If there are important terms not inside this glossary, reply in this thread to help update it: https://www.molly.com/threads/web3-and-metaverse-keywords-for-the-meta-future.1081
Exploring the definitions of essential technological concepts...
... ranging from Web3 to Metaverse
The next wave of technological change involving the Metaverse and Web 3.0 has the potential to revolutionize the way we work, play and interact. These changes are bound to bring about new (and potentially confusing) terms and concepts.
Here is a quick and easy-to-understand reference to the numerous definitions for you to better understand the future of technology.
Altcoin (or alternative coin) is a term used to describe any cryptocurrency aside from Bitcoin (the most established cryptocurrency with the largest market capitalization). There are currently more than 14,000 altcoins in existence, with Ethereum being one of the most popular.
Although there are differences in functionalities and consensus mechanisms, Altcoins generally share the same foundational framework as Bitcoin (i.e., peer-to-peer, decentralized, etc.).
Augmented Reality (AR)
Augmented reality is an immersive experience created by integrating computer-generated virtual objects into the user’s view. The seamless blending of real-world objects with virtual overlays enhances the user’s perceptual experience of the real world.
Augmented reality (AR) is different from virtual reality (VR) in that AR changes the user’s perception of a real-world environment. In contrast, VR delivers a fully simulated environment without including the real-world environment.
A block on the blockchain is a permanent data store of valid transaction records that have taken place on the blockchain network.
Each block can be thought of as a page of the ledger, and it contains vital components such cryptographically verifiable information, timestamp, and transaction data.
Blockchain is a technological system that serves as a distributed database for recording digital information in a secure, transparent, and immutable way within computer code.
It acts as a digital ledger of transactions shared across the computer nodes (aka blocks) in the entire computer network distributed around the world. Each block stores a set of transactions that each network member has independently verified.
The name ‘blockchain’ stems from the fact that the transactions are recorded in ‘blocks’ linked together to form a ‘chain’ of previous transactions.
The immutability, encryption, transparency, and decentralization features guarantee the security and fidelity of the records, thereby creating trust in the blockchain system without a trusted third party.
Bitcoin is a cryptocurrency, meaning that it is a decentralized digital currency built on blockchain that users can buy, sell, or exchange without an intermediary (e.g., banks).
It was launched in 2009 by the pseudonymous Satoshi Nakamoto to develop a peer-to-peer electronic cash system based on cryptographic proof rather than trust.
Bitcoin is currently the most popular and highly valued cryptocurrency by market capitalization.
Chainlink is an open-source technology that significantly enhances the capabilities of smart contracts by securely connecting them with external real-world data and computation.
This connection is made with its decentralized oracle network, which provides tamper-proof inputs, outputs, and computations, thereby guaranteeing the critical security and reliability features inherent to blockchain technology.
A consensus mechanism (aka consensus algorithm or consensus protocol) is an algorithm used in distributed systems (e.g., blockchain) to establish an agreement on the state of the network (or ledger), i.e., agree on matters like account balances, order of transactions, etc.
This mechanism ensures all network nodes are synchronized and that all the data entries and transactions are validated, legitimate, and secure.
The two most prevalent consensus mechanisms in blockchain are proof-of-work (PoW) and proof-of-stake (PoS).
The Creator Economy is a technology-facilitated class of business that allows independent creators to earn revenue from their online creations.
These creators include a mix of social media influencers, musicians, writers, designers, and video makers who leverage online platforms (e.g., YouTube, TikTok, SubStack, Patreon, etc.) to grow their influence and monetize their content directly.
Cryptocurrency (or crypto) is a form of currency that is virtual, decentralized, and encrypted (i.e., secured with cryptography).
It is a type of digital asset built on blockchain technology. The records of transactions and currency ownership are verified and securely stored in a digital ledger on a distributed computer network without the control of a central authority.
The term ‘crypto’ refers to the fact that online cryptocurrency payments are based on cryptographic systems, thereby allowing for secure transactions without the need for any trusted third-party intermediaries.
Cryptography is the study and practice of exchanging secure, encrypted messages between two or more parties using mathematical and computational techniques in the encoding and decoding of information.
The encryption techniques from cryptography are a vital component of blockchain protocols, allowing cryptocurrency and digital assets to be transacted, verified, and generated in a secure and trustless manner.
Decentralization is the shift of control, planning, and decision-making from a central, authoritative entity (e.g., individual, group) to a distributed network.
In the blockchain context, decentralization allows for the peer-to-peer transaction of digital assets, coupled with irreversible tracking of the information and history of transactions and ownership of these assets.
This process creates advantages such as redundancy (i.e., avoiding a single point of failure), transparency, and guarantees of data fidelity by spreading the records across the many nodes in the distributed computer network.
Decentralized Applications (dApps)
A decentralized application (dApp) is a digital application built on a decentralized, peer-to-peer blockchain network (most commonly on the Ethereum platform). It combines the properties of a smart contract with that of a front-end user interface.
Although the backend structure is different, dApps have interfaces like the traditional apps we are familiar with.
Some popular dApps include OpenSea (peer-to-peer marketplace for digital goods), Cryptokitties (a game that allows users to buy and sell virtual cats), and TraderJoe (one-stop decentralized trading platform).
Decentralized Autonomous Organization (DAO)
A decentralized autonomous organization (DAO) is a member-owned organization that does not have centralized leadership and has its internal rules embedded as computer code in an open, transparent manner.
It creates a fully democratized, flat system that provides members a safe and trusted way to collaborate, vote, or donate funds.
Decentralized Finance (DeFi)
Decentralized finance (DeFi) is a form of a financial ecosystem with products and services built on top of public blockchain systems (predominantly on the Ethereum blockchain).
Unlike traditional finance, which depends on central financial intermediaries, DeFi aims to disintermediate the conventional centralized model so that peer-to-peer transactions and payments can occur without a central authority.
This decentralized model allows people to engage in routine financial activities (e.g., borrowing, lending, trading, saving) with complete control, ownership, and accessibility without intermediaries.
A digital twin is a digital object in the metaverse representing a virtual model (aka digital double) of a real-world physical process, object, system, or service.
Serving as a bridge between the virtual and physical worlds, a digital twin is updated with real-time data (e.g., position, condition, temperature) gathered from smart sensors outfitted on the physical items and may include the objects’ visual properties, e.g., 3D representation.
For example, a digital twin in the healthcare context could be a personalized virtual model of a patient which is constantly updated with tracked health and lifestyle data via smart devices. This real-time representation allows for the delivery of tailored care based on the latest health status of the patient.
A distributed ledger is a digital database for the consensual sharing and synchronization of data spread across multiple locations, geographies, or organizations.
This consensus allows for transaction records to be accessed, authenticated, and updated in an immutable manner by multiple participants simultaneously.
In contrast to a traditional centralized ledger, there is no central authority in a distributed ledger, thereby avoiding the vulnerabilities of a single point of failure.
It is important to note that blockchain is only one type of distributed ledger but not vice versa, even though they share the same underlying technology.
Distributed Ledger Technology (DLT)
Distributed Ledger Technology (DLT) refers to the set of technological infrastructure and protocols for the setup of a distributed ledger.
See above for the definition of a distributed ledger.
Ethereum is a blockchain platform that creates a secure peer-to-peer network to execute and verify smart contracts and decentralized applications (dApps). It also serves as a digital currency via its native cryptocurrency, Ether.
Although Ethereum is the second most popular cryptocurrency behind Bitcoin, it was developed to be more than just a digital currency. Ethereum’s difference is that it focuses on facilitating and deploying immutable smart contracts and dApps.
Ethereum’s smart contract functionality allows people to transact and make agreements digitally without an intermediary. The transaction records are immutable, transparent, verifiable, and securely distributed across the blockchain network.
Ethereum Request for Comment (ERC)
Ethereum Request for Comment (ERC) is a standard protocol used to issue tokens on Ethereum.
This standard provides a list of rules that govern the implementation, usage, and distribution of digital tokens on the Ethereum platform to remain interoperable and compatible.
The popular ERC standards include ERC-20 and ERC-721.
Ether (ETH) is the native cryptocurrency of the Ethereum platform.
Extended Reality (XR)
Extended reality (XR) is an umbrella term that refers to the set of immersive technologies which combine the experiences and environments of the real and virtual worlds.
These technologies include augmented reality (AR), virtual reality (VR), and mixed reality (MR).
GameFi is a term blended from ‘gaming’ and ‘DeFi’, and is defined as the intersection of blockchain-based video gaming and decentralized financial elements.
The blockchain system enables video game players to attain verifiable digital ownership of in-game items and assets without a central administrator.
GameFi is primarily based on a play-to-earn model where players receive financial rewards (in NFTs) for completing gameplay objectives.
In the context of the Ethereum platform, gas refers to the fee necessary to perform a transaction or execute a smart contract on the blockchain network.
A hard fork refers to a radical software change to the protocols of a blockchain network, where the blockchain splits into two separate parallel blockchains: the original version and a new version that follows a new set of rules.
These significant code changes make the new blockchain version no longer backward-compatible (aka invalid) with earlier blocks built on the older protocol.
A hash function is an algorithm in cryptography that takes an input (e.g. a string of numbers and letters) and transforms it into an output of fixed length (aka hash) as part of a complex mathematical problem.
A blockchain system utilizes these hash functions to protect the integrity, security, and immutability of the data on the network.
Because the same input is expected to always produce the same hash, hash functions can be used to authenticate that a set of data has not been altered since the original hash was created.
Meta is the new company brand of Facebook, with the rebranding introduced in October 2021.
It signals the company’s new ambitions on bringing the metaverse to life and helping people connect, find communities and grow businesses in new-age virtual spaces.
MetaMask is a software that serves as a cryptocurrency wallet on the Ethereum network while also acting as a gateway for users to securely connect to and interact with blockchain-based Ethereum applications (aka dApps).
A metaverse is a digital realm that combines the components of mobile devices, social media, virtual and augmented realities, online gaming, blockchain, and cryptocurrencies to create an immersive and interactive online virtual experience.
Its goal is to create a shared virtual-reality space with digitally persistent environments where users can inhabit and interact, as avatars, with different people from different physical locations.
The metaverse aims to bridge the physical-virtual divide by supporting the continuity of identity, objects, history, payments, and entitlements in the virtual world.
Mixed Reality (MR)
Mixed reality is an immersive experience that blends the real and virtual worlds such that users can interact with and manipulate physical and virtual objects in real-time.
Mixed reality can contain both Augmented Reality (AR) and Virtual Reality (VR) elements.
The difference between Augmented Reality (AR) and Mixed Reality (MR) is that in AR, the real-world environment is solely overlayed with virtual components, whereas, in MR, there is an embedded capacity for interactivity between the real-world and digital elements.
Non-Fungible Token (NFT)
A non-fungible token is a digital blockchain-based asset that is one-of-a-kind and whose ownership, details, and metadata are publicly verifiable.
These cryptographic tokens (commonly on the Ethereum blockchain) represent unique items such as art, music, sports cards, and even real estate.
Non-fungible means that an object cannot be replaced with an identical item and is thus not mutually interchangeable.
Therefore, assets like cryptocurrencies (e.g., Bitcoin) are considered fungible, whereas an original art piece on the blockchain is deemed non-fungible.
An open platform is a software system based on open standards, allowing any willing party to flexibly build applications, features, and services such that the software functions in other ways than it was initially intended.
Proof-of-Stake (PoS) is a consensus mechanism in blockchain where the validation of new blocks and transactions is done by cryptocurrency owners (aka validators) selected based on the amount of cryptocurrency they contribute (or ‘stake’).
The nodes of the network commit ‘stakes’ of cryptocurrency tokens for a period of time as collateral for the opportunity to be selected to add the next block. In exchange for the transaction validation, the participating validators receive rewards in tokens.
This mechanism is more energy-efficient than the ‘mining’ method in the Proof-of-Work mechanism since the validators are randomly selected and are not directly competing in computational tasks.
Proof-of-Work (PoW) is a consensus mechanism in blockchain where network nodes expend significant computational effort to solve (or prove solutions of) complicated mathematical puzzles to validate new blocks and transactions.
This competitive process of generating hashes (long strings of numbers) to solve the difficult puzzles is called mining. Mining helps to ensure that peer-to-peer transactions occur securely without any trusted intermediaries since it becomes highly challenging to alter the previously mined blocks of the blockchain.
PoW is the original consensus mechanism used by Bitcoin.
A private key is a secret cryptographic code that allows users to access and transact their own funds and assets on the blockchain network, and can be thought of as a password or verification code.
Private keys represent access control and ownership of one’s actual cryptocurrency or digital assets, and must therefore be stored securely and not be shared with anyone else.
It is paired with a public key as part of a public-key cryptographic system for blockchain networks to work in a secure, safe, and trustless manner.
Public-key cryptography (aka asymmetric cryptography) is a system that generates pairs of keys (public key and private key) based on mathematical encryption algorithms, and this forms the core security feature of blockchain systems.
While the public key can be made known to others openly without affecting security, the private key should only be known to the owner and no one else.
The public key can be thought of as your house address, while the private key is the physical key that unlocks and opens your front door.
A public key is a cryptographic code that allows users to receive cryptocurrencies or digital assets into their accounts, and can be thought of as an public unique account number which users can openly share.
It is paired with a private key as part of a public-key cryptographic system for blockchain networks to work in a secure, safe, and trustless manner.
A smart asset is a unique virtual currency token that can digitally represent physical assets (e.g., real estate) or virtual goods (e.g., Bitcoin, artwork).
Each smart asset is associated with a smart contract that governs its use.
A smart contract is a contract on the blockchain (most commonly on Ethereum) that is programmed to execute automatically when the terms of the agreement are met.
The predetermined conditions of the contract between parties are written directly into lines of computer code, and all contract-related transactions are irreversible and trackable on the decentralized blockchain network.
As the execution of the contract terms is triggered automatically upon meeting the agreement terms, it creates a trusted transaction system without the need for a central authority or intermediary.
A soft fork refers to a software change to the protocols of a blockchain network which do not alter the base components and platform structure, thereby allowing for backward compatibility with older versions.
This forking method is as opposed to a hard fork, which results in a break in backward compatibility.
Solana is a blockchain platform designed to host decentralized, scalable applications with smart contract capabilities.
It is perceived as a long-term competitor to Ethereum, given its superior transaction speeds and lower transaction costs.
Solidity is an object-oriented, high-level programming language for writing and implementing smart contracts on numerous blockchain platforms (most notably on Ethereum).
A stablecoin is a cryptocurrency whose price is pegged to a reserve asset such as fiat currency (e.g., U.S. dollar) or exchange-traded commodities (e.g., gold).
This benchmarking significantly reduces its price volatility compared to unpegged cryptocurrencies like Bitcoin.
The stablecoin’s blend of traditional-asset stability and cryptocurrency infrastructure creates a stable medium for monetary exchange and storage.
The state of a blockchain system refers to the snapshot of the system at a given point in time. It encompasses multiple aspects such as the order of transactions, amount per transaction, account balances, etc.
This state is also the shared global truth that the nodes across the blockchain network agree upon without the need for a central authority.
A token is a digital representation of an asset (or unit of value) defined by a project or smart contract. It is developed on a specific blockchain network (commonly Ethereum).
The different types of tokens include utility tokens (sold as part of fund development and used for application access), security tokens (used for investment), and cryptocurrency (used for value exchange in financial transactions).
In the blockchain context, trustless means that a user does not need to trust or know anything about the other party to safely make transactions with them on the blockchain network.
Virtual Reality (VR)
Virtual reality is a fully immersive experience based on computer-generated simulations where the user’s 360-degree view is entirely contained within the three-dimensional digital world.
Typically accessed through a headset device, users can realistically explore and interact with the objects in the virtual environment through the VR system’s accurate tracking of the user’s movements and position.
Web 3.0 (aka Web3) is the new third-generation of internet services for websites and applications built on the open, decentralized blockchain technology, and aims to deliver greater connectivity, ubiquity, intelligence, and utility.
This new phase of the world wide web (in the form of a decentralized Internet existing on public blockchains) allows users to have ownership stakes in the applications and platforms.
This framework contrasts the current Web 2.0, where vast amounts of data and content are centralized within a tiny group of major tech giants.
If there are important terms not inside this glossary, reply in this thread to help update it: https://www.molly.com/threads/web3-and-metaverse-keywords-for-the-meta-future.1081