive fair recognition or rewards for the value they provide.
We don’t “actually“ OWN assets in Web2, the centralized authority has the final say.
Bitcoin was introduced during the notable 2008-2009 Financial Crisis, which drew increased attention to alternative financial systems. Its features were particularly appealing, both because of the economic situation at the time and the innovative approach it offered.
Ethereum: The next Bitcoin
Following the emergence of Bitcoin, numerous other blockchains and their associated cryptocurrencies were developed. Ethereum was the next successful blockchain after Bitcoin, it advanced on the idea of Bitcoin + Smart Contract that made blockchain a new trend for developers to make dApps or decentralized applications.
Ok, but what is Blockchain?
Blockchain is a decentralized, distributed ledger that securely stores transactions while ensuring data integrity, transparency, and security. Phew… It’s a lot with so many new strange words!
Well in simple words, blockchain is a technology that securely stores transactions. Instead of authority being centralized (Like banks) between our transactions, we have a distributed system, where all nodes support the network to run and execute transactions, where all nodes (computers) collectively run the blockchain network.
What are nodes exactly?
Nodes are the computers. How to become a node? Download that blockchain’s code and run it on your computer, you become a node.
How are transactions validated then, if anyone can become a node?
Thus blockchain offers a consensus mechanism, be it POW (Proof of Work) or POS (Proof of Stake). When all the “miners (in POW)“ or “validators (in POS)” agree, only then a transaction is added to new blocks. And becoming one is not easy, to become a miner these days is very expensive. You need to commit capital like hardware/GPU to become a miner and cryptocurrency to become a validator. Bitcoin uses POW mining and the Ethereum network uses POS validation where the initial commit is near 32 ETH. Oh, ETH is ether, the native cryptocurrency of the Ethereum blockchain. Every blockchain has its native cryptocurrency.
Participating in consensus, gives financial rewards to them, in terms of “Gas Price“. Then you might wonder, why one should become a node, not a validator. Well even though the node users are not rewarded financially, as they become a part of the blockchain, they enjoy data security, safe transactions, and OWN THEIR MONEY, they won’t have a centralized authority in between their transactions. In short, the nodes support the blockchain network and in turn, gets the perks of blockchain.
Wrapping Up!
Well, that was a lot for today! But Web3 opens a new Era of internet by introducing READ, WRITE, and OWN! Whether this field will thrive and replace existing Web2 or remain on the sidelines is what the future will say, but for now, it is nice to explore, search, and learn new alternatives to finance.
Last Note
Stay tuned in, I will write more blogs related to web3 and blockchain for those venturing into this field.
Thanks to #SheFi for their amazing sessions and for spreading the word about web3 and blockchain and getting me so excited about what new technologies could bring.
If you made it to the end, YOU DID IT!! Keep practicing, reading, and exploring. Stay healthy!!
