Crypto Concepts and Jargons Debunked by “Curious Newbie” Peter Yang, Reddit Product Manager

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Mr. Yang said, “A blockchain is a linked list of transactions stored on a network of computers.”

Stories of the exponential growth of cryptocurrencies or digital currencies are very common among young investors these days, although a few actually understand how the world of cryptocurrencies works. Today there is a very strong aspiration among young people around the world to learn the crypto process quickly so that they can start minting – or in this case “mining” – money as soon as they get it. can. Therefore, they turn to the Internet for answers.

But, researching the web doesn’t always help you get the basics of how crypto works. Also, watching expert videos and getting inspiration from analysts can sometimes not help.

So what could be the possible exit? Reddit Product Lead Peter Yang, in his blog post “The Curious Beginner’s Guide to Crypto,” gave a simple answer: “It’s often easier to learn from a curious newbie than from an expert who speaks in lingo. His blog is called “Creator Economy”.

New to web 3 and you want someone to “explain like i was five” how crypto works?

I wrote a single post that breaks down:

1. Web 32. Blockchain (wallets and keys, proof of work vs stake) 3. Tokens 4. Bitcoin5. Ethereum6. NFT7. DAO

Let’s dive into … https: //t.co/BzyKGUbbMy

Peter Yang (@petergyang) September 29, 2021

In his post, Mr. Yang – who describes himself as a “curious newbie” – said, “My goal is to” explain as if I was five “the following (crypto concepts): Web 3; Blockchain; Fungible tokens and non-fungible; Bitcoin and Ethereum; NFT; and DAO. “

To start, he quoted US businessman and investor Ben Horowitz: “Crypto has a characteristic that has never existed before – trust.”

“While trust can be established by code, creators don’t need to rely on middlemen. They: Don’t need to trust banks to get paid; trust social networks for a living. “

To validate the above statement, Mr. Yang explained, “With trust comes ownership. By reducing the tax on middlemen, creators and fans can finally own the benefits of their work. “

Web 3

While explaining the concept of “Web 3”, Mr. Yang said, “The best way to explain Web 3 is to compare it with Web 2. Today Web 2 is the Internet, dominated by the Internet giants. technology. It is built on a client-server architecture, where users are clients and businesses control servers. These companies extract value from creators and users by putting themselves in the middle. “

He added: “Web 3 is the Internet that was pioneered by cryptography. It is built from peer-to-peer networks of computers that communicate with each other without intermediaries using blockchain technology. . “

Block chain

Regarding blockchain, Mr. Yang said, “A blockchain is a linked list of transactions stored on a network of computers. Blockchains are“ decentralized: transactions are stored on a network of computers (nodes) ”; “Immutable: Transactions cannot be changed once committed to the block”; and “Open: Transactions can be viewed by anyone.” Is how blocks are linked) ‘. ”

Citing an example, he wrote: “Suppose Bob wants to send Mary 1 bitcoin. Bob and Mary both need crypto wallets. These wallets are either software (eg Coinbase, Metamask, Rainbow) or hardware (eg Ledger). First, Bob says to his wallet, “I want to send 1 bitcoin from my public address to Mary’s public address.” Second, Bob’s wallet produces a digital signature for this transaction based on his private key. And third, this signature proves that Bob actually owns 1 bitcoin. Bob’s wallet sends the transaction to the nodes of the blockchain network. These nodes then verify the transaction using Bob’s signature and public key. A node groups Bob’s transaction with other transactions in a block. It then works with other nodes to add the block to the blockchain. Marie will only see 1 bitcoin in her wallet after completing the three steps. “

He added that “The most important point to remember when it comes to wallets and keys is: you can share your public key with others to send and receive transactions. But you should never share your private key or your seed phrase. If anyone has access to these artifacts, they will be able to transact on your behalf. “

“A block can only be added to the blockchain if the other nodes agree,” he added.

Fungible tokens

To elucidate “fungible and non-fungible tokens,” he said, “Fungible tokens are interchangeable (eg, Bitcoin, Ether). Non-fungible tokens (NFTs) are unique (for example, a work of art). For exemple. , let’s look at a game like Fortnite or Roblox: fungible tokens are the virtual currency of the game (e.g. VBucks, Robux). Non-fungible (NFT) tokens are in-game character skins, emotes, etc. “

To differentiate Bitcoin and Ethereum (fungible tokens or cryptocurrencies), he said: “Bitcoin uses blockchain and is therefore decentralized, immutable and open. There will never be more than 21 million bitcoin.” Bitcoin was created by Satoshi Nakamoto (a pseudonym) in 2009.

Whereas Ethereum, created in 2013 by Vitalik Buterin, he said, is a digital token. “Ether is a store of value like Bitcoin, but its primary purpose is to reward nodes in the Ethereum blockchain for processing transactions. Gas is the amount of ether paid to a node to process a transaction,” he said. he added.

Non-fungible tokens

Explaining non-fungible tokens or NFTs, he said, “An NFT is a record of ownership of a single asset. This record lives on the blockchain and is: “Decentralized: Stored on a network of computers”; “Immutable: cannot be changed. once validated ‘; and Open: Anyone can see the transaction history. “

DAO

Regarding DAOs, Mr. Yang said, “A DAO is a community whose treasury belongs to its contributing members. The easiest way to describe how a DAO works is to compare it to a business. “

Traditional economy vs crypto

In conclusion, Mr. Yang compared traditional economics with crypto and referred to money (US dollar) as fungible tokens (Bitcoin and Ethereum). He compared factories, machines and software (productive assets) to the “smart contract”; food, clothing and television (merchandise) at DTV; e-commerce, retail stores and stock exchange (exchange mechanisms) at decentralized exchanges, auctions, order books managed by smart contracts; and government, central bank companies (institutions) to DAOs respectively, in the crypto economy.

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