📖
Web3 Encyclopedia
  • Welcome aboard!
  • Source
  • 😀Evolution from Web 1.0 to Web 3.0
    • Web 1.0 Web 2.0 Web 3.0
    • Key Features
    • Current Limitations
    • Future of Web 3.0
    • Learn: What Is Web3?
    • Learn: Will Every Brand Have a Web3 Strategy?
    • Learn: Big Ideas in 2023
    • Learn: The Web3 Paradox: Why Scaling Usage Alone Won't Lead to Mass Adoption?
    • Learn: Is Web3 A Marketing Buzz or Tech Revolution?
    • Learn: What is the relationship between blockchain and Web3?
    • Learn:Empowering Women in Web 3.0: The Role and Contributions of Women in Blockchain, DeFi, and dApp
    • Learn: Web 3.0 and the Future of E-Commerce
    • Learn: 12 ways ecosystem projects can attract more developers
    • Learn: How Web3 is Impacting Education?
    • Learn: Web3 And The Future Of Digital Advertising
    • Learn: Web3’s impact on personalization, trust and engagement
    • Learn: Web3-Powered Identity Management -- Unlocking the Benefits of Decentralization
    • Learn: Why Web2 companies fail in Web3 while others made it?
    • Learn: To Identify or Not in a Web3 World?
    • 🤫[Insider Series] McKinsey x Web3
    • TL;DR 👀
  • 💲Blockchain Fundamentals
    • Why is Blockchain So Popular?
    • Introduction to Blockchain
    • Blockchain Misconceptions
    • Blockchain vs Bitcoin, Database, Cloud
    • Consensus Mechanism
    • Public and Private Keys
    • Hash Functions and Cryptography
    • Sharding
    • Types of Blockchains: PoW, PoS and Private
    • Understanding Cryptocurrency
    • Coins vs Tokens
    • Blockchain Trilemma
    • Legality
    • Learn : Google’s Cloud Based Blockchain Node Service
    • Learn: How Blockchain, Digital assets, and Web3 Unlock Financial Inclusion Globally
    • Learn: Will Chinese-Made Crypto Soar Higher?
    • Learn: What Does MiCA Mean for Crypto in Europe?
    • Learn: Unraveling the Intricacies of Blockchain Forensics and Asset Tracking
    • Learn: Promising blockchain use cases in healthcare industry
    • Learn: The Role of Blockchain in Authenticating and Provenance Art
    • Learn: Blockchain-Based Digital Identity: Benefits, Risks, and Implementation Challenges
    • Learn: The Future of Energy Supply Chains
    • Learn: Revolutionizing smart contracts and cryptocurrency
    • Learn: Nigeria goes blockchain
    • Learn: A Game Changer for Online Gaming?
    • Learn: Is blockchain technology ready for high-storage applications?
    • Learn: Will Blockchain Technology Mark a Turning Point in Fraud Prevention?
    • Learn: Why ZK-rollups need data availability?
    • Learn: How will generative AI disrupt blockchain?
    • Learn: A New Blockchain for Generative AI?
    • TL;DR 👀
  • 🏟️Web3 Utilities
    • Decentralized Applications (dApps)
    • Cross-chain Bridges
    • DAO
    • Artificial Intelligence
    • Learn: Is Community-building Essential for Web3 Startups?
    • Learn: ‘Decentralization Theater’
    • Learn: Crypto and AI- A yay or nay combination?
    • Learn: Dissecting the DAO
    • Learn: What is motivating Lido DAO to rise?
    • Learn: How to Turn Your Community Into a DAO?
    • Learn: The Key to Decentralized Decision Making
    • Learn: How Web 3.0 can disrupt the supply chain industry?
    • TL;DR 👀
  • 🪙Bitcoin
    • What is Bitcoin
    • Bitcoin's Blockchain Technology
    • UTXO Model and Transaction Fees
    • Bitcoin Mining and Mempool
    • Learn: What is bitcoin mining?
    • What are Hard Forks and Soft Forks
    • What is SegWit and the Lightning Network
    • Bitcoin Ecosystem
    • Can Bitcoin be Destroyed? Game Theory and Network Attacks
    • Learn: Crypto token supplies explained
    • Learn: What is crypto tax-loss harvesting, and how does it work?
    • Learn: Can Crypto Go Green? How to Invest in Eco-Friendly Cryptocurrencies
    • Learn: Why Did FTX Collapse? Here’s What to Know.
    • Learn: How Sam Bankman-Fried swindled $8 billion in customer money?
    • Learn: How much is Bitcoin worth today?
    • Learn: The Costs of Running a Bitcoin Node In Nigeria
    • Learn: Has 2022 Left Any Crypto Positives?
    • Learn: How Crypto Exchanges Can Be Free of Risk?
    • Learn: Greed, Lies and FTX: Is Crypto a Force for Good or Evil?
    • Learn: Is Crypto a Cultural Movement?
    • Learn: What are the consequences of crypto’s ongoing regulatory process?
    • Learn: Beyond the Crash and Embracing NFTs?
    • Learn: Understanding crypto bag holders and their mindset
    • Learn: Inscriptions: Just A Fad, Or A Real Threat To Bitcoin Becoming Decentralized Money?
    • Learn: How Bitcoin Ordinals Can Change the Future Of Mining?
    • Learn: What is a supernet?
    • Learn: Bitcoin Miners Celebrate 10 Years Since First ASIC, What Changed Since Then?
    • Learn: Bill Vs. CBDC – Why This US Congressman Wants To Block The Fed From Issuing A Digital Dollar?
    • Learn: Why Bitcoin Will Blow People’s Minds In 2025?
    • Learn: How the Howey Test Sheds Light on Cryptocurrency's Regulatory Gray Area
    • Learn: Cryptocurrency vs AI: A Complex Debate
    • Learn: Where the U.S. Government Went Wrong in Regulating Crypto?
    • Learn: The Nostr Privacy Paradox
    • Learn: Do algorithmic stablecoins have a future as centralized coins are under scrutiny?
    • Learn: Is Bitcoin Set To Revolutionize The Financial World With Its Superior Purchasing Power?
    • Learn: What is Shibarium, and what does it mean for Shiba Inu?
    • Learn: What is a crypto dusting attack?
    • Learn: Is the Adoption of Central Bank Digital Currencies (CBDCs) the Future?
    • Learn: How Artificial Intelligence Could Revolutionize Crypto?
    • Learn: What’s next for EU’s crypto industry as European Parliament passes MiCA?
    • Learn: Why the EU Has MiCA and the U.S. Has Securities Law Confusion?
    • Learn: Six New Projects Looking to Mitigate Bitcoin Mining’s Energy Footprint
    • Learn: Who on Crypto Twitter chose not to pay for a blue checkmark?
    • Learn: What is the wash-sale rule in Crypto?
    • Learn: What is Pepecoin and can it flip memecoins Dogecoin and Shiba Inu?
    • Learn: Can you recover stolen Bitcoin from crypto scams?
    • Learn: What the ‘anti-mining bill’ means for the crypto industry in Texas?
    • Learn: Does the US have a crypto ‘tax loophole’ problem?
    • Learn: How users can stay protected?
    • Learn: How Crypto Revolutionize Cheaper and Faster Transactions?
    • Learn: Can NFTs and CFDs be BFFs?
    • Learn: A PR expert’s tips for memecoin projects
    • Learn: Why politicians aren't convinced about the Digital Euro?
    • Learn: How A 90-Year Old TA Theory Predicted The Sudden Bitcoin Boom?
    • Learn: Social Trading Platforms and CFDs: A New Paradigm in Investment
    • Learn: How could the Chinese economic crisis impact Bitcoin and crypto?
    • Learn: How do they compare: Bitcoin IRA vs. traditional IRA?
    • Learn: Why Tokenized Assets Are Safer During a Banking Crisis?
    • TL;DR 👀
  • 🛢️Ethereum
    • Bitcoin vs Ethereum
    • What can Ethereum do?
    • What is Ether (ETH)?
    • What's Unique About ETH?
    • What are Smart Contracts?
    • Energy Consumption?
    • Ethereum Virtual Machine (EVM)
    • Pros & Cons of Smart Contracts
    • Decentralized Applications (dApps)
    • Ethereum Token Standards (ERC-20, ERC-721 and ERC-1155)
    • Evolution of Ethereum
    • How to Get Your First Ethereum
    • Learn: Next Ethereum Upgrade — Shanghai Upgrade
    • Learn: Tipping Scale for Crypto Adoption: Usability vs. Accessibility
    • Learn: Major Publicly Traded U.S. Bitcoin Miner Files For Chapter 11 – Impact On The Market?
    • Learn: 5 altcoin projects that made a real difference in 2022
    • Learn: How Tether Can Be a More Stable Stablecoin?
    • Learn: Are the Ethereum Killers Still Deadly?
    • Learn: What Ethereum Tech Trends Are Weathering the Bear Market?
    • Learn: How Ethereum’s token burns are making it a deflationary cryptocurrency?
    • Learn: A few things to know about Ethereum's Shanghai Upgrade
    • Learn: The Role of Enterprise Ethereum
    • Learn: Understanding Layer 2 Scaling Solutions for the Ethereum Network
    • Learn: The Battle of Giants: Bitcoin vs Ethereum
    • Learn: Cryptography, Smart Contracts and Distributed Networks
    • Learn: The Memecoin Grift and How It Threatens Ethereum Culture
    • Learn: What Is Ethereum’s ‘Data Availability' Problem, and Why Does It Matter?
    • TL;DR 👀
  • 👛Wallet
    • What is a Blockchain Wallet?
    • Hardware / Software Wallet
    • How to Get Your First Cryptocurrency
    • Setting up Metamask Wallet
    • Learn: How to connect the Avalanche network to MetaMask?
    • Learn: How to pass on your crypto when you die?
    • Learn: What are hierarchical deterministic (HD) crypto wallets?
    • Learn: Pros and Cons of Digital Wallets
    • Learn : How Web 3.0 Wallets Are Redefining Digital Asset Security?
    • Learn: Open source: Buzzword or real security for crypto wallets?
    • TL;DR 👀
  • 🌕New & Rising Protocols
    • Binance
    • NEAR
    • Solana
    • Fantom
    • Polygon
    • Cardano
    • Polkadot
    • Cosmos
    • Harmony
    • Cronos
    • Optimism
    • Terra
    • Who Will Win the L1 Wars?
    • Learn: New Layer 1 Blockchains Are Expanding the DeFi Ecosystem But No Eth Killers Yet
    • Learn: Is an Increased Focus on Layer-2 Scaling and ZK Technology Justified?
    • Learn: What Are the Stakes in the SEC vs. Ripple Case?
    • Learn: What is The Graph, and how does it work?
    • TL;DR 👀
  • 📈Decentralized Finance (DeFi)
    • CEX vs DEX
    • CeFi vs DeFi
    • Algorithmic Stablecoins
    • Airdrop
    • Liquidity Pool
    • Impermanent Loss
    • Swapping
    • Wrapped Token
    • Arbitrage Opportunities
    • Staking
    • Yield Farming
    • Total Value Locked (TVL)
    • Gas Fees
    • Lending & Borrowing
    • Useful Tools
    • Activity: Uniswap & Pancake Swap
    • Learn: Automated Market Makers (AMMs) in DeFi
    • Learn: Crypto Moving towards ESG: What Is Regenerative Finance (ReFi)
    • Learn: What Is dYdX? Understanding the Decentralized Crypto Exchange
    • Learn: It's A Wrap - DeFi in 2022
    • Learn: Why DeFi should expect more hacks this year?
    • Learn: The Security Challenges of DeFi
    • Learn: The Promising Future of Decentralized Social Media on Web 3.0
    • Learn: Can CBDCs, Tokenized Deposits, Stablecoins and DeFi Coexist?
    • Learn: The Increasing Popularity of DeFi and Its Potential to Disrupt Traditional Finance
    • Learn: The future of DeFi is ReFi
    • Learn: DeFi aggregation
    • TL;DR 👀
  • 🙈Non-Fungible Token (NFT)
    • What are NFTs?
    • Case Study
    • Storage
    • Who are the Players?
    • NFT Marketplace
    • NFT Useful Resources
    • Activity: Mint Your Own NFT
    • Learn: How You Can Prevent Hackers From Stealing Your NFTs?
    • Learn: What Is an NFT Floor Price?
    • Learn: Should Bored Ape buyers be legally entitled to refunds?
    • Learn: China’s view of NFTs different from rest of the world’s
    • Learn: NFTs IRL: How Digital Collectibles Are Forging Offline Experiences
    • Learn: How NFT Brands Can Cut Through The Noise
    • Learn: How Web3 disrupts the music sector?
    • Learn: Unlockable content in NFTs
    • Learn: Why Meta Matters in NFTs?
    • Learn: Should NFT Marketplaces Become Centralized?
    • Learn: Hermès vs. MetaBirkins: The NFT Case That Could Have Major Trademark and Artistic Consequence
    • Learn: What are phygital NFTs, and how do they work?
    • Learn: What is NFT ticketing and how does it work?
    • Learn: Why Solana NFT marketplace is seeing less active users?
    • Learn: NFTs and Intellectual Property
    • Learn: How AI Is Changing Artistic Creation and Challenging IP Laws?
    • Learn: The Future of NFTs: Exploring Dynamic NFTs and Their Versatile Use Cases
    • Learn: NFTs in the event and ticketing industry
    • Learn: What is NFT rarity, and how to calculate it?
    • Learn: What happens to your NFTs when you die?
    • Learn: Dogecoin-Like Spike in Milady NFTs After Elon Musk’s Tweet, But Will It Last?
    • Learn: What are NFT royalties, and how do they work?
    • Learn: How developers aim to store crypto inside NFTs?
    • Learn: Generative Art NFTs: What Are They & Why Are They So Popular?
    • TL;DR 👀
  • 💗Metaverse
    • What is the Metaverse?
    • Metaverse Economy
    • Metaverse Companies
    • GameFi
    • Learn: Are We in the Metaverse Yet?
    • Learn: Can the Metaverse exist without blockchain?
    • Learn: Can the Metaverse Facilitate Sustainable Growth of Defi Systems?
    • Learn: What is the role of biometrics in the metaverse?
    • Learn: Can metaverse be the future court?
    • Learn: Metaverse Fashion Is on the Rise, but for Whom?
    • Learn: Sustainability in the Metaverse: Challenges and Opportunities
    • Learn: How To Build A Responsible Metaverse?
    • Learn: What is a VTuber, and how do you become one?
    • Learn: How proof-of-identity provides human experiences?
    • Learn: The “Metaverse” Next Frontier for Business: Impact And Challenges
    • Learn: The 5 Biggest Misconceptions About The Metaverse
    • Learn: Why culture and ownership are critical to the metaverse?
    • TL;DR 👀
  • 👾Career in Web3 (coming soon)
    • Developers
    • Moderators
    • Community Managers
    • UI/ UX Designers
    • Digital Fashion Designers
  • 🌱Sustainability (Coming Soon)
    • Industry Effort
    • Co-author
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  1. Metaverse

Learn: Why culture and ownership are critical to the metaverse?

As stores of our identity, customs and creativity, NFTs will drive Web3 adoption and become central to the new digital economy, writes Yat Siu, executive chairman of Animoca Brands.

PreviousLearn: The 5 Biggest Misconceptions About The MetaverseNextTL;DR 👀

Last updated 1 year ago

“History never repeats itself, but the Kaleidoscopic combinations of the pictured present often seem to be constructed out of the broken fragments of antique legends.” —Mark Twain

Bitcoin is now having its own NFT moment, some five years after the Ethereum network and CryptoKitties brought widespread attention to NFTs and sparked a revolution in digital ownership. Ordinal Inscriptions, which are assets “inscribed” on the lowest denomination of a Bitcoin (BTC), are, effectively, for Bitcoin.

Just as strong interest in NFTs starting back in 2017, demand for Ordinals today is causing disruptions on the Bitcoin network, leading to about the value and applications of Ordinals.

Disruptive change forces innovation, and the introduction of Ordinals is reason for enthusiasm for the future of Bitcoin and all crypto. This disruption is leading to new innovations and , whether in marketplaces, games or other aspects of the decentralized world.

Put simply, the Ordinals introduced by Bitcoin finally give the most valuable crypto community (by market cap) something it needed to expand meaningfully: a way to store not just digital value but also digital culture.

The interplay of has been very close to my heart for years; I have often remarked that while Bitcoins are stores of value, NFTs are stores of culture. I am now forced to revise that statement since Ordinals allow denominations of Bitcoin to serve as stores of culture.

If you’re not familiar with Ordinals, read all about them in . In this essay, I would like to focus on the importance of culture to global economies and, by extension, to digital economies as well. By digital economies I mean not only metaverses and virtual worlds but also layer-1 networks such as Ethereum and, more recently, Bitcoin.

Culture, ownership, network effects, business creation

Culture — the expressions of our collective identity, creativity and customs — is an often-underestimated force in both the metaverse and the real world. Culture is a and represents an important segment of any economy. Culture is also intrinsically connected to ownership, for example as in the attribution and commercialization of intellectual property.

Ownership over something gives us corresponding economic freedom over it: the ability to transact and use it as you please. Ownership also allows us to partake in the network effects related to that ownership.

Consider all the businesses that exist solely due to our ability to own things. Take cars, for example. The network of businesses connected to car ownership — such as insurance, spare parts, sound systems, rentals and ride-sharing services — forms an ecosystem much greater, more valuable and farther-reaching than the automotive industry itself.

As a result of these network effects, the utility of owning a thing like a car becomes significantly enhanced, making the experience of car ownership more valuable. Each new business or service that attaches itself to something we own adds to that thing’s network effect.

Another powerful effect of ownership is that owning something can contribute to our identity — to culture — in a manner that is distinct from the object’s utility. Take your fashion choices, the vehicle you drive, a family heirloom or your wedding ring — the ownership of such items can carry deep embedded meanings that are shared only within a small community with no immediate economic expectations, but that nonetheless shape our entire identity, legacy and story.

Stores of digital culture in the open metaverse

NFTs serve as stores of digital culture because Web3 enables true digital ownership, allowing digital items to carry personal meaning. Given that and that for many of us, our digital existence is potentially as valuable and important as our physical existence, the discussion of culture and digital ownership in the metaverse is incredibly relevant.

A lot of people raise their eyebrows at NFTs and Web3 because of the prices they see on the higher end of the spectrum. They look at a Bored Ape (Bored Ape Yacht Club is a project of Yuga Labs, one of the portfolio companies of Animoca Brands, which also includes Forkast Labs) and say, “How can that be priced higher than my Birkin bag, which is an actual real item I can use in the physical world?” But that is an error in thinking. People don’t buy a hugely expensive Birkin bag just to put stuff in it. Pure utility is not the point. The value of a Birkin bag comes from the network effect generated by all the people who consider Birkin bags to contribute value to their social identity. The bag’s pure utility is a distant second. It’s about owning a story and being part of a culture and community that become integrated with one’s identity.

The same is true for digital culture in the open metaverse today: Ownership, identity, and the related network effects are often more important considerations than pure utility. In a sense, social identity has emerged as a new utility for digital items, just as occurs in the real world for physical items like Birkin bags or high-end fashion in general.

Culture TVL: Powering the real and virtual economies

In the real world, culture is already a major economic contributor, both in terms of job creation as well as consumption and acquisition of goods. Every day all of us interact with aspects of culture in various manners — emotional, economic utilitarian or otherwise — and these interactions drive a significant portion of the economy.

Without culture, there would be no entertainment. Without entertainment, there would be no TVs or cinemas or video games. Without video games (and digital culture in general) there would be no PlayStation, Xbox, Nintendo or gaming PCs. Without advances in game tech, we would probably not have the graphical processing technology that has empowered other industries. Display technology is a good example of how cultural demand gave us better tech: In a few years, we went from cumbersome and limiting CRT displays to flat/curved panels and the miniaturized wonders found in mobile phones.

Think of an aspect of culture and imagine if utility was its main driver of consumption — in many cases that just doesn’t work. We could choose clothing that only serves the purpose of covering our bodies, and yet that utility is a distant second to the cultural aspects of fashion. People make fashion choices based on who they are and who they want to be. This individual need for expression explains why there are so many fashion choices.

Cultural expression isn’t limited to fashion; it translates into other real-world purchases, whether it’s cars, property, jewelry or even “skin-deep” purchases such as tattoos and piercings.

Because culture is already a highly significant real-world driver of the economy, creativity and innovation, it has a similar impact on the open metaverse, which is forming around us every day thanks to the proliferation of Web3.

NFTs store digital culture and, given the economic power of culture, it is easy to see why NFTs are driving the adoption of Web3 in their myriad forms, including avatars, video games, education, music and many other industries. Culture is a key pillar of the economic growth and sustainability of the new virtual economies being created in the open metaverse.

The open metaverse

As Web3 continues to become more established, more popular and easier to access, the all-important impact of culture will manifest itself in ever more powerful ways in the open metaverse, driving demand, consumption and utility as we truly enter the age of digital ownership.

This article first appeared in Forkast, written by Yat Siu

This evolution of digital items is perhaps the most fascinating aspect of the open metaverse, which is based on developing new virtual economies within the new ownership framework enabled by Web3. Consider that users all over the world already spend billions of dollars on virtual goods for Web2 video games and virtual worlds, where their purchased items are not actually owned but merely licensed. Skins and cosmetic items have no specific utility but they enable users to express their culture and identity. That allows these items to generate tens of billions of dollars a year and, according to a , the virtual goods market is estimated to grow to more than US$200 billion by 2028.

In the United States, one of the world’s major exporters of culture, . In 2021, the arts and culture made up more than US$1 trillion of the U.S. economy, growing more rapidly than other sectors. This should not be surprising, because culture drives consumption and therefore affects almost all aspects of trade and retail.

To put it in crypto terms, culture in the real world represents one of the major TVL, or , of any economy. The same phenomenon of culture as TVL is already occurring in virtual worlds: The purchase of skins or cosmetic items in your favorite games is the metaverse equivalent of fashion purchases in the real world. Culture is the driver.

Unlike its mainstream cousin, which emphasizes interface technologies to access proprietary “walled garden” experiences, the open metaverse is based on ownership and culture. Despite the crypto chill and various macroeconomic woes, the open metaverse remains an incredibly exciting space. , which is remarkable in itself but even more so for an industry that was supposed to be “dead.”

Perhaps the most notable fact of all is that digital stores of culture (NFTs) generated over in 2022 and that 90% or more of that value was

But that’s only the tip of the iceberg, because we’re still in the early days of property rights for goods in the virtual world. According to McKinsey research, the metaverse has the potential to generate in value by 2030.

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non-fungible tokens
overloaded the Ethereum network
spirited debate
network effects
NFTs and culture
this primer
key contributor to the development of prosperous societies
we spend a significant portion of our lives online
report by Credence Research
culture — including the arts — contributes significant value to GDP
total value locked
NFT sales totaled US$4.7 billion in Q1 2023
$24 billion
shared with their creators and participants
US$5 trillion