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Web3 glossary for NFT readers and writers

A Magical Glossary of Web3 Slang & NFT Readers

Just the name “Web3” is complex to debrief. It doesn’t leave anything to the imagination at first glance to anyone who doesn’t know about the different iterations of the internet, or NFTs. This is part of why Web3 and NFTs are so unknowable to literary enthusiasts – it just doesn’t align with most of their topics of interest as well as Web2. 

But believe us or not, Web2 was just like this for literary enthusiasts of old. We’re so used to Web2 today that it’s almost like second nature to us, but it wasn’t always like this.

That’s why we’ve compiled a glossary of Web3 terms for authors & readers to learn more about all of its ecosystem. 

But frankly, Web3 terms are super boring to learn about, because of how tech-bro-sounding they are. That’s why we’ll be doing this a little differently. Put on your best wizard hats and capes, because we’ll be pretending we’re in a fantasy world from now on:

Web3

Web3 is the first term found in the enchanted scroll, a decentralized iteration of the realm known as the internet. Decentralized means in this case that there’s no central kingdom governing Web3. Instead, it is a cosmos of interconnected communities, like Discords, Telegrams, and metaverses, each holding a piece of the magical tapestry. That also means there were part iterations of “the Web”, like Web1 and Web2. Web3 is simply the next step up from these two. Long ago, in the age of ancient scrolls, there existed the earliest version of the internet, known as Web1.

It was the first global network in the world, with a few people writing content and web pages.

Then came the era of Web2, where users can create content and interact with other users in real-time, but tech companies own your data.

NFT

NFTs are a treasure trove that some deem with skepticism, while others view as magical artifacts. At their core, they are a unique piece of data, a shimmering gem in the digital tapestry, resistant to replication. While many writers might see NFTs as scammy or environmentally unfriendly, not all of them are designed to be like this. An NFT is a non-fungible token, essentially a unique piece of data that cannot be replicated. Most of the time, NFTs are large files, so what’s truly stored in the blockchain is a link to the digital file. NFTs, though whispered about in the secret corridors of the internet for over eight years, did not bask in the radiance of mainstream admiration until the fateful year of 2021. It was during this epoch that the name of NFTs echoed through the mystical spheres, becoming a buzzword.

Blockchain

Blockchain is the closest concept we have to a super-secure spellbook that no one can tamper with, but everyone can see. It’s a revolutionary way of keeping track of information online. Instead of having one person or company in charge, the power is shared among many computers, making it incredibly trustworthy and resistant to hacking.

Tokens

Imagine, if you will, a sigil imbued with the power of ownership, a symbol that transcends the physical and the ethereal alike, representing ownership of an asset. These assets can be as real as a painting or as abstract as voting power in a DAO, more on that later. They can also provide access rights to a service, like a course, or a membership. Tokens are a fundamental component of Blockchain technology and all that is Web3, so you’ll probably hear of this term used in many Web3 contexts often.

Smart Contract

Behold the real-life physical contract, a parchment written with rules and conditions of an agreement. Now, set your gaze upon the smart contract, its more advanced counterpart, not bound by ink and parchment but by the very code that dances through the strands of the Blockchain. Like a diligent scribe, the smart contract executes itself when its established conditions align, without needing a human referee. Instead of being written in traditional legal jargon, a smart contract is coded. It’s also proactive, as when the conditions written in the code are met, it automatically triggers actions. Also, since it’s based on Blockchain technology, its terms cannot be changed later on by any of the involved parties. 

Decentralized Finance (DeFi)

Imagine a world where financial decisions aren’t controlled by a big, mysterious bank but are instead managed by a community of individuals, like a financial potluck where everyone brings something to the table. That’s the essence of decentralized finance, often called DeFi. 

DeFi relies on a community of participants who share and contribute to the financial system. Decisions about loans, investments, and other financial matters are made collectively by the community using smart contracts and blockchain technology.

Staking

You’re a scribe, and you’ve just finished creating a masterpiece—a scroll that has the potential to become a bestseller. Now, instead of keeping it on your shelf, you decide to share it with the world. But, you want to make sure you get something in return for letting others enjoy your creation.

In the world of Web3 and cryptocurrencies, this act of sharing and earning is a bit like staking.

Instead of selling your book, you decide to let readers borrow it for a while. They “stake” a small amount, like a deposit, to express their interest.

In return for staking your book, readers get some benefits. Perhaps they earn “interest” in the form of additional chapters or special editions. The longer they keep the book (stake), the more rewards they accumulate.

Pump and Dump

This is one of the more common types of crypto scams, and one responsible for giving Web3 and NFTs such a bad rap. Let’s use ten limited copy of Stephen King’s It signed by himself as a metaphor to explain this scam.

Let’s also assume that you’re a book club leader, and that you start passionately recommending all of these rare It copies to people on your social media. 

This is what happens:

  1. People start getting hyped, and demand around these It copies soars. 
  2. But what people didn’t know is that your true intention was never to promote the book’s literary merits, but to take advantage of the inflated interest and sell the signed It copies at inflated prices.
  3. Once the excitement reaches its peak, you swiftly sell off your copies of the rare book, making a considerable profit. However, as the leader, you know that the book’s actual value doesn’t justify the inflated prices.
  4. Unfortunately, many members who bought into the hype and purchased the rare book at its peak now face disappointment as the value plummets. They realize they were part of a scheme designed to artificially inflate the book’s perceived worth through hyping it on social media.

That’s a pump and dump.

Rug Pull

The other common type of Web3 scam is the rug and pull, a mischievous trick akin to a disappearing act. Imagine a project where wizards gather to exchange their most prized enchanted artifacts, including their money, NFTs, and crypto. A rug pull is akin to a devious sorcerer hastily rolling up the enchanted rug beneath the feet of unsuspecting participants, disappearing with their treasures in a puff of magical smoke.

DApp

dApp stands for decentralized application. It can be summarized as an app that runs on a decentralized system, like Blockchain.

An example of a literary dApp would be a digital collaborative storytelling medium where writers within that community can add paragraphs to the story. Participants can interact with each other and the story in a trustless and transparent manner. The dApp is also composed of smart contracts that ensure that every contribution to the collaborative story is recorded on the network, creating a tamper-proof and transparent story.

DAO

You’ll see DAO thrown everywhere in Web3, and a quick Google search will reveal that this acronym means “Decentralized Autonomous Organization”, but that just muddles the meaning even more.

If we were in a fantasy novel, a DAO would be a magical council where all decisions are made collectively, and no single wizard or witch holds all the power.

In these organizations, decision-making is spread across its participants. The catch here is that it runs on smart contracts, so instead of meeting in a Zoom or a magical videoconference, the decisions are executed automatically without needing input from the council.

Members of the DAO can propose ideas or decisions. Usually, members are token holders, and the more tokens possessed, the bigger influence in the decision-making process, although this isn’t always true and all DAOs have their own set of rules for establishing voting power.

As with everything Web3, DAO activities are recorded on the magical tome that is Blockchain. Whenever the DAO makes a decision, it’s permanently etched in the magical record.

The objective? To create fair and trestles governance, so that decisions are made by the many, not the few.

Decentralization

Decentralization is another commonly thrown-around term in Web3, usually as part of something else (DeFi meaning decentralized finance, and so on). Decentralization refers broadly to the lack of a central authority governing 

Tokenized Assets

Tokenization of assets means to issue a Blockchain token that represents a real-world tradable asset. One oft-cited example of its utility is in the real estate industry through the division of a piece of real estate into a million tokens and trading them on an index.

This enables fractional ownership, allowing an asset like a house or a car to be divided into smaller parts. So, if a house were to be divided into 100 tokens all worth $100, investors would be able to buy and sell fractions of the asset instead of owning it entirely and having to pay $10,000.

The bottom line

As we bid farewell to this enchanted scroll, let your quills be guided by the wisdom of decentralized councils, the resilience of blockchain foundations, and the interoperability bridges spanning across digital landscapes.

No, but seriously, Web3 terms can be hard to grasp due to their relative intangibility and niche status in present times, especially for the literary community. A key part of more authors and readers joining Web3 is to make it easier for them to understand what it’s all about, and how to protect themselves from scams.

And you, did you know any of these terms yourself?

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