In 2008, Satoshi Nakamoto released the Bitcoin white paper, which completely overturned our concept of digital transactions, and for the first time proposed a secure online transaction model that does not require a trusted intermediary. Satoshi Nakamoto wrote: "Electronic payment systems need to be based on cryptographic proof, not trust."
After the invention of smart contracts, the decentralized Internet model entered the public eye. If Bitcoin enables peer-to-peer payments, smart contracts expand the concept of programmable protocols to enable more advanced use cases such as insurance, gaming, identity management, and supply chains. Smart contract users can interact directly and securely, thus creating a A new type of Internet Web3 that is more fair, transparent and based on encrypted facts, a secure system run by society.
Web3 reproduces the decentralized infrastructure of the first version of the Internet (ie, Web 1.0). Web 1.0 is characterized by users setting up their own blog sites and RSS feeds. On this basis, Web3 also combines the rich interactive experience of Web 2.0, such as social media platforms. The combination of Web 1.0 and Web 2.0 forms the digital ecology of Web3, in which users can truly own their own data, and transactions are guaranteed by encryption technology. Users no longer need to trust brand endorsements, but rely on certain software code logic to strictly enforce the agreement.
The following are the key building blocks of the Web3 technology stack:
blockchain
Blockchain is a highly secure and decentralized network where people can store data, exchange value, and record transaction activities in a shared ledger that is not controlled by any centralized entity. The blockchain network is the backbone of Web3, providing a secure execution layer in which encrypted assets can be created, issued and traded, and programmable smart contracts can be developed. Blockchain is the settlement layer and base layer of Web3.
encrypted assets
Encrypted assets are digital tokens that utilize a decentralized and tamper-proof blockchain network environment to fully guarantee the security of transactions. Encrypted assets are the native currency of Web3 decentralized applications (dApps), and can also be used to pay for Web3 services and participate in Web3 governance.
Before the advent of blockchain technology, tokens often referred to units of value used to purchase and trade products or services, such as passes for highway tollbooths, tickets for amusement parks, and game tokens. In these early use cases, service providers issue tokens that allow users to directly pay for services in advance.
The tokens in Web3 applications are also value units issued to Web3 content creators, but the difference is that these value units exist in a digital and programmable form, and their functions go far beyond value exchange. In Web3, a token can represent an investment in a protocol, project or blockchain. Tokens can also be used to pay for or guarantee services in this project or protocol. In addition, the pass can also allow the holder to participate in the governance of the agreement or project.
Smart Contracts and Decentralized Applications (dApps)
A smart contract is an immutable program on the blockchain that uses the code logic of "if x is true, then execute y" to automatically execute transactions. Programmable smart contracts can create decentralized applications, or "dApps." Decentralized applications are protocols based on the encryption economy, laying the foundation for the development of Web3 and delivering Web3 to users.
Unlike Web 2.0 applications and Web 1.0 static HTML pages, dApps are not run by any one person or organization, but by a decentralized blockchain network. Decentralized applications may seem simple, but they can create very complex automated systems such as peer-to-peer financial services (DeFi), data-driven insurance products, and P2E games.
Oracle
For smart contracts to realize their full potential, they must be able to interact with data and systems outside of the blockchain network. The oracle can connect the blockchain to real-world data and systems, and provide the key infrastructure to create an interoperable and unified Web3 ecosystem.
The Chainlink oracle network can not only transmit financial market data for DeFi applications, but also perform a series of secure off-chain calculations, such as verifiable random numbers and decentralized execution, to ultimately realize dynamic NFTs and highly automated dApps. In addition, with the continuous development of the Cross-chain Interoperability Protocol (CCIP), the oracle network will connect various fast-growing blockchain ecosystems and L2 expansion solutions to enable them to interact safely.
The oracle machine expands the Web3 technology stack, transmits off-chain data and services to promote smart contract innovation; realizes cross-chain interoperability to ensure seamless connection of various blockchains. Chainlink's oracle machine infrastructure also provides an entrance for Web 2.0 backend systems to enter the Web3 world, providing an abstraction layer for traditional systems, and easily accessing any public and private chains. Ultimately, oracles will bring decentralized computing and cryptographic guarantees to legacy systems, and build a bridge between Web 2.0 and Web3.
