Tokenization, DAO, Memecoin: The amount of new terms minted related to crypto is growing exponentially. Learn what they mean.
By 2021, the digital currency universe experienced accelerated growth, with many trends emerging and not-so-new ones going strong. We saw Bitcoin and cryptocurrencies dip into the mainstream as trends such as NFTs, Blockchain gaming, and the metaverse flourished, concepts that expanded to reach the global tech sphere.
However, this rapid technological evolution comes with a range of new terms that we are often unfamiliar with and can initially be complex to understand. This post presents a brief guide to some of the popular concepts that will likely shape the crypto space this 2022.
One of the best ever SciFi writers, Neal Stephenson, coined the term "Metaverse" inside a fantastic novel named SnowCrash, published in 1992. It refers to the convergence between physical and virtual worlds in an online space. This recent development leverages virtual reality headsets, augmented reality, and NFT to offer users virtual spaces for social interaction, commerce, entertainment, and other things.
While the concept has exploded following the renaming of Facebook to Meta, technologists are still trying to agree on the different versions of the metaverse and what it will entail in the future. Many people think that is the natural evolution of the Internet where 3D environments will replace today's websites, and digital assets will play a central role. Some financial experts predict that the metaverse will evolve into a multi-billion dollar industry.
NFT is a shorthand for non-fungible tokens. This notion refers to a non-exchangeable asset, such as a dollar, a Bitcoin, or a car tire. Instead, it is a scarce Blockchain-based digital asset comparable to collectible or limited nature objects, such as a baseball autographed by renowned athletes or a valuable work of art.
An NFT can represent any digital (or physical) object: a song, a photograph, a tweet, a video, a JPG, and even genetic code; the possibilities are almost endless. The critical thing to know is that this scarce token format works like a key that allows you to demonstrate ownership, but it is nothing more than a digital signature recorded on the Blockchain.
In this post, you can find some exciting considerations on this growing trend: How NFTs relate to intellectual property and its effects on creators.
The term tokenization refers to creating a digital token, specifically an NFT. People often use the concept to describe converting an object (physical or virtual) into a scarce digital asset on the Blockchain.
Tokenization can facilitate the registration, traceability, ownership, and certification of virtually any type of asset; it can be stocks, real estate, debt, bonds, copyrights, art, collectibles, and even food or agricultural and livestock products. This blockchain-enabled capability can also enable, for example, the fractional purchase of the property.
GameFi is the abbreviation for "Game Finance." It is a concept that refers to the mixing of games and decentralized finance (DeFi). This development gained popularity in 2021 as video games such as Axie Infinity took the crypto-sphere storm.
The term is intrinsically related to DeFi, a decentralized version of Blockchain-based financial services. GameFi encompasses various developments, such as NFTs and DAOs, to allow players to earn money while playing games or interacting with other users online. NFTs are a crucial ingredient in GameFi, as it makes it possible for players to maintain ownership within the game and monetize their activities within that space.
Play-To-Earn is the most popular game modality currently in the Blockchain gaming sphere. As its term implies ("Play-To-Earn"), the model allows players to earn money while having fun, primarily through NFTs and tokens native to the gaming platforms that users can lock in or dispose of as collateral to generate performance in a process widely known as staking. The various items in these games are tokenized, making it easy for users to exchange and trade them in online marketplaces, thus enabling profit generation. Check this list for the top 50 P2E games.
Similar to the metaverse concept, the notion of Web 3.0, or simply Web 3, has also attracted widespread attention in recent months. The word refers to what might be the Internet's next stage, which promises to be a decentralized version of websites using blockchain tech.
In theory, in Web 3, technology giants such as Google, Amazon, and Facebook will no longer have control of data, allowing web users to enjoy greater autonomy, freedom, and security. In addition, this development promises to provide cybernauts with greater interconnection between different social networking platforms. However, industry experts are still trying to agree on building this evolved version of the web and its possible implications.
Some significant personalities in the technology sphere shared a heated discussion: Jack Dorsey and Elon Musk triggered a controversial dispute over Web3 on Twitter.
DAO is the acronym for Decentralized Autonomous Organization. DAOs are groups of people on the Internet that organize themselves through the power of smart contracts and Blockchain. The DAO rules are coded (programmed) on the Blockchain.
DAOs exercise governance through tokens that allow members (or token holders) to vote to decide aspects such as structure or the implementation of internal changes. More recently, with the explosion of DeFi, this form of decentralized organization has started to become popular.
Today, there are many types of DAOs, with different purposes. Some specialize in collective investment of art, physical and digital items, such as PleasrDAO, but there is everything, and even Elon Musk's brother has one.
Memecoins or meme tokens refer to the same thing: digital currencies whose image bases on a joke or literally on a meme. Dogecoin (DOGE) is based on the famous meme of the Japanese Shiba Inu puppy dog and is perhaps the most popular meme cryptocurrency on the market. DOGE, Launched in 2013, arose as a parody intended to make crypto more accessible to those less experienced.
In 2021 we saw an explosion of memecoins and a slew of dog-themed tokens take over cryptocurrency. Coins inspired by puppies, memes, and Elon Musk, such as Shiba Inu (SHIB), Dogelon Mars (ELON), Floki Inu (FLOKI), emerged and tried to capitalize on the sudden commercial success of DOGE. While they grew explosively, these assets have proven highly volatile; but the memecoins trend does not yet seem ready to leave the crypto sphere.
People wildly use Altcoins in the digital currency ecosystem, especially in trading. The term is an acronym for "alternative coins." It refers to any crypto coin other than Bitcoin. In this sense, Ethereum is the most crucial altcoin in the adoption and market capitalization ecosystem. Many community enthusiasts often use the term to refer to lesser coins relative to their ranking by market capitalization.
2021 was the altcoin's year. Beyond Bitcoin, the digital currency market experienced significant growth, with many altcoins posting yields and investment returns higher than the leading cryptocurrency.
DApp is a contraction for "Decentralized App." The term refers to software apps in Blockchain technology or peer-to-peer (P2P) networks. Due to their decentralized nature, nobody can control these apps, as with well-known apps such as Uber or Instagram need a central authority to operate.
While they are not new, dApps seem to be becoming especially popular amidst the attention that Internet evolution developments such as NFTs, Blockchain gaming, the metaverse, and Web3 are getting. In light of these developments, some enthusiasts anticipate that, in the future, most of the applications we use today - such as Twitter - will be decentralized.