Web3 and Blockchain

01 Blockchain

Introduction to Blockchain

Blockchain is a type of database where information is stored in groups called blocks. Each block is linked to the one before it using a digital fingerprint called a hash, which forms a chain. Copies of the chain are kept by thousands of computers (called nodes) around the world, and new blocks are added only when the network agrees they are valid.

A complete overview

Definition

What is inside a block

Why you cannot quietly change the past

If someone edits Block 2, its hash changes. Block 3 still points to the old hash, so the link no longer matches and every other node rejects the change. To hide it, the attacker would have to redo Block 2, Block 3, and every block after, faster than the whole honest network. That is why old records are practically permanent.

Main properties of a Blockchain

Types of Blockchains

02 Key terms

Definitions you need to know

Node

A computer that stores a copy of the blockchain and follows its rules.

Hash

A fixed length fingerprint produced from any data by a hash function such as SHA 256.

Wallet

An app or device that holds your keys. It does not store coins; it proves you control them.

Public key and address

Like an account number you can share so others can send you assets.

Private key

A secret code that signs transactions. Whoever has it controls the assets. Never share it.

Seed phrase

12 or 24 words that can recreate your wallet. Treat it like the master key.

Miner and validator

Participants who check transactions and create new blocks, and who are rewarded for it.

Consensus

The method nodes use to agree on which blocks are valid.

Smart contract

A program stored on a blockchain that runs automatically when its conditions are met.

Gas fee

The fee paid to the network for processing a transaction or running a contract.

Coin and token

A coin runs on its own blockchain, like BTC or ETH. A token is built on another blockchain, like USDT.

NFT

A Non Fungible Token: a unique digital item with provable ownership.

DeFi

Decentralized Finance: lending, trading, and saving through smart contracts.

DAO

Decentralized Autonomous Organization: a group run by rules in code and votes of token holders.

dApp

A decentralized application whose back end runs on a blockchain.

Oracle

A service that brings real world data, like prices, into smart contracts.

Layer 2

A network built on top of a blockchain to make transactions faster and cheaper.

Fork

A change to the rules of a blockchain, or a split into two chains.

Mainnet and testnet

The real network with real value, and a practice network with free test coins.

03 How it works

How Blockchain works

Here is what happens when Alice sends 2 coins to Bob.

1. Alice starts a transaction

   Her wallet creates a message: “send 2 coins to Bob”. She signs it with her private key, which proves it is really from her without revealing the key.

2. The transaction is broadcast

   It is sent to the network and waits in a pool of pending transactions, often called the mempool.

3. Nodes verify it

   Nodes check the signature and confirm Alice has enough balance and has not already spent the coins.

4. A block is built

   A miner or validator picks pending transactions and groups them into a new block, adding the previous block’s hash.

5. The network reaches consensus

   Under Proof of Work, miners compete to solve a puzzle. Under Proof of Stake, a validator is chosen based on its stake and others attest that the block is valid.

6. The block is added

   All nodes add the block to their copy of the chain. The transaction is now recorded.

7. Confirmations build up

   Each new block on top makes the change harder to reverse. After a few confirmations, Bob can treat the payment as final.

Digital signatures: how keys work

Consensus mechanisms

04 Web3

Introduction to Web3

Web3 is the idea of a decentralized internet. Instead of large companies owning your account, data, and content, you control them yourself through a wallet, and applications run on open blockchains. In Web3, ownership and rules are written in code, and users can be owners as well as customers.

Web1 vs Web2 vs Web3

Core ideas of Web3

The Web3 stack

1. BlockchainBase layer: Ethereum, Solana, and others record transactions.
2. Layer 2Faster and cheaper networks on top, like rollups.
3. StorageIPFS, Arweave, and Filecoin hold files off the chain.
4. Data and oraclesTools such as The Graph and Chainlink read and feed data.
5. Wallets and identityMetaMask, hardware wallets, and ENS names.
6. dAppsThe apps people use: exchanges, games, and marketplaces.

How a Web3 app works

1. ConnectYou connect a wallet instead of making an account.
2. RequestThe app asks to read data or send a transaction.
3. SignYou approve and sign it in your wallet.
4. ExecuteA smart contract on the blockchain runs the action.
5. UpdateThe app shows the new state, like your new balance.

05 Roles

Roles of Blockchain and Web3

People and roles inside the network

The role Blockchain plays in the real world

06 History

The history of Blockchain and Web3

1. 1991

   Timestamping documents

   Stuart Haber and W. Scott Stornetta describe a way to link timestamped documents with cryptography so that they cannot be changed secretly. This is the seed of the blockchain idea.

2. 1990s

   Digital cash experiments

   Researchers such as David Chaum work on private digital money, and the cypherpunk community explores cryptography for freedom and privacy.

3. 1998 and 2004

   Bit gold and reusable proofs

   Nick Szabo proposes bit gold, and Hal Finney builds a reusable proof of work system. Both are important steps toward Bitcoin.

4. 2008

   The Bitcoin whitepaper

   An author using the name Satoshi Nakamoto publishes “Bitcoin: A Peer to Peer Electronic Cash System” in October 2008.

5. 2009

   The genesis block

   The Bitcoin network starts in January 2009 with the first block, called the genesis block.

6. 2010

   The first real purchase

   A programmer pays 10,000 Bitcoin for two pizzas, a famous early example of crypto used as money. It is remembered each year as Bitcoin Pizza Day.

7. 2011 to 2014

   Altcoins appear

   Projects like Litecoin and Ripple launch, and exchanges grow. The term “Web3” is coined by Ethereum co founder Gavin Wood around 2014.

8. 2013 to 2015

   Ethereum and smart contracts

   Vitalik Buterin proposes Ethereum in 2013, and it launches in 2015, allowing anyone to run programs on a blockchain.

9. 2016

   The DAO attack

   A bug in an early DAO lets an attacker take a large amount of funds. It teaches the industry how important code security is.

10. 2017

    ICO boom and CryptoKitties

    Thousands of projects raise money by selling tokens, and the game CryptoKitties shows early NFTs and network congestion.

11. 2020

    DeFi summer

    Lending, trading, and yield platforms grow rapidly, bringing financial services to smart contracts.

12. 2021

    NFT and Web3 boom

    NFTs, play to earn games, and Web3 become mainstream topics, with record trading and a lot of hype.

13. 2022

    The Merge and market shocks

    Ethereum moves from Proof of Work to Proof of Stake in September 2022, cutting its energy use sharply. The same year, several large platforms collapse, including FTX, and trust takes a hit.

14. 2023 to 2024

    Layer 2 growth and Bitcoin ETFs

    Rollups make Ethereum cheaper to use. In January 2024 spot Bitcoin exchange traded funds are approved in the United States, and Bitcoin has its halving in April 2024.

15. 2025 onward

    Stablecoins, regulation, and tokenization

    Governments write clearer rules, stablecoin use grows, and traditional finance explores tokenizing real world assets such as bonds and funds.

07 Technology deep dive

Technology behind it

Smart contracts

A smart contract is code stored on a blockchain. When a condition is met, it runs exactly as written and no one can stop or secretly change it. Ethereum popularized them using the Solidity language and the Ethereum Virtual Machine (EVM). A simple example: “If Bob pays 1 token, send him the digital ticket.”

Layer 1 and Layer 2

Major Blockchains compared

Token standards

Wallets and keys

Gas fees

Every action on a blockchain uses computing and storage, so users pay a fee. The fee rises when the network is busy because users compete for limited space in each block. Layer 2 networks and faster chains help keep fees low.

Decentralized storage

Storing large files on a blockchain is costly, so Web3 apps keep only a small reference (a hash) on chain and store the file in systems like IPFS, Arweave, or Filecoin. The hash proves the file has not been changed.

08 Uses

Real world use cases

Benefits and challenges

09 Safety

Risks, scams, and staying safe

Safety checklist

1. BackupWrite your seed phrase on paper and store it offline.
2. SeparateKeep a small wallet for trying apps and a safe wallet for savings.
3. VerifyCheck links, contract addresses, and project details.
4. TestSend a small amount first before large transfers.
5. SecureUse strong passwords, two factor login, and a hardware wallet for larger sums.

Rules and taxes

Laws about crypto differ by country and change often. In India, for example, income from virtual digital assets is taxed and some transactions attract TDS. Always check the latest official rules and talk to a qualified tax professional before you trade or invest.

Environmental impact

Proof of Work networks use a lot of electricity. Proof of Stake uses far less. Ethereum’s move to Proof of Stake in 2022 reduced its energy use dramatically.

10 Build and learn

How to start in Web3 and blockchain

If you are a user

1. Learn the basics first

   Understand wallets, keys, and fees before you put in money.

2. Create a wallet

   Install a trusted wallet and write down the seed phrase offline.

3. Practice on a testnet

   Use free test coins to send, swap, and try apps with no risk.

4. Start small and stay careful

   Use reputable platforms, test with small amounts, and never rush.

If you are a developer

A simple smart contract (Solidity)

/* SPDX-License-Identifier: MIT */
pragma solidity ^0.8.20;

contract SimpleStorage {
    uint256 private number;

    function store(uint256 newNumber) public {
        number = newNumber;
    }

    function retrieve() public view returns (uint256) {
        return number;
    }
}

This contract stores one number on the blockchain. Anyone can call store to change it and retrieve to read it. You can try it for free in the Remix online editor on a test network.

Build a tiny Blockchain in Python

import hashlib, time

class Block:
    def __init__(self, index, data, prev_hash):
        self.index = index
        self.time = time.time()
        self.data = data
        self.prev_hash = prev_hash
        self.hash = self.make_hash()

    def make_hash(self):
        text = f"{self.index}{self.time}{self.data}{self.prev_hash}"
        return hashlib.sha256(text.encode()).hexdigest()

chain = [Block(0, "Genesis block", "0")]
chain.append(Block(1, "Alice pays Bob 5", chain[-1].hash))
chain.append(Block(2, "Bob pays Carol 2", chain[-1].hash))

for b in chain:
    print(b.index, b.hash[:12], "prev:", b.prev_hash[:12])

Each block stores the previous block’s hash. Change any data and the hashes stop matching. This is the heart of a blockchain, without the network, the consensus, and the security of a real one.

Learning roadmap

1. Month 1Blockchain basics, wallets, and hashing. Use a testnet.
2. Month 2Learn JavaScript and Python basics.
3. Month 3Learn Solidity and deploy a contract with Remix.
4. Month 4Use Hardhat or Foundry, and write tests.
5. Month 5Build a dApp front end that connects to a wallet.
6. Month 6Learn security basics and publish a portfolio project.

Careers in the field

11 FAQ

Frequently asked questions