11 . Coin vs Token:
Consider tokens to be the equivalent of using Uber services to get around. You do not have to buy a car because it is either too expensive or you believe you do not move around enough to warrant purchasing one. Uber provides the driver while also indirectly providing the car and fuel. You only pay for the service.
Tokens do not have a blockchain backing them up. They are backed by projects which utilize the blockchain network's security and other services. Tokens are distributed as a reward for using a product, for voting on governance, or as a form of stock in a company (part ownership). For
example, ERC20 tokens, BSC20 tokens, and TRC20 tokens.
Coins are backed by blockchain networks. They are intended to be used as means of exchange or store of value. Examples of Bitcoin, Litecoin, Bitcoin Cash, etc.
12 . Soft fork:
A fork is a modification to a blockchain network protocol that occurs either through consensus or as a result of disagreement among the mining community as to how the protocol should proceed.
The network may need to scale, the block size increased, miners’ reward re-evaluated, etc., in which case a fork may be proposed. Old blocks are left behind and the fresh blocks proceed at the point of a fork.
A soft fork, as the name implies, does not make a drastic change to the blockchain. For instance, a change in the block size of a blockchain. Miners do not necessarily need to make drastic changes to their nodes. In this case, miners with old software(older nodes) can participate in the network and add new blocks as long as they adhere to the new rules of the network.
13 . Hard fork:
A hard fork results in a drastic change to a network protocol. The new change is totally incompatible with the previous network version. Nodes that do not update to the new version will not be able to process transactions or push new blocks to the blockchain. This can be an upgrade or improvement in the protocol or the creation of an entirely new blockchain protocol.
In the instance where a new blockchain is created via an agreement by the community, all participants agree on the change, leave the old chain behind and follow the new rules.
A disagreement in the community about an upgrade or a decision can also result in a fork into two completely different and incompatible blockchains with a different coin or token. In this case, participants who follow the new blockchain are allocated an equal number of tokens as they had in the previous network protocol.
If a participant decides to follow the new blockchain but still continues mining on the old chain, he gets two different tokens of the same value: from the old and the new network
14 . DAO:
A decentralized Autonomous Organization is a community-owned organization whose regulations are determined through smart contracts (codes). Members and intending members of a DAO can purchase tokens from the organizations, and some of these tokens are also traded publicly on exchanges.
Voting is used to make decisions since it is autonomous. Voting power is frequently divided among users based on the tokens they possess, and the voting method for making decisions is published on the chain. An individual with 4,000 tokens has 4x voting power as someone with 1,000 tokens.
The majority of DAOs have internal treasuries that nobody is allowed to access without the group's consent. They are completely autonomous and transparent, and because they take place on a blockchain network, everybody can see the transactions.
Once implemented, smart contract encoding rules can only be altered by vote.
DAOs are fantastic since everything is visible to everyone and they are transparent. They may also include individuals from other countries who may not be acquainted with one another personally but who have similar objectives.
For instance, a VC DAO may be made up of individuals who band together to invest in Web3 initiatives. They decide which initiatives to fund, how long to hold onto them, and how to divide earnings.
DAOs' security is a top concern. Because the codes are available to the public, hackers might exploit them.
15 . A decentralized exchange(Dex) is a cryptocurrency trading platform that enables you to exchange your tokens without the need for a middleman.
DExes employ automated market makers (AMM), an algorithm that leverages the law of supply and demand to determine and calculate the values of the tokens to be traded by their availability in the liquidity pool, as opposed to centralized exchanges that use order books to match buyers and sellers. The trades are executed using smart contracts
To trade on a dex, you must have a non-custodial wallet such as Trust, MetaMask, or SafePal.
DExes help you maintain your anonymity because there is no KYC requirement. You also have custody of your tokens, unlike centralized exchanges.
Because the source code is open source, anyone can examine it and notify the community if there are any vulnerabilities. Hackers can also identify and exploit flaws. Exchanges of cryptocurrency can only be made between coins on the same blockchain.
DExes have some disadvantages. One of the cons is low liquidity.
Also, there is no customer service, so you are on your own if you made a bad trade or were duped into buying the wrong token.
16 . Soulbound:
It proposes that Soulbounds can serve as the credential we use in daily life as we lay the groundwork for a fully decentralized society (DeSoc). Soulbounds, like NFTs, are non-fungible (they cannot be swapped for another token), but unlike NFTs, Soulbounds cannot be transferred.
It represents a person's identity.
While NFTs can be purchased or sold, Soulbounds are not intended to be purchased or sold. Consider Soulbound as an NFT that contains your medical records, school records, ID number, age, and so on. You can use this to cast your vote during an election.
Soulbounds are tied to your wallet (Soul) for the duration of the wallet's life and are issued by wallets or accounts known as 'Souls.'
Soulbounds can be given to executives by a company. The relationship between a company and an individual can be proven because it can be verified on a blockchain.
Soulbounds can be used to verify that you attended an event or completed a course. It fosters trust while safeguarding your privacy.
17 . ERC:
Ethereum Request for Comment(ERC) is a technical guideline and standard for builders on the Ethereum network. This standard is set either for the creation and issuance of tokens or to facilitate interaction between smart contracts and applications
Ethereum Improvement Protocol, EIP, submitted is reviewed and analyzed by the core Ethereum development. Once deemed important and approved, it is implemented as an ERC standard.
Popular ERC standards are
ERC20: this is the most popular standard for creating fungible tokens(a fungible token is a token that can be swapped for another token on the same blockchain).
ERC1155: multi-token standard for fungible, semi-fungible, non-fungible tokens.
ERC223: European Research Council Standard. Though not widely accepted, this standard proposes to address the issue of tokens being lost forever when a user sends tokens to the wrong smart contract. It notifies the user and reverses the transaction. It is backward-compatible with ERC20.
ERC777 : to build extra functionality on top of the ERC20 such as improved privacy and the recovery of tokens lost due to losing your private keys.
Other proposed ERC tokens are ERC865, ERC884, ERC165 and ERC621.
18 . Crypto staking:
This is one of the ways to earn passive income in crypto. It allows you earn cryptocurrency as a reward for holding.
In most cases, coins /tokens are locked away and cannot be withdrawn for a specified period of time which could be days and even months. Some staking platforms are flexible and you can withdraw your tokens anytime but stop earning the moment they are withdrawn.
Staking is done using crypto wallets through special dApps(decentralized applications). Centralized exchanges such as Binance and Kucoin also offer staking features. Since your tokens are in the custody of CEXes, staking by can be done with the click of a button. All you need is to have the number of tokens you want to stake in your custodial wallet and the exchanges will take care of the rest. Most crypto projects use staking to incentivize holding and discourage massive sell-off.
In a Proof of Stake network, validators stake a certain number of tokens in order to qualify to mine a cryptocurrency.
19 . Coin Age: defines how long the coin has to remain unspent for it to become eligible to be considered stake-worthy.
Validators in a PoS system are granted the power to create a block based on the coin age of their stake. The coin age is derived by multiplying the number of coins at stake by the number of days they have remained unspent(idle days). E.g. The coin age of 10 ETHs that have remained idle for 40 days would be 400-ETH-days(10 x 40 = 400).
The larger and more idle the validators' stake, the greater their chances of selection. A validator with a coin age of 300 has a higher chance of mining a block than 200.
Once a validator mines a block, the coin age is reset to 0 to allow an equal playing field for all.
20 . Web3 vs Blockchain:
Web3 is the coverage term for the Blockchain ecosystem. It is the next generation of the web/the internet which services and applications will be built. Web3 has 3 major characteristics. They are
Decentralized: not hosted under a single authority
Permissionless and open: you do not need the permission of a third party or a centralized authority to participate, and, anyone can join.
Trustless: you're in control of your data. No KYC is required.
To put it simply:
Signup for web2: Your name, email address, residential address, date of birth, age, phone number, SSN, and mother's maiden name, etc.
Web3: connect your wallet.
BLOCKCHAIN: the technology that powers the Web3 ecosystem. Read What is Blockchain to learn more