Web3 FAQ

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1. What is Web1?

  • Web1 is the first generation of the World Wide Web, born in 1989.
  • Tim Berners-Lee created it, and during that time, it was just a way to share information between researchers at different universities.
  • The critical thing to remember about Web1 is that it was minimal. It was text-based, and one could not do much than just surf basic websites.

2. What is Web2?

  • Web2 is all about taking things one step further.
  • With Web2, we moved towards a world where users could interact with websites more seamlessly.
  • They could buy, sell, and make transactions without ever having to leave the website. It became all about creating a more user-friendly experience.

3. What is Web3?

  • Web3 is a proposed future version of the World Wide Web, combining advancements in AI, ML, algorithmic computation, decentralization, token-based economies, and blockchain technology.
  • In this Web version, users have a say in how their data is used and who has access to it. Web3 platforms are more protected and feature-rich than the previous iterations of the internet.
  • Web3 promises to change how we use the internet and has excellent technological developments and scalability potential.

4. What is a Blockchain?

  • A blockchain is, quite simply, a digital ledger.
  • It is a database that is distributed across a network of computers and is used to track transactions.
  • What makes blockchain special is its underlying concept of decentralization makes blockchain special, which sets it apart from other digital ledgers.
  • This means that there is no single authority that controls the data. It is maintained by the participants in the network and therefore provides more security.

5. What is the difference between Blockchains & Web3?

Blockchain technology underpins cryptocurrencies like Bitcoin, while Web3 is the protocol that allows decentralised applications to run on top of a blockchain.

Think of it this way. Blockchains are like the internet, while Web3 is the deployment and functioning agent. With blockchains, one can create a decentralised network where users can interact directly with each other without having to go through a third party.

6. What are Crypto Assets?

They are digital assets that use cryptography to secure their transactions and control the creation of new units.

They are similar to traditional assets, like stocks and bonds, but they are decentralised, which means they are not subject to government or financial institution jurisdictions. This is what makes them so exciting. They define a whole new way of finance, investment, and digital transactional activities.

Note: If you want to break into the world of Web3, it is essential to understand what crypto assets are and how they work.

7. What is a DAO?

DAO, or decentralised autonomous organisation, is a self-governing organisation run by the rules encoded into its smart contract. In other words, it is an organisation that does not need a traditional management structure or central authority.

8. What is DeFi?

DeFi, also known as decentralized finance, is utilised for emerging technology to remove third parties and centralised institutions from the transactions related to finance. Innovative contracts on a blockchain provide financial mechanisms without intermediaries such as brokerages, exchanges, or investment firms.

9. What is a Metaverse?

It is a term used to describe a virtual world that exists online. In other words, it is a digital universe where users can interact, engage, and experience seamless accelerated connectivity.  In simpler terms, the metaverse is like the internet, only way more immersive.

Users can explore different worlds, meet new people, and do all sorts of things they can and cannot do in the real world. It is an exciting concept that is worth learning more about.

10. What are the different types of Blockchains?

Blockchains are mainly of three different types:

11. What are Blockchain Nodes?

Nodes are the backbone of the blockchain network. They are responsible for validating transactions and maintaining the blockchain. Every time a new block is created, it is sent to all the nodes for verification. If a node rejects a block, the entire network will reject it.

There are two types of nodes: full nodes and light nodes. Full nodes store the entire blockchain, while light nodes only store the most recent block. This makes them faster and more efficient, which is why they are becoming more and more popular.

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Stay till the end and ace your Web3 interview!

12. What are Blockchain Bridges?

A blockchain bridge is a way to connect two or more blockchains. This is done by creating a new blockchain that connects to the other blockchains and acts as a bridge between them.

This can be useful for things like transferring tokens or data between blockchains. It can also consolidate data from multiple blockchains, making it easier to track and access.

13. What is Merged Mining?

Merged mining is a process where miners can increase their profits by combining their hashing power with other miners. This means that they can find blocks on multiple blockchains simultaneously.

This process is made possible by the use of sidechains. Sidechains are blockchains connected to the main blockchain, allowing for the transfer of coins between different blockchains. This makes it possible for miners to verify transactions on multiple blockchains.

14. What are the types of Blockchain Forks?

There are two types of Blockchain Forks:

  • Hard Forks

This is the most common type of fork, which happens when there is a disagreement among the miners about the direction of the blockchain. As a result, a new chain is created, and the old one becomes defunct.

  • Soft Forks

This occurs when some miners decide to update the blockchain, but others do not want to or cannot for some reason. Again, this leads to two chains splitting off from each other.

15. What are Blockchain Addresses?

Blockchain addresses are digital wallets that store cryptocurrencies. They are created when someone sends a payment to a new address and can be used to receive payments from others.

Addresses can be public or private, usually represented as a string of letters and numbers. Knowing how to create and use blockchain addresses is essential for anyone working in the blockchain space.

16. What are Blockchain Wallets?

blockchain wallet is a digital storage space for your cryptocurrency. It is a place where one can store coins and keep track of all their transactions. There are different types of wallets, and choosing the one that fits one’s needs is essential.

  • Hot Wallets – A hot wallet is connected to the internet. Hot wallets are easier to use but less secure.
  • Cold Wallets –  A cold wallet is not connected to anything digital. Arguably, cold wallets are more secure but harder to use.

17. What are Blockchain Record-keeping Models?

There are three popular record-keeping models used in the blockchain:

1) Centralized: This is where all the data is stored on a central server. Major companies like Facebook and Google use this model.

2) Decentralized: This is where the data is stored on a network of computers. Bitcoin and Ethereum use this model.

3) Distributed: This is a hybrid model where some data is stored on a central server, and some are stored on a network of computers. IBM and Microsoft use this model.

18. What are some excellent Blockchain use cases?

Some good examples of Blockchain in action are digital voting, supply chain management, and file storage.

  • In the voting example, citizens can cast their ballots securely and anonymously without fear of fraud or tampering.
  • For supply chain management, Blockchain can track where products are in the production process and authenticate the origins of goods. This can help reduce fraud and improve efficiency.
  • And as for file storage, Blockchain can be used to create a secure, decentralised network for storing files. This is an excellent solution for businesses that must keep their data safe and secure.

Understanding Blockchain Forks 

At the most beginner level, a blockchain is a collection of data blocks linked together by safe cryptographic keys to build a chain of blocks stretching all the way back to the first one.

Therefore, it leads the blockchain visualization as a straight road formed up of interconnected blocks. Since the blocks are linked by an agreement that all of the blocks accept, each optimization to the system necessitates a modification in consensus across the blocks. However, since the blocks are linked through a practically unalterable set of protocols, the chances of reaching such a consensus are nearly impossible.

Therefore, rather than recreating each block, forks are frequently used to make modifications to a blockchain. A fork is an event on the blockchain platform in which the initial programming is copied, and the relevant modifications are made to it. Moreover, two blockchain platforms can’t coexist; therefore, the new blockchain separates into two branches, generating a fork-like deflection from the primary blockchain.

Who Determines a Fork Formation?

According to blockchain experts, since there is no centralized entity running the blockchain, it is up to the platform’s members to decide on a path ahead and make modifications that enhance overall system functionality and efficiency.

Diverse groups of participants, varying from miners, and investors to full node developers, are different components in blockchains. So, who has the final rights on what system improvements must be put in place? In addition, certain members have greater electoral power than others since each subgroup provides significantly to the system.

Miners, for example, that safeguard the system by allocating computing resources for block validation are likely to decide the fork versions’ integrity and popularity. Since miners will provide the computing resources required to maintain the system, any fork version that the miners approve is likely to prevail. Most open-source blockchains enable overlapping of duties and, as a result, a shared authority on fork formation procedure. Other subset jobs comprise developers, who develop and optimize the blockchain’s technology underlying coding script, and full node consumers, who serve as the platform’s core and auditors, validating and maintaining the blockchain’s record.

What is a Hard Fork?

Forks are modifications to the blockchain’s network algorithm that leads to the primary blockchain network to split. If there is a scenario where an old blockchain network has crypto working on it, a fork on that blockchain will lead to the formation of a parallel token on the newly forked blockchain network.

The regulations of the blockchain rules are upgraded or altered in a hard fork, creating the previous blockchain and the updated blockchain incompatible with each other.

This implies that the previous nodes will deny the recently upgraded blocks, and the newer blockchain will run under fresh guidelines that will continuously deny blocks from the old blockchain indefinitely. A “backward-incompatible” software update, this methodology is commonly referred to as.

For instance, a hard fork was developed on the Bitcoin blockchain network because of disapproval among the Bitcoin community over the optimal way of scaling the blockchain network. Individuals who sought to expand the block size were at one edge of the discussion. However, on the other side, edge the community members that were against such changes. Those who wished to develop the block size went to the Bitcoin Cash fork, whereas those who didn’t want to upgrade stayed on the original Bitcoin network. Therefore, even though both currencies (Bitcoin and Bitcoin Cash) work on separate blockchains, their histories are identical before the fork.

What is a Soft Fork?

A hard fork is a backward-incompatible upgrade to the blockchain, whereas a soft fork is a rule modification that is forward-compatible. The old blockchain will keep accepting blocks from the new advanced blockchain platform since the fork is a forward-compatible alteration, although the regulations have been modified due to the new upgrade.

Broadly said, a soft fork convinces the old blockchain network to accept the altered rules, thus allowing both the upgraded and old blocks of transactions to be accepted at the same moment.

A soft fork, unlike a hard fork, keeps the old blockchain alive by retaining two lanes with separate regulations and standards. The Segregated Witness (SegWit) Bitcoin protocol upgrade 2015 is an example of the successful implementation of a soft fork.

Before the SegWit upgrade, the Bitcoin system was somewhat more expensive ($30 per transaction) and time-consuming. In addition, signature information makes up roughly 65 percent of a transactional block, according to the developers of the SegWit upgrade. As a result, SegWit advocated that the effective block size be increased from 1MB to 4MB.

The objective of this improvement was to divide or eliminate signature information from transactional data records on each block of the blockchain, clearing space for increased transactional productivity per block. The previous Bitcoin blockchain was ready to embrace fresh 4MB and 1MB blocks simultaneously after the implementation of a soft fork.

The soft fork allowed the old nodes to validate the new blocks as well, thanks to a smart engineering approach that structured new rules without violating the old ones.

Difference between Hard Fork and Soft Fork

The blockchain and cryptocurrency communities are split on which form of the fork is preferable for improving blockchain networks. Although each sort of fork offers advantages, the communities are much more engaged about the disadvantages and hence split over them.

Soft forks are the milder of the two, but they carry their own set of risks. The most obvious of these dangers is that corrupt individuals can operate a soft fork to deceive full-node consumers and miners into confirming transactions that violate the blockchain’s regulations.

Full-node consumers operate as the blockchain network’s auditors, always preserving an entire copy of the blockchain network at all times. The responsibility lies with them to guarantee that each new block follows the policies of the earlier blockchain network. The network’s trustworthiness can be jeopardized if a set of individuals on the Blockchain attempts to set new regulations without bringing it to the knowledge of the platform’s full node participants.

Bitcoin, for example, maintains its decentralized character by having full-node customers and miners that work individually with others and verify the ledger’s authenticity. This is how important economic rules like double-spending prevention and Blockchain’s inflation formula are strengthened. However, if unscrupulous operators convince full-node consumers and miners to approve blocks that break the regulations, the blockchain may begin accepting erroneous blocks, resulting in the platform’s failure. Thus, blockchain platforms have tried to reduce this risk by ensuring all soft forks are publicly accessible.

Apart from this, hard forks also lead to their own areas of concern. Firstly, hard forks are known for segregating communities. This is because a hard fork, unlike a soft fork, has no middle ground. Secondly, many suggest that hard forks are harmful as they split the platform’s hashing power, reducing the site’s overall trustworthiness as well as overall processing capabilities.

Which One Is More Beneficial: Soft Fork or Hard Fork?

Cryptocurrency exchanges and other business networks claim that hard and soft forks have distinct purposes. Although contentious hard forks can cause division in the community, but intelligent and well-planned ones may also result in software changes that everybody stamps on.

Hard forks are replaced by soft forks, which are more kind and diplomatic. If the modifications are written in such a manner that they do not clash with current regulations, there is no need to be concerned about fragmentation.

Transformation of Blockchains

Whatever form of the split is used, it is evident that significant work has to be accomplished to enable a smooth transfer of blockchain maintenance and upgrades. Most blockchain miners and traders select hard forks as it reduces the danger of approving or mining invalid blocks.

Hard forks guarantee that miners and traders on the blockchain are not left behind or deceived, particularly while they operate. Although, hard forks utilize a lot of computing resources and are seen to be harmful to the growth of digital currencies.

Soft forks, amidst their increasing uncertainty, provide a significantly speedier alternative to blockchain software upgrades without consuming additional processing resources. Soft forks are often praised for their ability to roll out upgrades without causing a social rift.