01 Aug Beginner’s Guide to Decoupling Blockchain & Crypto
Early this year, I had the honour to do a guest lecture at the Berlin School of Economics and Law, speaking about “Decoupling Blockchain & Crypto”. I covered the history and fundamentals of Web 3.0 and blockchain, followed by the market outlook in Europe. The lecture was for university students unfamiliar with the web 3.0 industry, so I simplified the terms and included the market overview and use cases to help students understand Web 3.0 at the macro level, which I’d love to share it with you today. The link to access the entire presentation is available at the end of the article.
Author’s note: This article suits beginners entering the web 3.0 industry.
The lecture was divided into three parts; 1. Fundamentals of Blockchain & Cryptocurrency, 2. Web 3.0 & Blockchain in Finance, 3. Market Outlook in Europe & Use Cases. In today’s article, I’ll cover chapter 1, discussing the history and fundamentals of the blockchain and cryptocurrency.
The history of the internet started in the late 1990s when the first web page was published. It was a form of a magazine you could read on the computer screen instead of on paper. The internet evolved in the 2000s. The website visitors could publish their content, comment on others’ articles, or share it. The social media giants like Facebook and Google emerged. It was the time when the regulation played a massive role in moderating people’s digital behaviour and protecting people’s rights online such as intellectual property and data privacy. I recently watched a Netflix series, “The Most Hated Man on the Internet”, which represents the story of that time.
As people became aware of the value of their data, the decentralisation movement powering the data ownership naturally received the internet community’s attention. Today, many people have already experienced in participating in the cryptocurrency protocols by governing, operating or claiming a fractional share of ownership. Web 3.0, the next iteration of the internet, is where the users or online community can actively participate in the online ecosystem development.
Web 3.0 is often touted as a system enabled by blockchain, but what does that mean?
We can say the Web 3.0 era started in 2008 when Bitcoin, the first cryptocurrency, was introduced to the world by Satoshi Nakamoto. Bitcoin is the first successful use case of the decentralised system fueled by blockchain technology. It was evolutionary as it showed the new possibilities of the internet and challenged various legacy systems.
Blockchain is often synonymous with cryptocurrency — but it’s not. To understand what it means when someone talks about blockchain, you need to know what cryptocurrency means.
Blockchain, a distributed ledger technology, is a growing list of data records securely chained together via cryptography.
Cryptocurrency, one of the digital assets, is designed to work as a medium of exchange utilising cryptography for security, control and transaction verification.
I’ve elaborated on how each term was assembled and defined below.
We could utilise blockchain technology without creating cryptocurrency. But cryptocurrency like Bitcoin requires blockchain technology as it’s an essential part of the crypto protocols. Blockchain enables the model where transactions happen peer-to-peer, where data are stored locally, and how you control who you interact with and what you share with them without involving any third parties.
Blockchain is simply an open, decentralised ledger where transactions are recorded chronologically and transparently without needing a third-party authority or central server. These transactions can represent anything from simple transactions between two parties to exchanging information or complex contracts between multiple parties.
The key takeaway is that blockchain is an underlying technology while cryptocurrency is an application.
Blockchain technology is often referred to as Web 3.0. This is because it has similar potential as the web in terms of connecting people who would otherwise be unconnected through its potential for decentralisation.
“Cryptocurrency requires blockchain. Blockchain does not.”
Cryptocurrency contributed to transforming the way we exchange value. Since the first medium of exchange, the cowry shell, was invented in the Solomon Islands, humans have never stopped using money. Various mediums have been successfully utilised, for instance, natural resources (cowry shell), metals (coin), papers (paper currency), plastics (credit card), and now digital assets (cryptocurrency).
Cryptocurrency is one of the most significant inventions enabled by blockchain technology. But there is more to blockchain technology. The technology has evolved, and the Web 3.0 industry is represented by more than just cryptocurrency today.
In the following article covering chapter 2, I will elaborate on how the Web 3.0 ecosystem has been developed since the inception of Bitcoin and what’s important to know for today’s applications.
You can see the presentation here if you are interested in reading the entire session.
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