A Guide to Blockchain and Web3

This article was sourced from the dYdX community! Thank you to Micah for contributing this content!

What is Blockchain Technology?

Blockchain is a decentralized ledger technology that securely and transparently records transactions and stores data. It uses cryptographic technology to ensure that validated transactions cannot be altered or deleted and are publicly visible on the network.

Blockchain was first introduced as the technology behind Bitcoin but has since been adopted for various other applications beyond cryptocurrency.

What is Web3?

Web3 is the term used to describe the set of technologies and protocols aimed at decentralizing the internet. It seeks to give users more control over their data and create a more equitable and decentralized online ecosystem.

Web3 technologies, such as decentralized applications (dApps) and decentralized finance (DeFi) platforms, are built on top of blockchain networks and utilize their underlying infrastructure to function. Therefore, Web3 is essentially an extension of blockchain technology, leveraging the initial technology to decentralize networks and applications further.

Web3 encompasses a wide range of technologies, including blockchain, peer-to-peer networks, and dApps. Web3 technologies are intended to empower users by giving them more control over their data and enabling them to interact with each other in a decentralized and transparent manner.

What are dApps?

dApps are applications built on top of blockchain networks. They are designed to be secure and transparent. They are frequently used to facilitate peer-to-peer interactions, such as trading and exchanging goods or services, without the need for a central authority. They operate transparently through open code and contracts deployed on the network, reducing the risk of censorship and ensuring accessibility for all users.

How does Web3 and blockchain fit together?

One of the significant ways in which blockchain and Web3 technologies intersect is through the use of dApps. As mentioned earlier, dApps are applications built on a blockchain network and run on a peer-to-peer network, so any central authority does not control them. Web3 refers to the next generation of the internet, where data and applications are decentralized and controlled by the users, not corporations. Web3 technologies, including blockchain, aim to create a more transparent, secure, and open internet.

The key difference between Web3 and blockchain is that Web3 is a broader concept, whereas blockchain is one of the underlying technologies that make up Web3. The difference between dApps and blockchain is that dApps are built on a blockchain network and run on a decentralized system. In contrast, blockchain is the underlying technology that enables the decentralization of dApps.

dYdX and Web3

dYdX is a decentralized perpetual exchange on the Ethereum blockchain that offers a secure and transparent platform for trading without relying on centralized intermediaries. It leverages blockchain technology to create a trustless, permissionless, non-custodial platform.

As part of the Web3 ecosystem, dYdX aligns with its core principles of decentralization and user control, working towards a more open and transparent financial system.

Summary

Blockchain and Web3 are often used interchangeably in discussions about digital assets, but it is essential to distinguish between them. Blockchain refers to the technology used by crypto protocols, while Web3 encompasses the broader ecosystem of dApps and other crypto technologies. Without blockchain, Web3 would not exist.

As Web3 continues to evolve, it is expected to play a significant role in shaping the future of the internet. Its focus on peer-to-peer interactions through dApps, decentralized finance through DeFi and management of digital identifies and personal data has the potential to create a more secure, transparent, and open online ecosystem for all users.

Legitimacy and Disclaimer

Crypto-assets can be highly volatile and trading crypto-assets involves risk of loss, particularly when using leverage. Investment into crypto-assets may not be regulated and may not be adequate for retail investors. Do your own research and due diligence before engaging in any activity involving crypto-assets.

dYdX is a decentralised, disintermediated and permissionless protocol, and is not available in the U.S. or to U.S. persons as well as in other restricted jurisdictions. The dYdX Foundation does not operate or participate in the operation of any component of the dYdX Chain’s infrastructure.

The dYdX Foundation’s purpose is to support the current implementation and any future implementations of the dYdX protocol and to foster community-driven growth in the dYdX ecosystem.

The dYdX Chain software is open-source software to be used or implemented by any party in accordance with the applicable license. At no time should the dYdX Chain and/or its software or related components be deemed to be a product or service provided or made available in any way by the dYdX Foundation. Interactions with the dYdX Chain software or any implementation thereof are permissionless and disintermediated, subject to the terms of the applicable licenses and code. Users who interact with the dYdX Chain software (or any implementations thereof) will not be interacting with the dYdX Foundation in any way whatsoever. The dYdX Foundation does not make any representations, warranties or covenants in connection with the dYdX Chain software (or any implementations and/or components thereof), including (without limitation) with regard to their technical properties or performance, as well as their actual or potential usefulness or suitability for any particular purpose, and users agree to rely on the dYdX Chain software (or any implementations and/or components thereof) “AS IS, WHERE IS”.

Nothing in this post should be used or considered as legal, financial, tax, or any other advice, nor as an instruction or invitation to act by anyone. Users should conduct their own research and due diligence before making any decisions. The dYdX Foundation may alter or update any information in this post in the future at its sole discretion and assumes no obligation to publicly disclose any such change. This post is solely based on the information available to the dYdX Foundation at the time it was published and should only be read and taken into consideration at the time it was published and on the basis of the circumstances that surrounded it. The dYdX Foundation makes no guarantees of future performance and is under no obligation to undertake any of the activities contemplated herein.