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Web3",[37],{"id":38,"data":39,"type":26,"version":25,"maxContentLevel":29,"pages":41},"25326966-b1a1-45b4-9d29-50d26ce683f4",{"type":26,"title":40},"The Evolution of Web3",[42,57,71,87],{"id":43,"data":44,"type":25,"maxContentLevel":29,"version":25,"reviews":48},"2a9815d6-401a-46ee-a8e0-2ed3964b3db8",{"type":25,"title":45,"markdownContent":46,"audioMediaId":47},"A whole new Web","If you’ve spent any time on the internet in the past few years, you will probably have come across a strange new vocabulary.\n\nNFTs. Blockchain. Ether. DeFi. Tokens. Smart contracts. HODLing.\n\nAnd of course – Bitcoin.\n\n\n ![Graph](image://83120fd3-79b0-465d-a5cd-64faca8c6c4a \"Web3 can seem baffling to outsiders\")\n\nThese are all crucial components of Web3. If you aren’t familiar with them, they can seem like baffling concepts. But Web3 may well represent a new chapter in the history of the internet. In fact, it may even represent an entirely new way to organize businesses, economies, and even whole societies.\n\n","d045fe80-7760-4db0-b3d5-c02b7f7cfe1c",[49],{"id":50,"data":51,"type":52,"version":25,"maxContentLevel":29},"32ccf64a-2086-4061-a8ed-74f2dcdec2f5",{"type":52,"reviewType":21,"spacingBehaviour":25,"clozeQuestion":53,"clozeWords":55},11,[54],"Web3 is a new way to organize businesses, economies, and even whole societies.",[56],"societies",{"id":58,"data":59,"type":25,"maxContentLevel":29,"version":25,"reviews":63},"265bb410-1f03-46a9-bb04-df71bf9e5f20",{"type":25,"title":60,"markdownContent":61,"audioMediaId":62},"Why so complex?","Web3 and the crypto industry can seem hard to get your head around at first.\n\n ![Graph](image://ad0171c5-eaaf-456e-9f37-94f799142d4a \"Bitcoin - the first and biggest cryptocurrency\")\n\nThis is partly because the technology is a little complex. But it’s also because Web3 deals with things that are so fundamental to our societies that it is actually quite hard to conceive of doing them differently.\n\nFor example – money. It’s not often that we are required to think about what money actually *is*, at a conceptual level. Similarly, many of us think of traditional corporations, with centralized, top-down decision-making, as the only way to do business.\n\nTo understand the true value of Web3, we need to examine these fundamental building blocks of our society, and dare to imagine alternatives – because that is what people are building, right now, in the Web3 space. \n\n","e0fe7b52-08fb-4a70-8a87-225481b3a3a6",[64],{"id":65,"data":66,"type":52,"version":25,"maxContentLevel":29},"38c38d92-e46d-46e5-9548-32294948e652",{"type":52,"reviewType":21,"spacingBehaviour":25,"clozeQuestion":67,"clozeWords":69},[68],"The true value of Web3 can be hard to understand, because it requires us to think about the fundamental building blocks of society",[70],"fundamental building blocks",{"id":72,"data":73,"type":25,"maxContentLevel":29,"version":25,"reviews":77},"2dbfad60-44a3-418d-bba3-a690af15dae2",{"type":25,"title":74,"markdownContent":75,"audioMediaId":76},"Who’s afraid of crypto?","The terms ‘crypto’ and ‘Web3’ can summon strong feelings – often negative ones. Much of the media coverage of the space has focused on its less admirable sides. \n\n\n\n ![Graph](image://c06cfba4-e2bc-4624-86e7-789b6d5ad90e \"Some examples of NFTs\")\n\nSome of this is fair criticism. Tax avoidance, large-scale fraud, people losing their life-savings in ill-advised investments – Web3 has had more than its fair share of scandals. This new frontier of technology has developed at a pace that regulators could never keep up with – and bad actors have certainly taken advantage. \n\nBut the core value proposition of a decentralized Web remains incredibly strong. Those who ignore it due to early scandals may well be missing out on the most important technology in a generation.\n\n","4c342c9e-0cd9-40fd-a45e-6301a2d03bb6",[78],{"id":79,"data":80,"type":52,"version":25,"maxContentLevel":29},"7d45cba1-a7af-467a-b740-36072ebf644e",{"type":52,"reviewType":26,"spacingBehaviour":25,"binaryQuestion":81,"binaryCorrect":83,"binaryIncorrect":85},[82],"Which of these is an accurate description of the history of Web3 so far?",[84],"Full of scandals",[86],"Mostly uncontroversial",{"id":88,"data":89,"type":25,"maxContentLevel":29,"version":25},"66d15c01-48c1-4463-ae2c-119d8fd76484",{"type":25,"title":90,"markdownContent":91,"audioMediaId":92},"Why this matters","In the early days of the internet, it was routinely mocked as an impractical, dangerous place for oddballs and fraudsters.\n\nOver the past 30 years, it's become something that most of us use for many hours every single day.\n\nToday, the very same debate rages about Web3. Will crypto revolutionize the Web, and permanently alter the shape of our economies? Or will this experiment be remembered as a useless fad?\n\nOnly time will tell. But anyone with an interest in what tech will look like in the coming decades should take the time to really think about these questions.\n\n ![Graph](image://015a9356-66af-4f37-96d9-9319398f2d39 \"Michael 'Jelly' Jelen\")\n\nFew people are better positioned to guide us through this world than Michael \"Jelly\" Jelen. Jelly has authored blockchain policy and strategy for governments worldwide, contributed to top DeFi DAOs, and is a co-founder of Swan, a crypto fund focused on improving the efficiency of digital asset markets through arbitrage.\n\nThis pathway is written in collaboration between Kinnu and Jelly.\n\n","0a4fec6e-23a5-4fc2-aac2-b8e133d7784a",{"id":94,"data":95,"type":28,"maxContentLevel":29,"version":25,"orbs":98},"b8af915d-0b32-4151-8dd1-e77da2997473",{"type":28,"title":96,"tagline":97},"What is Web3?","A fad or the next technological revolution?",[99,202,251],{"id":100,"data":101,"type":26,"version":25,"maxContentLevel":29,"pages":103},"cdee052d-8962-4d92-86df-097c053a10a4",{"type":26,"title":102},"The Evolution of the Web",[104,128,155,169,187],{"id":105,"data":106,"type":25,"maxContentLevel":29,"version":25,"reviews":110},"5b267e69-c0e4-4a77-acfd-db5b17c32598",{"type":25,"title":107,"markdownContent":108,"audioMediaId":109},"What actually is the Web?","The internet is practically as integral to your life as the air we breathe. Every day we seamlessly interface with this world for banking, streaming, messaging and socializing. Have you ever wondered how that happens? \n\n ![Graph](image://61d10bfa-ea2f-43d9-b7fd-7cb9cb30dd50 \"A typical data center - this is where the Web lives\")\n\nAlthough it may feel like it, the internet isn’t magic. Every time you use it, you’re actually remotely requesting information from physical computers – servers. \n\nAt the moment, the vast majority of these servers live in chilled rooms – called ‘data centers’ – privately owned by a handful of big companies in Silicon Valley. The majority of stuff on the internet lives in these managed, centralized databases.\n\nHowever, the premise of Web3 is that our interactions on the internet we know and love will begin to happen in a permissionless, decentralized way. \n\nThis new Web would not exist on centralized servers, but on distributed networks – servers that effectively exist on many different computers around the world, with no one in control of them – thanks to blockchain technology.\n\n","a20d3ee4-2496-4240-9546-7b962b5ea1c6",[111,120],{"id":112,"data":113,"type":52,"version":25,"maxContentLevel":29},"05fba7da-3f26-4716-9984-f7f10bf9d0cd",{"type":52,"reviewType":26,"spacingBehaviour":25,"binaryQuestion":114,"binaryCorrect":116,"binaryIncorrect":118},[115],"What is the premise of Web3?",[117],"A technology enabling decentralized interactions on the web",[119],"A technology that will improve the speed of web interactions",{"id":121,"data":122,"type":52,"version":25,"maxContentLevel":29},"cecaf809-320d-4490-a205-ce2763cd8daa",{"type":52,"reviewType":21,"spacingBehaviour":25,"clozeQuestion":123,"clozeWords":125},[124],"The internet we know is based on centralized servers, but Web3 proposes a permissionless, decentralized way to store information.",[126,127],"permissionless","decentralized",{"id":129,"data":130,"type":25,"maxContentLevel":29,"version":25,"reviews":134},"30d54c5c-6138-41aa-b3b3-0bdfaa0c9509",{"type":25,"title":131,"markdownContent":132,"audioMediaId":133},"History of the Internet","But before we get into the nooks and crannies of Web3, it is important to look at how we got here. The World Wide Web was designed in 1989 by the British Scientist Tim Berners-Lee as a standard way of communicating between computers. While it was possible to send content before the Web, it had to be sent and received by the same application, or ‘protocol.’\n\n ![Graph](image://abd04c5a-df1a-45cd-9495-a8c03ce6df09 \"Tim Berners-Lee - father of the World Wide Web\")\n\nHowever, the introduction of the World Wide Web created an open, standardized protocol for information transmission including standards for formatting, security and navigation. This allowed users to access and transmit communication from different devices using different applications and for them to still be able to read them.\n\nSoon, the Web took off, particularly when Berners-Lee released the code for free in 1993. It has since become widely used. Today, almost every company, shop, government, service and charity has a website.\n\n","b5c6cddd-eb33-4e92-af88-2f2dc04eba40",[135,144],{"id":136,"data":137,"type":52,"version":25,"maxContentLevel":29},"29cb19f3-e4ba-4db8-bb42-359706954582",{"type":52,"reviewType":26,"spacingBehaviour":25,"binaryQuestion":138,"binaryCorrect":140,"binaryIncorrect":142},[139],"Who designed the World Wide Web in 1989?",[141],"Tim Berners-Lee",[143],"Marc Andreessen",{"id":145,"data":146,"type":52,"version":25,"maxContentLevel":29},"da8f2412-4424-412c-90d7-4437804dcca8",{"type":52,"reviewType":29,"spacingBehaviour":25,"multiChoiceQuestion":147,"multiChoiceCorrect":149,"multiChoiceIncorrect":151},[148],"When was the World Wide Web designed?",[150],"In 1989",[152,153,154],"In 1993","In 1995","In 1999",{"id":156,"data":157,"type":25,"maxContentLevel":29,"version":25,"reviews":161},"3a53a387-8421-4265-b994-faf2faba4e2c",{"type":25,"title":158,"markdownContent":159,"audioMediaId":160},"Web1 - The Readable Web","The internet as we know it did not appear the second Tim Berners-Lee pushed the button. Instead, it went through a gradual process of change and improvement. Broadly, the journey the internet has undergone can be categorized into three main stages, which we label as Web1, Web2 and Web3. \n\nIn Web1, pages appeared largely in a static form. This meant that they were not interactive or able to process movements on change. Web1 was a bit like a library of hard copies of articles. You might read an article, but you certainly can’t leave a comment at the bottom, or write your own article that you think the world may want to read.\n\nIn Web1, accessing information was largely done through Netscape, a precursor to the modern browser. Although anyone could run a server, there was soon a concentration of running them in large “dot com” companies. Moreover, communication largely happened through chatrooms like AOL instant messenger – which look a lot like Slack or Discord do today.\n","79a2df07-89dd-4dd5-96e6-be999f3a001e",[162],{"id":163,"data":164,"type":52,"version":25,"maxContentLevel":29},"3b9e9a29-b444-4e34-b631-20f265f742cf",{"type":52,"reviewType":25,"spacingBehaviour":25,"activeRecallQuestion":165,"activeRecallAnswers":167},[166],"Which stage of the Web was characterized by static pages?",[168],"Web1",{"id":170,"data":171,"type":25,"maxContentLevel":29,"version":25,"reviews":175},"8eaf20c6-4403-4dc2-93cd-26e9a5f19bd1",{"type":25,"title":172,"markdownContent":173,"audioMediaId":174},"Web2 - The Readable, Writable Web","Web1 was an incredible invention. But it lacked the ability for everyone to participate, unless you were willing to write a lot of code and set up your own server. As a result, there was a gradual shift to Web2, from the early 2000s onwards.\n\nWeb2 can broadly be described as the internet as you know it today. It’s made up of websites that also function like platforms – users can participate in what appears on the site, and interact with web pages. Users can log in to accounts and be given a personalized experience of the site.\n\n ![Graph](image://864bc83c-ef46-46f3-a2a5-bcbb6714983a \"TikTok - one of many interactive services enabled by Web2\")\n\nWeb2 involves user-generated content. This ability is what pushed the Web into the incredible beast it is today, where anyone can upload anything, and roughly 2.5 million terabytes of data – from cat TikToks to tax returns – is uploaded every single day.\n\nA huge proportion of businesses operating in Web2 store their users’ data and monetize it. This wouldn’t have been possible in Web1, where users weren’t really able to interact with websites at all. \n\n","0a879034-4cec-45d9-bb32-5907756d5aea",[176],{"id":177,"data":178,"type":52,"version":25,"maxContentLevel":29},"fef5804c-8fd0-43b7-aa25-15b2a9e764b1",{"type":52,"reviewType":29,"spacingBehaviour":25,"multiChoiceQuestion":179,"multiChoiceCorrect":181,"multiChoiceIncorrect":183},[180],"What is the most significant difference between Web1 and Web2?",[182],"Web2 involves user-generated content",[184,185,186],"Web2 is more secure","Web2 is more visually appealing","Web2 is decentralized",{"id":188,"data":189,"type":25,"maxContentLevel":29,"version":25,"reviews":193},"38b80a92-1972-46dc-a87c-e4615e4f076d",{"type":25,"title":190,"markdownContent":191,"audioMediaId":192},"Web3 - The Readable, Writable, Ownable Web ","In response to the Web2 gatekeepers, a new paradigm emerged. \n\nWeb3 seeks to secure and decentralize ownership of digital content, enabling peer-to-peer transactions without the need for a middle-man. In order for this system to function effectively, the roles of trust and permission have shifted from a centralized company to computer code run on a decentralized network of machines. \n\n ![Graph](image://4f4475fc-a645-4597-9b31-07b9a1a7c27f \"Web3 will let you own your video game currencies - and so much more\")\n\nThis mechanism by which data can be stored in a trustless manner is called the blockchain. Blockchain enables decentralized services that do not depend upon a single, centrally controlled server to operate.\n\nFor example, think of a system of online coins for a videogame. In Web2, the game developer would have a database containing each person’s name and their number of coins. Ultimately, the amount of coins you have in that game is totally at the discretion of the company that manages the game. \n\nWeb3, on the other hand, would allow you to own those coins as unique digital assets. No company or individual can take them away from you. \n\nCoins in a videogame might sound trivial, but, as we will see, this principle of true ownership of digital assets could radically upend almost every aspect of the Web as we know it today.\n\n","d9d3e10b-8809-4ef5-ab55-b2a3dc33b576",[194],{"id":195,"data":196,"type":52,"version":25,"maxContentLevel":29},"e373a354-7724-42a6-8013-7af64aebdf48",{"type":52,"reviewType":21,"spacingBehaviour":25,"clozeQuestion":197,"clozeWords":199},[198],"The mechanism by which data can be stored in a trustless, decentralized manner is called the blockchain.",[200,201],"blockchain","trustless",{"id":203,"data":204,"type":26,"version":25,"maxContentLevel":29,"pages":206},"12d3b11a-0309-4f46-a79e-d6f1bd293505",{"type":26,"title":205},"Pros and Cons of Web3",[207,221,237],{"id":208,"data":209,"type":25,"maxContentLevel":29,"version":25,"reviews":213},"560b8981-af2e-411b-8551-71e379907f3f",{"type":25,"title":210,"markdownContent":211,"audioMediaId":212},"Benefits of Web3","One of the big benefits of Web3 is putting data ownership back in the hands of users. Because data will be stored and processed in a decentralized manner, you will own all of your data and select which organizations you chose to give access to it (and at what price). It has been famously said in Web2 that “if you don’t pay for the product, you are the product”. Web3 enables users to monetize their own data, rather than centralized companies. \n\nMoreover, Web3 aims to store data more securely than its predecessors. Currently, centralized data storage means that a hacker would only need to break into a single database to access the data of millions of people. A decentralized web means that each user’s assets are secured individually.\n\nFinally, Web3 aims to create a more democratic playing field in many industries through the power-shift away from gatekeepers. As a Web2 content creator, you are completely at the whim of the platform you publish content on. If one day Facebook or YouTube decides that they don’t like your content, you are left with zero recourse to continue your business and maintain your livelihood.","75a60bf0-6203-4a76-8336-2cd43fefc473",[214],{"id":215,"data":216,"type":52,"version":25,"maxContentLevel":29},"9ae78236-1c5b-4985-81fd-1aa7c2676b50",{"type":52,"reviewType":21,"spacingBehaviour":25,"clozeQuestion":217,"clozeWords":219},[218],"One of the big benefits of Web3 is putting data ownership back in the hands of users.",[16,220],"data ownership",{"id":222,"data":223,"type":25,"maxContentLevel":29,"version":25,"reviews":227},"8e67c751-709f-4386-b0b1-79f1a1ae541c",{"type":25,"title":224,"markdownContent":225,"audioMediaId":226},"Drawbacks of Web3","No upgrade comes without growing pains, and Web3 is no exception.\n\nAt the moment, the buzzword and technology of ‘blockchain’ often feels like ‘a hammer searching for a nail’ as thousands of new projects pop up worldwide that replicate already-solved problems using blockchain. Why store data decentrally across thousands of computers if a simple centralized database will do? In many instances, it just doesn’t make sense.\n\n ![Graph](image://04818849-2622-4d54-8f14-c7905028ec5b \"Traditional ways of doing business can actually be highly effective\")\n\nAdditionally, the Web3 ethos of decentralization may not be the best organizational structure to get things done. There’s a reason that businesses don’t put every decision to a vote from all employees - it takes forever! Can you imagine a decentralized Apple able to make an iPhone without the visionary leadership of Steve Jobs? Centralization is a far superior organizational structure to achieve certain things quickly.\n\nAs is often the case, technology moves faster than regulation, opening up an entire territory of ‘wild west’ behavior. Regulation for Web3 is opaque – or even non-existent – often exposing consumers to tremendous risks that they may not fully realize. Until governments, consumers, and developers agree how best to safeguard this powerful technology that has the potential to redefine asset ownership, the industry is rife with scams, exploits, and countless pitfalls awaiting unsuspecting victims. At the moment, it’s not for the faint of heart.\n\n\n","9fccecc6-453d-48cb-aabc-50dc3897b25a",[228],{"id":229,"data":230,"type":52,"version":25,"maxContentLevel":29},"1eeafe84-f17e-4cea-b81c-e31f57d44395",{"type":52,"reviewType":26,"spacingBehaviour":25,"binaryQuestion":231,"binaryCorrect":233,"binaryIncorrect":235},[232],"Which of these is a disadvantage of Web3?",[234],"Centralization can sometimes be more effective for businesses",[236],"Blockchains are less secure than traditional servers",{"id":238,"data":239,"type":25,"maxContentLevel":29,"version":25,"reviews":243},"4fdd2142-fa70-4b3b-87ac-bf4922e91151",{"type":25,"title":240,"markdownContent":241,"audioMediaId":242},"How does Web3 decentralization work?","In Web2, users transmit data to a server, which will then send data back. In fact, even when a user is sending a message to another user, it will travel through the server. For example, if Hanna wanted to send money to Dylan, the message would go from Hanna to the server and then from the server to Dylan.\n\nHowever, in Web3, the middle man is cut out. Instead, through the use of peer-to-peer communication, users communicate directly with each other. In the above example, the money would instead travel from Hanna directly to Dylan, who would then store it. \n\nAs these interactions become more numerous, they begin to form a chain. This is where we get the term ‘blockchain’. In a blockchain, each individual computer is helping to verify the veracity of other elements within it. Through decentralization, a true ‘web’ of interdependence has been created.\n","01393b1a-4384-4e3a-88c6-20db5faf4220",[244],{"id":245,"data":246,"type":52,"version":25,"maxContentLevel":29},"f44bb182-c714-45fc-bab0-9ee41483b950",{"type":52,"reviewType":21,"spacingBehaviour":25,"clozeQuestion":247,"clozeWords":249},[248],"Blockchain requires many different computers to verify transactions.",[250],"verify",{"id":252,"data":253,"type":26,"version":25,"maxContentLevel":29,"pages":255},"f300cc3f-7561-446d-8c5a-ff21d3a6c14d",{"type":26,"title":254},"Decentralization and Its Implications",[256,270],{"id":257,"data":258,"type":25,"maxContentLevel":29,"version":25,"reviews":262},"78519142-e054-4062-83b7-3131734509e3",{"type":25,"title":259,"markdownContent":260,"audioMediaId":261},"Political implications of decentralization","One of the fiercest debates in the digital world is around the role that platforms should play in moderating speech. \"No-platforming” is the practice of removing an individual from being able to share their views in a given location on the grounds that the centralized controller deems them to be morally or politically objectionable. This may include alleged incitement to hate crime or racist activity.\n\n ![Graph](image://a58f8bd6-8a40-4fd0-885e-be7e42c68178 \"The role of Web2 platforms in moderating free speech is subject to fierce debate\")\n\nCentralized companies like Twitter, Facebook and Google have tended to govern speech on their site in line with their corporate ethos. While some have argued that this is against the principle of free speech, they are well within their rights to do this legally because they are not legally obliged to give a platform to anyone. While I can say whatever I want in the street, I don’t have the right to demand the main stage at Madison Square Garden. \n\n\n\nHowever, in Web3, the decentralized nature means that there is no corporate authority governing what can and can’t be said. As a result, the only restriction on speech is the law – and even that can be difficult to enforce. Many have therefore argued that Web3 could have an impact on political dissent, particularly in authoritarian regimes. It is yet to be seen how this technology will influence the world political landscape.\n\n","c4c13316-1f06-4bf6-913f-a4f655880281",[263],{"id":264,"data":265,"type":52,"version":25,"maxContentLevel":29},"1e0420f0-fc4f-4fcc-85d8-08d95f13ceff",{"type":52,"reviewType":21,"spacingBehaviour":25,"clozeQuestion":266,"clozeWords":268},[267],"In Web3, the decentralized nature means that the only restriction on speech is the law.",[269],"law",{"id":271,"data":272,"type":25,"maxContentLevel":29,"version":25,"reviews":276},"4cf34ae4-8a88-422c-bd75-1403801c21c1",{"type":25,"title":273,"markdownContent":274,"audioMediaId":275},"Is Web3 really independent of institutions?","One significant challenge of Web3 is that while it decentralizes software, many other ‘gatekeeper’-style bottlenecks still exist that effectively render decentralization impossible. \n\nIn order for people to access Web3 features, they are still going to need internet access, either provided through conventional wired and fiber-optic options or via mobile data. Many governments use this to control their population’s internet access – often in line with their own political agenda. The deployment of Starlink’s censorship-free low-earth satellite internet during the Russia-Ukraine war demonstrates that there are alternatives to government-provided internet access, however they’re not yet widely available. \n\nSimilarly, while blockchain technically allows for the free exchange of money anywhere, in reality the on and off-ramps to using cryptocurrency leave room for government interference. Currently, an American in New York is entirely prohibited from purchasing a piece of art from an Iranian in Tehran. If they attempt to engage in any kind of traditional transfer of money, it will be blocked. \n\nThere would be nothing stopping them making that same transaction in cryptocurrency. However, to get utility from that currency – to buy groceries or pay rent – they would still need to convert it into local, traditional money. And at that point, governments can still intervene.\n","98251ba6-9486-486a-b501-148a9bc954c6",[277],{"id":278,"data":279,"type":52,"version":25,"maxContentLevel":29},"162a303a-8f63-4071-9920-ba3b5bc539e2",{"type":52,"reviewType":29,"spacingBehaviour":25,"multiChoiceQuestion":280,"multiChoiceCorrect":282,"multiChoiceIncorrect":284},[281],"What is one challenge of Web3 that still allows for government interference?",[283],"Accessing on and off-ramps to using cryptocurrency",[285,286,287],"Decentralizing software","Deployment of Starlink","The existence of dApps",{"id":289,"data":290,"type":28,"maxContentLevel":29,"version":25,"orbs":293},"4a332b3e-8ed5-484e-bcbb-56eea79707ba",{"type":28,"title":291,"tagline":292},"Cryptocurrency","Crypto doesn’t have to be cryptic. An explanation of how cryptocurrencies work, starting with the first principles of economics",[294,359,427,464,511],{"id":295,"data":296,"type":26,"version":25,"maxContentLevel":29,"pages":298},"00b190a5-d86d-4249-be48-4e02e599b0af",{"type":26,"title":297},"Understanding Money",[299,315,329,343],{"id":300,"data":301,"type":25,"maxContentLevel":29,"version":25,"reviews":305},"99289129-971b-4407-ba0b-4efcfceee306",{"type":25,"title":302,"markdownContent":303,"audioMediaId":304},"What is money?","Money is such an integral part of every one of our lives that it’s easy to lose sight of what it actually is. To really understand the value of cryptocurrency, we have to ask a fundamental question – what is money?\n\n![Graph](image://c8bec6e0-cc03-4521-808f-b9e4a7cfb624 \"Bartering is the oldest form of value exchange\")\n\nPut simply, it’s a system that many societies have developed to represent value. It has two main purposes: value transfer, and value storage.\n\nImagine being an apple farmer in the dark ages. Apples are valuable, but you need things other than apples to live – warm clothes, for example. To solve this problem, people started bartering.\n\nBartering is the transfer of value through direct exchange of valuable goods. A cold apple-grower in need of warm clothes can find a hungry clothmaker in need of food, and the two can share the fruits of their labor for mutual gain.\n\n\n","62cfb9af-aa41-4394-81b5-0840f7017ff8",[306],{"id":307,"data":308,"type":52,"version":25,"maxContentLevel":29},"d305978b-bb1b-439c-b97d-636d1c937346",{"type":52,"reviewType":26,"spacingBehaviour":25,"binaryQuestion":309,"binaryCorrect":311,"binaryIncorrect":313},[310],"What is bartering?",[312],"The transfer of value through direct exchange of valuable goods",[314],"The use of currency to represent universal value",{"id":316,"data":317,"type":25,"maxContentLevel":29,"version":25,"reviews":321},"9c4635d1-fe37-40e7-bbd5-be3debbfa0b2",{"type":25,"title":318,"markdownContent":319,"audioMediaId":320},"The problem with barter systems","Bartering helped primitive societies to divide their labor. But it has serious drawbacks. These can be grouped under the term ‘non-coincidence of wants’. Put simply, bartering is pretty inefficient if the people around you don’t want what you produce at that moment in time.\n\n ![Graph](image://91054886-0aed-4985-83e9-0b6a291f095a \"Gold and silver replaced bartering over time in many societies\")\n\nTo return to our apple farmer looking for warm clothes. He might have a bumper crop of apples. But what if the local clothmaker doesn’t want any apples? \n\nThe answer is to find some object that can be accepted across the whole of society as a universal language of value. The clothmaker may not want apples, but he definitely wants *something*. If society agrees upon an object that can be exchanged for *anything*, then the apple-grower can sell his apples in exchange for it, then buy clothes from the clothmaker with it, and then the clothmaker can go off and buy anything he wants.\n\nThis was how currency was born. And most societies over time started using precious metals like silver or gold as currency.\n\n","8e4e28c0-5f0e-40a0-b5e3-44091b2069f9",[322],{"id":323,"data":324,"type":52,"version":25,"maxContentLevel":29},"79fccd4d-7fb8-499e-a3b7-076b107e8e0b",{"type":52,"reviewType":21,"spacingBehaviour":25,"clozeQuestion":325,"clozeWords":327},[326],"Bartering helped primitive societies to divide their labor.",[328],"Bartering",{"id":330,"data":331,"type":25,"maxContentLevel":29,"version":25,"reviews":335},"710b0fe2-1f9f-4620-bcba-e34b3880c7aa",{"type":25,"title":332,"markdownContent":333,"audioMediaId":334},"How money evolved","Gold was initially chosen as currency because it is scarce, hard to falsify, and doesn’t degrade over time like iron or copper does. However, there are obvious drawbacks to gold. It’s not easy to carry, if you have it on you, you’re a target for robbery, and you can’t send it over long distances with any ease.\n\nInstead, people started depositing their gold with a novel institution called a bank. In return, a bank issued paper certificates, signifying gold ownership. Over time, people started using these paper slips to trade, rather than going to their bank, withdrawing their gold and using it to purchase goods. These paper slips effectively started working as gold-backed currencies. \n\nAs more time passed, governments started taking on the responsibility of storing gold and handing out paper currency in return. \n\nNowadays, money is not backed by gold anymore, but instead by nothing. People use it because it’s legally enforced by governments. Most governments took their currencies off the gold standard in the 1970s.\n\nThere is a term for this modern manifestation of money – fiat currency. Fiat currency basically refers to money as we all know it today. It comes from the Latin word for ‘by decree’ – because money holds value under this system purely by government decree. It’s no longer backed by apples, cloth, gold, or any other real-world good.\n","5581d71b-11fa-4edf-9ddd-7d737e2b6109",[336],{"id":337,"data":338,"type":52,"version":25,"maxContentLevel":29},"1310438f-af57-4833-93a8-eaa0a010c2ad",{"type":52,"reviewType":21,"spacingBehaviour":25,"clozeQuestion":339,"clozeWords":341},[340],"Gold was initially chosen as currency because it is scarce, hard to falsify, and doesn’t degrade over time like iron or copper does.",[342],"Gold",{"id":344,"data":345,"type":25,"maxContentLevel":29,"version":25,"reviews":349},"4f3eef98-a019-41ff-97de-3cd812e1e308",{"type":25,"title":346,"markdownContent":347,"audioMediaId":348},"The problem with fiat currency","For fiat currency to work properly, everyone using it needs to have confidence in the currency’s ability to hold its value. For example, we need to have confidence that if we sell our apples, the money we receive will be able to buy other things, roughly equivalent to the value of the apples we sold.\n\n\n ![Graph](image://6e5bc939-25df-465c-8bbf-701f70652597 \"Fiat currency is only as strong as the government controlling it\")\n\nThis is usually guaranteed by the government, who will commit to continuing to use the currency, and to legally enforce its acceptability as value. They will also be responsible for the supply of money – ensuring that inflation and deflation don’t occur. \n\nThis is one of the most important roles played by any government. Without an honest, fair, impartial central authority managing the whole monetary system, then no-one can be sure that fiat currency is actually valuable.\n\nThe problem with this, of course, is that honest, fair, impartial governments are by no means guaranteed. Indeed, they’re pretty hard to come by! In fact, there’s not a fiat currency on earth that hasn’t been devalued at some point due to careless actions by the government in charge of it. \n\nBut, for most of history, if you wanted to use money (and you don’t really have a choice in that matter) you had to trust your government.\n\nThat is, until crypto came along.\n\n","c2f10439-eaeb-447d-aed3-e299f743cecf",[350],{"id":351,"data":352,"type":52,"version":25,"maxContentLevel":29},"aa872b4e-4d0f-40da-829e-f5de9a5e9a9d",{"type":52,"reviewType":26,"spacingBehaviour":25,"binaryQuestion":353,"binaryCorrect":355,"binaryIncorrect":357},[354],"Who is responsible for controlling the supply of fiat currencies?",[356],"Central governments",[358],"The financial markets",{"id":360,"data":361,"type":26,"version":25,"maxContentLevel":29,"pages":363},"c2c8e24d-56d2-4c31-8505-fc23989d4770",{"type":26,"title":362},"Introduction to Cryptocurrency",[364,380,393,411],{"id":365,"data":366,"type":25,"maxContentLevel":29,"version":25,"reviews":370},"5f7848ca-599d-4a16-acdc-b45502dbc117",{"type":25,"title":367,"markdownContent":368,"audioMediaId":369},"What is cryptocurrency?","Everything changed for fiat currencies when an engineer named Satoshi Nakamoto asked: “What if we code our way out of government-enforced currencies?” Using some extremely smart technology called blockchain, he created the first cryptocurrency to answer that question. Its name is Bitcoin.\n\n ![Graph](image://fd67cb5f-4efe-49de-a193-032e39c6e5ee \"A bust of the anonymous Satoshi Nakamoto, Budapest\")\n\nThis was a monumental step in the history of money, and only time will tell its far-reaching consequences.\n\nCryptocurrency is a digital form of currency that exists purely in code, and is backed up by no government or central entity. They are stored as digital tokens in people’s ‘wallets’ – think of these simply as a digital storage mechanism.\n\nWe’ll go into the mechanics later, but at a high level, cryptocurrencies are currencies that work independently of any authority. They are a technology that automates the main purpose that governments served in backing up currencies – trust.\n\n","a6373013-270d-48bc-a805-b20d7be58146",[371],{"id":372,"data":373,"type":52,"version":25,"maxContentLevel":29},"b3473a31-0fa0-4f1a-a9b6-b727825cee44",{"type":52,"reviewType":26,"spacingBehaviour":25,"binaryQuestion":374,"binaryCorrect":376,"binaryIncorrect":378},[375],"What is the name of the first cryptocurrency created by Satoshi Nakamoto?",[377],"Bitcoin",[379],"Ethereum",{"id":381,"data":382,"type":25,"maxContentLevel":29,"version":25,"reviews":386},"ce5f247c-267b-4dac-961c-d641a9ab4a91",{"type":25,"title":383,"markdownContent":384,"audioMediaId":385},"Why does crypto have value?","With typical money, value is preserved by the fact that it is backed by a government. Provided the government is trustworthy, and doesn’t print too much money, you could be sure that that currency will retain buying power.\n\nCryptocurrency is not backed up by any government, but instead by code and the blockchain. Crypto’s proponents argue that it doesn’t need to be backed by anything – ultimately, fiat isn’t either. Both are ultimately dependent on people believing that the currency holds value. But the blockchain is arguably more trustworthy than any institution.\n\nFor cryptocurrency to hold its value, it needs to have an indisputable amount in circulation, and indisputable transactions that prove who owns which coins. This amount needs to be written into the distributed ledger on a blockchain. Indeed, this is the primary function of a blockchain – to keep track of all the coins in circulation, and the transactions that move them from wallet to wallet.\n\nThe beauty of blockchain is that no individual or group controls that ledger – it’s distributed across a network of global computers. When the system is dictated by a blockchain, the possibility of a corrupt or incompetent government devaluing the currency is eliminated.\n","d01a6daf-d0ce-4a9d-811b-9d461e928f5a",[387],{"id":388,"data":389,"type":52,"version":25,"maxContentLevel":29},"eaf172f9-67dc-4eac-a992-70f6e94f11d4",{"type":52,"reviewType":21,"spacingBehaviour":25,"clozeQuestion":390,"clozeWords":392},[391],"Cryptocurrency is not backed up by any government, but instead by code and the blockchain.",[200,291],{"id":394,"data":395,"type":25,"maxContentLevel":29,"version":25,"reviews":399},"6e4fc3ee-6547-405d-95a9-0d1cc7798bd0",{"type":25,"title":396,"markdownContent":397,"audioMediaId":398},"How do crypto transactions work?","Cryptocurrency coins don’t actually exist as physical objects. Instead, they exist as records of transactions in the blockchain. Therefore, the way you would send a coin to someone else is by adding a message in the ledger that you have transferred your coin to somebody else. This message has to be processed by someone. But rather than a government or bank serving as the trusted validator, the blockchain network does.\n\nIn order to demonstrate transparency to all participants of the network, and in contrast to traditional financial transactions, these messages, or records, are not privately concealed. As a result, anybody can see when a transaction has taken place. Moreover, they can see the network addresses of both the coin sender and the coin recipient. However, they will not necessarily be able to understand who each computer address belongs to. As a result, cryptocurrency transactions typically provide partial, but not complete, anonymity.\n\n","875d15df-0f14-41ed-b831-11822e69a447",[400],{"id":401,"data":402,"type":52,"version":25,"maxContentLevel":29},"54ca3f6f-68a4-4f37-b65b-fe29fb1d5600",{"type":52,"reviewType":29,"spacingBehaviour":25,"multiChoiceQuestion":403,"multiChoiceCorrect":405,"multiChoiceIncorrect":407},[404],"How do cryptocurrency coins exist?",[406],"As records of transactions in the blockchain",[408,409,410],"As physical objects","As private keys","As notes",{"id":412,"data":413,"type":25,"maxContentLevel":29,"version":25,"reviews":417},"c8e20c4c-2b32-4f27-b053-aa60ff3bac7f",{"type":25,"title":414,"markdownContent":415,"audioMediaId":416},"Types of cryptocurrencies","Cryptocurrencies, like Bitcoin or Ethereum, are designed to exist in isolation to real world currencies or commodities. In theory, this means that their value wouldn’t be affected by a crash in the US dollar, presenting them as a favorable option for investors attempting to diversify their assets.\n\nPegged cryptocurrencies, also known as Stablecoins, are designed to work in conjunction with real world currencies or commodities. This means that their value is directly tied to a real world currency.\n\nAt the moment, there are thousands of different cryptocurrencies across over dozens of blockchain networks. In this pathway, we’re going to cover the two biggest ones: Bitcoin and Ether.\n","4b2771f1-a35b-4c81-84db-3358244e2231",[418],{"id":419,"data":420,"type":52,"version":25,"maxContentLevel":29},"8a5eb644-87f3-44d0-9484-1238a254dbca",{"type":52,"reviewType":26,"spacingBehaviour":25,"binaryQuestion":421,"binaryCorrect":423,"binaryIncorrect":425},[422],"What are pegged cryptocurrencies also known as?",[424],"Stablecoins",[426],"Altcoins",{"id":428,"data":429,"type":26,"version":25,"maxContentLevel":29,"pages":431},"e03087ea-7644-4cec-b307-d443cae6bccb",{"type":26,"title":430},"Challenges of Cryptocurrency",[432,446],{"id":433,"data":434,"type":25,"maxContentLevel":29,"version":25,"reviews":438},"4598e8f1-3ad0-44c4-9046-a1790dd5dbd3",{"type":25,"title":435,"markdownContent":436,"audioMediaId":437},"Drawbacks of cryptocurrency","Perhaps the clearest downside of cryptocurrencies is that their value is ultimately based on the trust and belief that people have for them. Technically this is no different from every other currency on earth – but trusting a currency like gold that has been around for 1000+ years, or the US dollar that has been around for 200+ years, is quite different from Bitcoin that has been around for 10+ years. \n\n ![Graph](image://55d0af74-465f-4484-8bb2-8fd60e68b0a4 \"Some examples of popular cryptocurrencies\")\n\nCrypto’s novelty comes with another drawback: most vendors don’t currently accept it as payment. This detracts from its utility, since you need to convert crypto back into fiat to spend it.\n\nDecentralization also creates problems with fraud and institutional risk. In the traditional financial system, most bank deposits are insured by the government. Since crypto is largely unregulated, you are not entitled to compensation if you are a victim of fraud in cryptocurrencies. Once the money’s gone, it’s gone forever. \n\nFinally, cryptocurrencies are difficult to regulate. If a blockchain network is truly globally distributed, under what jurisdiction should it be regulated? The anonymity that crypto affords its users makes it useful for criminals or tax avoiders. \n\nBecause money is a core tenet of government power, crypto is a great threat to the modern state, for better or for worse.\n\n\n","619c476c-ed60-4bfc-9288-29ec56ef2dfc",[439],{"id":440,"data":441,"type":52,"version":25,"maxContentLevel":29},"12dfa79b-4e4a-4e9f-9db0-bd14794c348b",{"type":52,"reviewType":25,"spacingBehaviour":25,"activeRecallQuestion":442,"activeRecallAnswers":444},[443],"How does decentralization create problems with fraud and institutional risk?",[445],"Crypto is largely unregulated, and if you lose your money there's no way to get it back",{"id":447,"data":448,"type":25,"maxContentLevel":29,"version":25,"reviews":452},"d4d7c0da-8be4-43ad-a946-6cdd3d2f43bd",{"type":25,"title":449,"markdownContent":450,"audioMediaId":451},"Storing cryptocurrency","All cryptocurrencies are stored in ‘wallets’ which use ‘public-private key’ encryption.\n\nYour ‘public key’ is like your street address. Anyone can send a package to that address. Your ‘private key’ is something you never share, like a key to unlock your mailbox and read your mail. This system allows incoming transfers from anywhere, while maintaining private access and control.\n\nBecause all transactions and wallets are publicly visible on the blockchain, anyone can see exactly how much currency is stored where, and how many transactions have occurred. However, the public key just looks like a string of numbers. There’s no way to tell whose wallet is whose, unless they’ve publicized that information.\n\n ![Graph](image://cb18fbbc-5bb6-438d-8321-9549f5a04535 \"Trezor has manufactured convenient hard wallets that allow for easy transactions\")\n\nFor security reasons, many people store their keys on a physical device - this is called a ‘hardware wallet’. Hard wallets exist on your own hardware. You can connect them to the network to make transactions, or you can keep them offline. When they are offline, the blockchain still maintains a record of their crypto balances. \n\nThis is in contrast to a ‘soft wallet’ that stores the keys in a cloud-based service, which users can log into with a password from anywhere. The most famous of these soft wallets is called MetaMask.\n\n","d8e81270-e9fa-425f-b706-b1af2f2f42dd",[453],{"id":454,"data":455,"type":52,"version":25,"maxContentLevel":29},"d42334b8-fd4e-447b-b669-7c282028f971",{"type":52,"reviewType":29,"spacingBehaviour":25,"multiChoiceQuestion":456,"multiChoiceCorrect":458,"multiChoiceIncorrect":460},[457],"What is the term used to describe a physical device that stores a user's keys for security reasons?",[459],"Hardware wallet",[461,462,463],"Soft wallet","Cloud wallet","Digital wallet",{"id":465,"data":466,"type":26,"version":25,"maxContentLevel":29,"pages":468},"6accab63-0363-41b3-b323-cb5a6ec3c89f",{"type":26,"title":467},"Bitcoin Case Study",[469,483,497],{"id":470,"data":471,"type":25,"maxContentLevel":29,"version":25,"reviews":475},"953cc67f-f447-4968-b1db-43d0ce591974",{"type":25,"title":472,"markdownContent":473,"audioMediaId":474},"Case study: Bitcoin - a history","The first and most famous cryptocurrency is Bitcoin. Bitcoin was first proposed under the pseudonym of Satoshi Nakamoto in a 2008 academic paper. To this day, no-one knows who Satoshi is, though his (or her, or their) net worth must run into the tens of billions.\n\n ![Graph](image://cffc4693-bc78-42c6-b2e8-ff8ffff462b6 \"Bitcoin - the coin that started it all\")\n\nSatoshi proposed Bitcoin – and the first blockchain – because existing centralized financial systems “suffered from the inherent weaknesses of the trust based model” and wanted to design something which instead was “an electronic payment system based on cryptographic proof instead of trust”. Fundamentally, Nakamoto argues that the existing financial system relies on the trusted third party to mediate disputes, which itself is expensive, when a better solution would be to eliminate the potential for disputes altogether. \n\nHis solution was Bitcoin. Interestingly, it was developed and launched in 2008-2009, the years of the Great Recession, where trust in government financial competency was at an all time low.\n\n","e4fa1e98-793c-4521-a307-33628baa966d",[476],{"id":477,"data":478,"type":52,"version":25,"maxContentLevel":29},"a611d778-853d-446e-82fb-f3a60fb0711d",{"type":52,"reviewType":21,"spacingBehaviour":25,"clozeQuestion":479,"clozeWords":481},[480],"Bitcoin was first proposed under the pseudonym of Satoshi Nakamoto in a 2008 academic paper.",[482],"Satoshi Nakamoto",{"id":484,"data":485,"type":25,"maxContentLevel":29,"version":25,"reviews":489},"10db0fdc-7032-49c3-9a70-071927a9463a",{"type":25,"title":486,"markdownContent":487,"audioMediaId":488},"Case study: Bitcoin - how it works","In his whitepaper, Nakamoto explained the principles of Bitcoin. Whenever a transaction happens, it is broadcasted to a network of computers called ‘nodes’. The nodes will then independently validate the transaction based on whether its transaction history matches up to the existing transaction histories in the chain. Basically, the nodes check whether you actually have sufficient funds.\n \nIf it appears valid based on the network’s rules, called a ‘consensus mechanism,’ they are added to their own localized version of the chain and broadcast back out to the network as the latest version.\n\nThe Bitcoin blockchain uses the SHA256 hashing algorithm — a one-way type of encryption. The SHA256 algorithm was developed by the US government and then released under a royalty free patent in 2008. This hashing method turns data of any length into a relatively short but uniquely identifiable output, meaning you can verify things easily. ","8c5a7cc6-14c5-4f47-a79d-7a3dc407e17c",[490],{"id":491,"data":492,"type":52,"version":25,"maxContentLevel":29},"3acebc03-c582-4e7a-b65d-a12e2f8594c7",{"type":52,"reviewType":21,"spacingBehaviour":25,"clozeQuestion":493,"clozeWords":495},[494],"The Bitcoin blockchain uses the SHA256 hashing algorithm.",[496],"SHA256",{"id":498,"data":499,"type":25,"maxContentLevel":29,"version":25,"reviews":503},"fa36b06e-a983-4193-b2bb-abc36af168c7",{"type":25,"title":500,"markdownContent":501,"audioMediaId":502},"Case study: Bitcoin - benefits and drawbacks","One of the big benefits of Bitcoin when compared to other cryptocurrencies is how widely it is used. Out of the total amount of money stored in cryptocurrencies, around 40% of that is in Bitcoin. This means that it is even easier to find someone to conduct a transaction within Bitcoin than with other cryptocurrencies. Moreover, because Bitcoin has been around for so long, there is a degree of confidence that it has held up thus far as ‘unhackable.’ Finally, because Bitcoin is coded as having a finite supply, it is immune to inflation.\n\nHowever, a huge drawback of Bitcoin was that it wasn’t designed with smart contracts in mind. Smart contracts allow for blockchains to go much further, in replacing not just money but many of the institutions essential to money – like banks and lending services. Newer blockchains are mostly built to accommodate smart contracts.\n\nMoreover, even though Bitcoin is the most widely accepted cryptocurrency in the world today, with companies like Microsoft, Subway and Gucci accepting it as payment, it is still not universal enough yet for someone to survive entirely on it without using conventional payment currencies. \n","2bbfeed9-11ad-4ce1-abd1-813b6531fec4",[504],{"id":505,"data":506,"type":52,"version":25,"maxContentLevel":29},"272e4c6e-da81-476b-83e1-0a44b56e5e64",{"type":52,"reviewType":25,"spacingBehaviour":25,"activeRecallQuestion":507,"activeRecallAnswers":509},[508],"What percentage of the total amount of money stored in cryptocurrencies is in Bitcoin?",[510],"Around 40%",{"id":512,"data":513,"type":26,"version":25,"maxContentLevel":29,"pages":515},"1cd1c03f-e774-4cd2-82ab-8343d6bf2189",{"type":26,"title":514},"Ethereum Case Study",[516,538,556],{"id":517,"data":518,"type":25,"maxContentLevel":29,"version":25,"reviews":522},"97545f38-5bb4-4b0f-b411-cf811950930f",{"type":25,"title":519,"markdownContent":520,"audioMediaId":521},"Case study: Ethereum - a history","Ethereum is a newer blockchain with its own cryptocurrency called Ether. It was first proposed in 2013 by Vitalik Buterin in order to create programmable money. He says that he wanted to build “a blockchain with a built-in Turing-complete programming language”. That means that you can run “if this, then that” statements with your money, rather than just sending simple transactions. Effectively, it means that you can build applications on the Ethereum blockchain as well, not just currency.\n\n ![Graph](image://c735a39b-fe39-468a-ac13-0c042bc20cec \"Ethereum - a smarter, more versatile blockchain\")\n\nWhile the Bitcoin blockchain was mostly designed around a single digital currency, Buterin wanted to build a blockchain that had more functions through decentralized applications, which are known as dApps. \n\nHowever, Ethereum recognized that the dApps of the future would require more flexibility, scalability, and features than were technically possible in 2013, so rather than release a ‘final’ version of Ethereum that would soon be outdated and slow, a decentralized network of contributors called the Ethereum Foundation continue to improve the network. \n\nThis allows Ethereum to take advantage of technological developments over time. When different groups of users disagree about this, it leads to what is known as a ‘hard fork’, where two different protocols exist.\n\n","711ba451-33a1-448f-9e0b-88be3d191d7d",[523,530],{"id":524,"data":525,"type":52,"version":25,"maxContentLevel":29},"961310cb-1cb5-4340-b746-4120ec5af6e5",{"type":52,"reviewType":25,"spacingBehaviour":25,"activeRecallQuestion":526,"activeRecallAnswers":528},[527],"Who proposed Ethereum in 2013?",[529],"Vitalik Buterin",{"id":531,"data":532,"type":52,"version":25,"maxContentLevel":29},"a791509d-48db-4e06-ab77-318ca3a7b382",{"type":52,"reviewType":26,"spacingBehaviour":25,"binaryQuestion":533,"binaryCorrect":535,"binaryIncorrect":537},[534],"What is the name of the cryptocurrency associated with the Ethereum blockchain?",[536],"Ether",[377],{"id":539,"data":540,"type":25,"maxContentLevel":29,"version":25,"reviews":544},"04dac034-5ed1-4fe7-bc19-54a2aab8e806",{"type":25,"title":541,"markdownContent":542,"audioMediaId":543},"Case study: Ethereum - benefits and drawbacks","A huge benefit of Ethereum was that it was designed with smart features in mind. This means that the full potential of countless decentralized applications built on smart contracts can be unlocked. This allows for the implementation of countless potential use cases including automatic transactions (if this, then that). Any time that conditions are met, payments can be triggered, automating things like sales commissions, tax payments, or salaries. \n\nMoreover, the application infrastructure in Ethereum is more developed than in other blockchain networks. According to CNN, 94 of the top 100 rated dApps are based around the Ethereum network. This means it’s at the core of interactive decentralized finance.","c4c3efa0-d947-46de-8fec-c5b61c8c4f78",[545],{"id":546,"data":547,"type":52,"version":25,"maxContentLevel":29},"e18e2f56-7211-4ccc-9b25-453c00e1ae31",{"type":52,"reviewType":29,"spacingBehaviour":25,"multiChoiceQuestion":548,"multiChoiceCorrect":550,"multiChoiceIncorrect":552},[549],"Which of these is a benefit of Ethereum that allows for more use cases than Bitcoin?",[551],"Smart features and a more developed application infrastructure",[553,554,555],"Proof-of-work consensus mechanisms","Public-private key encryption","Peer-to-peer payments",{"id":557,"data":558,"type":25,"maxContentLevel":29,"version":25,"reviews":562},"7b329314-a867-4310-a721-96a1f307736c",{"type":25,"title":559,"markdownContent":560,"audioMediaId":561},"Case study comparison: Ethereum vs Bitcoin","Fundamentally, the key difference between Bitcoin and Ethereum is that while Bitcoin was designed purely to function as a cryptocurrency, Ethereum is an entire ecosystem for regulating interacting transactions. \n\n ![Graph](image://fbd6c7c2-b304-4715-8d0b-535b0e647188 \"Both Bitcoin and Ethereum have strong use cases\")\n\nBecause Bitcoin is older and higher-profile, more people accept it as payment. Ethereum is still largely only available for transfer through apps that work on its network. This means that currently, Bitcoin has more practical uses in the real world. While most people don’t use Bitcoin to shop at Gucci, the possibility of doing so allows it to hold its value better. Moreover, its wider acceptance in the digital network means that you can use it for in-game purchases and cosmetics at many of the world’s top video games.\n\nHowever, an advantage of Ethereum over Bitcoin comes because Ethereum continues to improve its codebase, while Bitcoin operates identically to the day it was created. As further advancements in cryptography arise, Ethereum will continue to improve speed, efficiency and security. Although secure, Bitcoin’s lack of additional utility and functionality limit the use cases for which it can be used. Others argue that in its simplicity lies Bitcoin's strength. Only time will tell.\n\n","2f6c7cda-0783-4521-9a78-6fcbf5bb0c8b",[563],{"id":564,"data":565,"type":52,"version":25,"maxContentLevel":29},"5521d99f-6fff-4980-b915-dd3e33e41cb1",{"type":52,"reviewType":21,"spacingBehaviour":25,"clozeQuestion":566,"clozeWords":568},[567],"Bitcoin is older and more widely accepted, while Ethereum is newer and has more functionality and utility.",[569,570],"functionality","utility",{"id":572,"data":573,"type":28,"maxContentLevel":29,"version":25,"orbs":576},"66c5e3d7-8e72-4f97-ac9f-7ca43608b9dc",{"type":28,"title":574,"tagline":575},"What's a Blockchain?","An overview of the technology that makes everything in Web3 possible.",[577,628,677,729,778],{"id":578,"data":579,"type":26,"version":25,"maxContentLevel":29,"pages":581},"2e19d269-9e35-4229-930f-f9e30ca30cf5",{"type":26,"title":580},"Introduction to Blockchain",[582,596,614],{"id":583,"data":584,"type":25,"maxContentLevel":29,"version":25,"reviews":588},"fdb9d099-67f5-4d20-9498-63817ae8af67",{"type":25,"title":585,"markdownContent":586,"audioMediaId":587},"What is the blockchain?","In Web2 databases, information is stored in one location, usually in a central server of the company who owns it. Think of Amazon or Facebook. They administer their own databases in secret, only making specific elements public. \n\nWhoever controls this database has supreme power over its data. If Facebook wants to delete or silence certain contents, it has all the power to do so. Web2 databases are centralized, where the owner and only the owner is in full control.\n\n ![Graph](image://ed0a4d21-9b62-44e1-850c-6a5f5aa6b1a6 \"Traditional database structures put huge power into the hands of corporations\")\n\nContrary to Web2 databases, blockchains function as decentralized databases. Every participant of the blockchain has a copy of all the data. The source of truth is whatever the majority of blockchain participants support. Since anyone can participate in validating the blockchain, it functions as a super-democratized system of truth and data. If thirty computers say that an apple belongs to Dylan, and one says it belongs to Dan, there is no doubt that the apple belongs to Dylan. People trust that the majority of nodes contain the truth.\n\nImagine trying to change the Bible. You could amend a passage in your own copy, but it would be easy for someone to point to the millions of other copies on earth to show that your version is fake. If you wanted to actually change the Bible, you’d have to access and change every single copy on earth – an impossible task.\n\n","e5fbca11-7098-48f7-81d1-c5a7a4e7f5fd",[589],{"id":590,"data":591,"type":52,"version":25,"maxContentLevel":29},"dac82f30-b784-4ae3-86df-14122607e421",{"type":52,"reviewType":21,"spacingBehaviour":25,"clozeQuestion":592,"clozeWords":594},[593],"Web2 databases are centralized, while blockchains are decentralized databases.",[595,127],"centralized",{"id":597,"data":598,"type":25,"maxContentLevel":29,"version":25,"reviews":602},"7ad144d9-6c14-4115-9f66-571f31b6a613",{"type":25,"title":599,"markdownContent":600,"audioMediaId":601},"Two types of blockchain","The Blockchain has exciting new potential applications, both for organizations internally and for individuals. \n\nOne type of Blockchain use is to grant everyone access. This works well for things like cryptocurrencies. Anyone can buy or sell Bitcoin, contributing to the blockchain. Since access to editing these blockchains are entirely open, these are referred to as permissionless Blockchains.\n\nAnother type of Blockchain restricts access to a small group of users. This might be done for supply chain management between a handful of companies. In these situations, a shipping company may not trust the supplier of coffee beans, the roaster may not trust the shipping company, and the store may not trust the roaster, but in a well-architected ‘permissioned’ or ‘private’ blockchain, each entity can store its relevant documentation about its piece of the supply chain in an immutable ledger. \n\n ![Graph](image://2f1c6da7-56b2-48c0-8145-d6f78ff65057 \"Private blockchains could revolutionize supply chains for goods such as coffee\")\n\nThey can then share only the relevant information to other suppliers in the chain to ensure quality, quantity, and freshness are maintained throughout the entire process to the customer. \n\n","b53b06a2-8648-4694-ad17-04e3db42a572",[603],{"id":604,"data":605,"type":52,"version":25,"maxContentLevel":29},"348e59a6-bb53-4edd-9f0a-3b9b5d8d1882",{"type":52,"reviewType":29,"spacingBehaviour":25,"multiChoiceQuestion":606,"multiChoiceCorrect":608,"multiChoiceIncorrect":610},[607],"What type of blockchain restricts access to a small group of users?",[609],"Permissioned or private",[611,612,613],"Permissionless","Open-access","Public",{"id":615,"data":616,"type":25,"maxContentLevel":29,"version":25,"reviews":620},"23d66e43-78cb-4661-be51-1516ffb077c6",{"type":25,"title":617,"markdownContent":618,"audioMediaId":619},"Why does the blockchain work?","Imagine a bug caught in amber. When it is first trapped, there’s not much amber around the fly. Over the following weeks, months, or years, the tree continues to ooze sap, trapping pine needles, then leaves, then bark, and maybe later even other insects. As time progresses, the initial ‘layer’ of amber around the mosquito is buried quite deep with dozens of other layers and debris surrounding it.\n\n\n ![Graph](image://9262f258-3b33-4afd-bfe3-9b28c2dbee92 \"Blockchains preserve a dated image, which it's very hard to tamper with without it being noticeable\")\n\nThe blockchain works along similar principles. Each piece of information in the database exists in a ‘block’ – think of it like an insect or pine needle preserved in a layer of amber. Each block of information is verifiable, and timestamped – just as anyone can look at an insect in amber and see what kind of insect it is, and also tell how long it has been in there, relative to the other layers.\n\nTampering with the outermost layer (i.e. the most recent block) is somewhat straightforward since it’s not trapped very deep. Removing a pine needle from 5 layers deep, however, is nearly impossible without indicating that the amber has been tampered with. This is also true with blockchain. It’s essentially impossible to change the information in older blocks without it being obvious to everyone else that you’ve done so.\n\nThis makes blockchains an extremely secure way to store information over time, that everyone can agree is authoritative.\n\n","ed07069e-63f0-4b3d-a09b-e42e70c8a83e",[621],{"id":622,"data":623,"type":52,"version":25,"maxContentLevel":29},"135868fc-083a-4981-a225-1c151a198c5e",{"type":52,"reviewType":25,"spacingBehaviour":25,"activeRecallQuestion":624,"activeRecallAnswers":626},[625],"Why are blockchains similar to amber?",[627],"They can preserve things for everyone to see, but it's very hard for anyone to tamper with them without it being obvious to everyone else.",{"id":629,"data":630,"type":26,"version":25,"maxContentLevel":29,"pages":632},"f320ecb2-a81b-4588-9629-c80523add2e7",{"type":26,"title":631},"Encryption and Hashing",[633,647,663],{"id":634,"data":635,"type":25,"maxContentLevel":29,"version":25,"reviews":639},"1d4dcd62-81c9-4714-b93e-b99be57debd7",{"type":25,"title":636,"markdownContent":637,"audioMediaId":638},"Introduction to encryption","Encryption is the process through which information is converted into a form where it cannot be read by intercepting parties. This is done by applying an algorithm, which is essentially a process, applied to a piece of data. For example, to encrypt a word, you might change each letter to its next letter. This is known as a Caesar Cipher.\n\n ![Graph](image://88872acd-d7c2-4986-bfc8-40f49053b2fb \"A traditional Caesar Cipher\")\n\nEncryption used in modern computing is more mathematical, applying complex mathematical formulae to the text inputs. This takes advantage of advances in computational power and makes it harder to break the cipher.\n\nIn addition, even though services like WhatsApp encrypt their messages, it is not just messages sent between humans which end up encrypted. In fact, data which is sent solely between computers like timestamps, amounts of money in your bank account and even code can be encrypted to stop hackers from intercepting or interfering with it. If something is encrypted, while hackers can change it to something nonsensical to stop it from arriving, without knowing the encryption method they’re unable to alter or read the data.\n\n","1ccaa02b-4892-4edb-9aa4-b652b9974a5e",[640],{"id":641,"data":642,"type":52,"version":25,"maxContentLevel":29},"1635f2ef-812e-4b70-a91c-1e486f06cac1",{"type":52,"reviewType":21,"spacingBehaviour":25,"clozeQuestion":643,"clozeWords":645},[644],"Encryption is the process through which information is converted into a form where it cannot be read by intercepting parties.",[646],"Encryption",{"id":648,"data":649,"type":25,"maxContentLevel":29,"version":25,"reviews":653},"c8e7ab66-d98e-4a26-b315-0e0bfadd8e15",{"type":25,"title":650,"markdownContent":651,"audioMediaId":652},"Hashing","Hashing is one type of one-way type of encryption. A hash is a mathematical encryption algorithm that essentially turns data into an encrypted form, all of which are the same size. \n\nImagine you have two bananas and an orange. If you put them into a blender, you will be left with a smoothie. If you give a drop of that smoothie to your friend, it is impossible for them to turn the smoothie back into two bananas and an orange. However, if they have two bananas and an orange themself and put them in a blender, they will get an identical smoothie. They can then compare the two smoothies to ensure that they are the same. \n\nHashing functions work similarly. They take any input of words or numbers and generate a unique output. So you can feed words and sentences like “hello”, “¿Cómo estás?” or “Voulez vous coucher avec moi?” into the hashing algorithm, and get a unique, but consistent output.\n\nLet’s look at a little visual illustration below of the most popular hashing algorithm, SHA256.\n\nWhen we feed the word “rice” into SHA256, we get the following output:\n\n ![Graph](image://7a0973ac-a7cc-4696-aa25-ed3a2cd8fd41 \" \")\n\nThe same input will always produce the same output. But, a slightly different input will generate a vastly different output:\n\n ![Graph](image://484f8751-3ca2-41d3-b606-52f4ef64b485 \" \")\n\nHowever, you can never go from hash back to the original input.\n\n","81987580-898a-41ec-b0e4-7707f21a9d90",[654],{"id":655,"data":656,"type":52,"version":25,"maxContentLevel":29},"4b2c8163-8f76-491d-a008-6654c8db0a14",{"type":52,"reviewType":26,"spacingBehaviour":25,"binaryQuestion":657,"binaryCorrect":659,"binaryIncorrect":661},[658],"What is hashing?",[660],"A one-way type of encryption that turns data into an encrypted form, all of which are the same size",[662],"A two-way type of encryption that allows information to be translated back to its original message",{"id":664,"data":665,"type":25,"maxContentLevel":29,"version":25,"reviews":669},"ff07a1dd-e806-4d98-a1b5-84e5de02addc",{"type":25,"title":666,"markdownContent":667,"audioMediaId":668},"How is hashing used in the blockchain?","Hashing actually has multiple functions in blockchain technologies. \n\nFirst, it’s vital to secure your assets. As you probably know by now, the only thing that Jenny needs to unlock her bitcoin is her private key. It functions like a key to a super-duper secure safe. Only with the private key can she access her funds. When Jenny attempts to make a transaction, her private key is hashed to her public address, and her ownership is confirmed. \n\n ![Graph](image://3d7b90b8-6f1c-4b11-b999-d3a26e2e89e3 \"Hashing is essential for wallet keys to work\")\n\nTo send bitcoin to Martha, Jenny finally needs Martha’s public address, and Jenny can pay back Martha for all the martinis they had last Friday night.\n\nConsidering blockchain’s reliance on encryption, there are countless other areas that hashing is implemented to ensure security and privacy on the blockchain. \n\n","98742ff9-f132-4e46-baaa-c2b98b2f21c6",[670],{"id":671,"data":672,"type":52,"version":25,"maxContentLevel":29},"3160d490-ebcd-4a42-bdbd-b5468263af83",{"type":52,"reviewType":21,"spacingBehaviour":25,"clozeQuestion":673,"clozeWords":675},[674],"The kind of algorithm that is essential to securing crypto assets is called hashing.",[676],"hashing",{"id":678,"data":679,"type":26,"version":25,"maxContentLevel":29,"pages":681},"e90d33fd-c103-45e8-9d18-fbb30ecfc711",{"type":26,"title":680},"Consensus Mechanisms",[682,697,714],{"id":683,"data":684,"type":25,"maxContentLevel":29,"version":25,"reviews":688},"b1e0b5f3-7f36-4405-a570-1c5bd49851fc",{"type":25,"title":685,"markdownContent":686,"audioMediaId":687},"Consensus mechanisms","A blockchain exists as a series of blocks of data, which are verifiable but unmodifiable. But who is taking the time to keep the system alive and well? For blockchains to work, it’s essential that people spend the time and money required to validate the network.\n\nThis is where ‘consensus mechanisms’ come in. They are aptly named: these are mechanisms for proving consensus about the data on the blockchain. To use the earlier analogy, consensus mechanisms are the processes people use for verifying that their smoothies have the same fruit in them.\n\nAll blockchains require consensus mechanisms, and there are a number of different approaches to creating them. The two most famous are ‘Proof-of-Work’ – used by Bitcoin, and ‘Proof-of-Stake’, now used by Ethereum and most other newer blockchains.\n","0290a3fd-02ab-408f-ac6f-3284116d8d3b",[689],{"id":690,"data":691,"type":52,"version":25,"maxContentLevel":29},"600f7a70-7cd8-4958-9b64-09cfd365994a",{"type":52,"reviewType":21,"spacingBehaviour":25,"clozeQuestion":692,"clozeWords":694},[693],"The two most famous consensus mechanisms are ‘Proof-of-Work’ – used by Bitcoin, and ‘Proof-of-Stake’, now used by Ethereum and most other newer blockchains.",[695,696],"Proof-of-Work","Proof-of-Stake",{"id":698,"data":699,"type":25,"maxContentLevel":29,"version":25,"reviews":702},"57f6952d-82dc-4eab-87e8-4b8ba4245f9a",{"type":25,"title":695,"markdownContent":700,"audioMediaId":701},"The two main consensus mechanisms are Proof-of-Work and Proof-of-Stake. They are different ways of achieving the same goal – incentivizing people to spend the time and computing power to keep the blockchain alive and well.\n\nProof-of-Work works by requiring participants - known as miners - to solve complicated math problems to verify transactions on the blockchain. \n\nThese math problems are very expensive by design to keep malevolent actors at bay. Attacks on the blockchain are disincentivized, since it takes a lot of computing power and energy to mine a block.\n\nIn theory, if you had over 50% of the computing power in the network, you could proclaim yourself as a billionaire and send tons of faulty transactions to yourself. But, because mining is so, so expensive, such fraudulent activity is effectively impossible. And even if it was, as soon as you’d changed the ledger, people would realize – and lose trust in the currency. Since the only thing giving crypto value is trust, hacking large cryptos is impossible and uneconomical.\n\nHowever, since energy is expensive, validators need a financial incentive. This is created through cryptocurrency rewards. Anyone who dedicates computing power to mining will be rewarded with that blockchain’s currency for doing so.\n","57072611-7b4f-4f48-91b2-2b05105a9c63",[703],{"id":704,"data":705,"type":52,"version":25,"maxContentLevel":29},"d11ce484-18b0-4793-a30b-42b6e6674e04",{"type":52,"reviewType":29,"spacingBehaviour":25,"multiChoiceQuestion":706,"multiChoiceCorrect":708,"multiChoiceIncorrect":710},[707],"What term is given to people running Proof-of-Work consensus mechanisms on dedicated computers?",[709],"Miners",[711,712,713],"Workers","Hackers","Block-builders",{"id":715,"data":716,"type":25,"maxContentLevel":29,"version":25,"reviews":719},"4277112d-a1fd-4bbb-9c28-2d651dade2b9",{"type":25,"title":696,"markdownContent":717,"audioMediaId":718},"The other major consensus mechanism used is Proof-of-Stake. This was invented as an alternative to Proof-of-Work when people realized the financial and environmental costs of using so much energy to validate the blockchain.\n\nProof-of-Stake instead requires participants in the network to ‘stake’ some of their coins – to put them up as collateral. In return, they are entered into a pool of people. One (or a handful) of these people is randomly selected to run the computer operation required to validate the block in the chain. Because they have skin in the game – their money is at stake as collateral – it can be safely assumed that they will not tamper with the block, otherwise they risk losing their ‘staked collateral.’\n\nProof-of-Stake is generally considered to be a superior, more efficient and environmentally-friendly alternative to Proof-of-Work. The biggest blockchain in the world – Bitcoin – runs on Proof-of-Work. But most new development and activity in the blockchain space is occurring on Ethereum or other chains that use Proof-of-Stake.\n","aef71934-b52d-4846-b99f-02d97a338754",[720],{"id":721,"data":722,"type":52,"version":25,"maxContentLevel":29},"cf35e204-5847-4aee-8dc1-9b99d68bc37e",{"type":52,"reviewType":26,"spacingBehaviour":25,"binaryQuestion":723,"binaryCorrect":725,"binaryIncorrect":727},[724],"What is the incentive for people not to tamper with blocks in a Proof-of-Stake blockchain?",[726],"Not losing their staked collateral",[728],"Being sued by the Ethereum Foundation",{"id":730,"data":731,"type":26,"version":25,"maxContentLevel":29,"pages":733},"1b15e73d-2c96-4dcb-b459-93e7a2eb1d9f",{"type":26,"title":732},"Applications and Benefits of Blockchain",[734,748,764],{"id":735,"data":736,"type":25,"maxContentLevel":29,"version":25,"reviews":740},"775a207d-91fb-4b01-a814-8d3ccd85aa44",{"type":25,"title":737,"markdownContent":738,"audioMediaId":739},"Uses of blockchain","There are many different potential uses of the blockchain that capitalize on its many advantages. In fact, the blockchain is expected to become the primary mechanism for widely used databases as Web3 rolls out and becomes increasingly popular.\n\n ![Graph](image://2c394c69-aebb-442f-97e2-107f3ebf6432 \"Blockchain is tamper-proof, unlike virtually any system of data storage in existence\")\n\nOne category of things which are likely to be added to the blockchain are things which want to be made resistant to tampering. Examples of these include digital currencies, real estate ownership and intellectual property ownership records.\n\nAnother category of things which are likely to be added to the blockchain are things which need to be kept private. Examples of these include personal information data, medical histories and mental health records.\n\n","59b0d113-5bdd-443f-a084-ce52dd33e73c",[741],{"id":742,"data":743,"type":52,"version":25,"maxContentLevel":29},"786be27a-7001-4b07-930a-db1aab3c3eaa",{"type":52,"reviewType":21,"spacingBehaviour":25,"clozeQuestion":744,"clozeWords":746},[745],"One category of things which are likely to be added to the blockchain are things which want to be made resistant to tampering.",[200,747],"tampering",{"id":749,"data":750,"type":25,"maxContentLevel":29,"version":25,"reviews":754},"e2d2b97e-683f-4bda-b729-94a3be66ab7c",{"type":25,"title":751,"markdownContent":752,"audioMediaId":753},"Benefits of blockchain","One of the benefits of blockchain is that it is effectively impossible for any agent to make changes to a database without those changes being visible to everyone. In Web2, you would only need to access and edit the database in order to change its elements. This means that theoretically, if you had access to your bank’s database, you would be able to move money from someone else to yourself without their permission.\n\nProponents of blockchain say that it's safer because, in the blockchain, it is impossible to change other people’s blocks once they are in the chain. However, given that modern banking databases are safeguarded with consistency reviews, one-time-passwords, two-factor authentication and complicated encryption, your money is pretty safe in the bank too.\n\nA second benefit of the blockchain is that interactions can be conducted pseudonymously. Instead of having to give a third party your name, so they can store it alongside your money, the database in the blockchain only relies on where the blockchains exist digitally to identify them.\n\n![Graph](image://7c48a954-fff5-42cc-9760-cad3314f92c2 \"Code ensures that transactions can be conducted anonymously\")\n\nFinally, it cuts out the third-party entirely. This means that even if you live in a location where a trusted, stable bank doesn’t exist, you can still rely on the safety of your money. Moreover, you don’t need to pay transaction fees or rely on the bank not to lose your money on poor investments, cutting out the middleman.\n\n","7e5e1543-037e-4ddd-8842-66078778bfe3",[755],{"id":756,"data":757,"type":52,"version":25,"maxContentLevel":29},"e94eb2db-febb-4f6f-95a6-58689d1b0af6",{"type":52,"reviewType":26,"spacingBehaviour":25,"binaryQuestion":758,"binaryCorrect":760,"binaryIncorrect":762},[759],"What is one of the benefits of blockchain?",[761],"It is impossible to change other people’s blocks once they are in the chain.",[763],"It uses less power than traditional servers",{"id":765,"data":766,"type":25,"maxContentLevel":29,"version":25,"reviews":770},"a57ee1d1-95ff-421b-8665-70af79603aa5",{"type":25,"title":767,"markdownContent":768,"audioMediaId":769},"Drawbacks of blockchain","However, there are also some key disadvantages to blockchains. \n\nWith a centralized database - like those of a bank - the government is able to quickly view criminal activity and hold people accountable. However, in a decentralized system, that’s far more difficult. Because people operate pseudonymously, fraudulent or criminal activity is harder to trace. That means that blockchains could become a hotbed for illegal activity, including drug trafficking, or money laundering.\n\nNevertheless, blockchains stand as a permanent and immutable public record of transactions. If, therefore, pseudonymous transactions can be identified by law enforcement, crypto could prove much easier to trace than, for example, cash. \n\nSecondly, as with any new technology, users unfamiliar with the blockchain might not trust it with their information or personal finances. Alternatively, this lack of familiarity might mean that they are susceptible to scams that prey on human errors rather than technological ones.\n\nFinally, frequently hashing and storing large amounts of information can take computational power. This means that until someone devises a hardware or software solution, blockchains will be slow. Moreover, the energy required to maintain the blockchain so that all blocks are online in multiple copies for checking is large, which itself will mean higher costs.\n\n","2286683b-eb1f-47b8-9bec-1a8b3f25393b",[771],{"id":772,"data":773,"type":52,"version":25,"maxContentLevel":29},"4bd10d06-cf1d-4fa7-a71b-1d345589c082",{"type":52,"reviewType":25,"spacingBehaviour":25,"activeRecallQuestion":774,"activeRecallAnswers":776},[775],"Why are cryptocurrencies and blockchains appealing to criminals?",[777],"They are much harder to trace than centralized technologies",{"id":779,"data":780,"type":26,"version":25,"maxContentLevel":29,"pages":782},"524cb8e6-2630-40c5-807f-643169409405",{"type":26,"title":781},"Challenges and Drawbacks of Blockchain",[783,797,813],{"id":784,"data":785,"type":25,"maxContentLevel":29,"version":25,"reviews":789},"d29a9da0-f02b-4992-90b3-6b33ea7b4330",{"type":25,"title":786,"markdownContent":787,"audioMediaId":788},"Electricity costs and climate change","Proof-of-Work blockchains have extremely heavy requirements when it comes to electricity. In fact, Bitcoin alone uses 150 Terawatt Hours, more electricity than Argentina, every single year. Computers will draw significant amounts of power in order to simply sustain the blockchain in the background, without even mentioning the process of extending it.\n\nIn the modern day, this poses a significant challenge because of the impacts of climate change. Currently, all of our methods of generating electricity have an impact on the climate. Even solar panels take away land from nature and can require unsustainable practices to build. As a result, the introduction of a vast new framework that requires copious amounts of electricity threatens our planet. \n\nThat being said, many blockchains are turning away from Proof-of-Work. 2022 saw the historic Ethereum ‘Merge’, where the Ethereum blockchain switched to Proof-of-Stake after a huge collective effort by the Ethereum Foundation. The move will cut the energy consumption of Ethereum by 99.95%.\n","e7d3849e-664b-46b3-80a1-77649d1183a8",[790],{"id":791,"data":792,"type":52,"version":25,"maxContentLevel":29},"050ba27d-552b-4152-94ec-7cb9c0479d83",{"type":52,"reviewType":21,"spacingBehaviour":25,"clozeQuestion":793,"clozeWords":795},[794],"In 2022, the Ethereum blockchain switched from Proof-of-Work to Proof-of-Stake, which will cut energy consumption by 99.95%.",[696,796],"99.95",{"id":798,"data":799,"type":25,"maxContentLevel":29,"version":25,"reviews":803},"6955de04-c7c7-413f-a88c-1b7c83f8c471",{"type":25,"title":800,"markdownContent":801,"audioMediaId":802},"What is the weak link in the blockchain?","One of the potential uses of the blockchain in the future will be to reliably track the ownership of real world assets. Usually, this involves an asset holder logging the transaction in the blockchain. However, there is a weak link in this system: humans.\n\nWhat if you give something to a friend and forget to log it in the blockchain? It won’t be logged in the Blockchain, so your friend won’t be the registered owner - they’ll never be able to sell or transfer ownership to anyone else. Here’s another problem: what if someone dies, and you inherit the property? Obviously, the previous owner will never be able to log the change in ownership in the Blockchain.\n\nIn order for the Blockchain to reach a state where it covers all of our needs, developers are going to have to think of innovative new solutions to the problems associated with human errors and imperfections.\n","e1a90fed-94e6-49bd-9d68-0583671e21ba",[804],{"id":805,"data":806,"type":52,"version":25,"maxContentLevel":29},"0ba72f91-fd62-4216-b5b4-0da4d2f52468",{"type":52,"reviewType":26,"spacingBehaviour":25,"binaryQuestion":807,"binaryCorrect":809,"binaryIncorrect":811},[808],"One of the potential uses of the blockchain in the future will be to reliably track the ownership of real world assets.",[810],"True",[812],"False",{"id":814,"data":815,"type":25,"maxContentLevel":29,"version":25,"reviews":819},"17a5247b-d322-433f-8f18-b10dc82df8ad",{"type":25,"title":816,"markdownContent":817,"audioMediaId":818},"Gas fees","Another drawback of the blockchain is that transactions are not free. While traditional banks often earn money indirectly and mostly don’t charge for transactions, blockchains charge fees every time you send money. On the blockchain, transaction fees are explicit and paid to the network participants, who help check that transactions are legitimate. This is done through consensus mechanisms: getting multiple different computers, also known as nodes, to check the authenticity of another block.\n\nIn the Ethereum network, these transaction fees are called ‘gas fees’. These are something you will need to pay each time you make a transaction on the blockchain. These fees can rack up quickly. When networks are congested fees can shoot up and it’s possible that some are upwards of $60 for each transaction - and potentially thousands for large transactions at peak times.","be3b1d29-1182-44a9-a472-c53bde9b5cff",[820],{"id":821,"data":822,"type":52,"version":25,"maxContentLevel":29},"1641224a-96e0-46bc-9b40-41cd75df438a",{"type":52,"reviewType":21,"spacingBehaviour":25,"clozeQuestion":823,"clozeWords":825},[824],"On the blockchain, transaction fees are called  ‘gas fees’ and can be upwards of $60 for each transaction.",[826,827],"gas","$60",{"id":829,"data":830,"type":28,"maxContentLevel":29,"version":25,"orbs":833},"c17564b6-8480-4598-951b-3ed61e30e970",{"type":28,"title":831,"tagline":832},"How Does Decentralized Finance Work?","How descentralized finance (DeFi) is shaking up financial services.",[834,890,959,1044],{"id":835,"data":836,"type":26,"version":25,"maxContentLevel":29,"pages":838},"04eafd37-bfba-43e7-8171-88c49b8386de",{"type":26,"title":837},"A Primer for Traditional Finance",[839,862,876],{"id":840,"data":841,"type":25,"maxContentLevel":29,"version":25,"reviews":845},"cf81e847-4839-4e4e-948c-077b74b05da4",{"type":25,"title":842,"markdownContent":843,"audioMediaId":844},"A primer for traditional finance","DeFi (Decentralized Finance) is a buzzword that anyone who has read about Web3 will have come across. But it can also be a tricky concept to get your head around. This is because many of the services that DeFi deals with – traditional financial services – are already pretty complex and abstract. \n\nFinancial services is a term used for the investment, lending, and management of money and assets.\n\nFor most people, that begins and ends with their bank – the bank looks after your money, you might get loans or mortgages from them, and you may make investments through them too. \n\nThere is one main utility provided by banks, and other providers of financial services: trust.\n\nYou put your money in a bank because you trust their ability to look after it better than you can yourself. You also are putting trust into a legal system that will uphold your rights if that money is not looked after according to the bank’s contractual obligations.\n","606d5304-8f98-4d6b-85e6-75e03882de1e",[846,855],{"id":847,"data":848,"type":52,"version":25,"maxContentLevel":29},"2f834293-2280-4e09-8175-cd66dc6230f7",{"type":52,"reviewType":26,"spacingBehaviour":25,"binaryQuestion":849,"binaryCorrect":851,"binaryIncorrect":853},[850],"What is the main utility provided by banks and other providers of financial services?",[852],"Trust",[854],"Intelligence",{"id":856,"data":857,"type":52,"version":25,"maxContentLevel":29},"783ef8fe-ebd1-4d6e-9f63-e0ed68000b39",{"type":52,"reviewType":25,"spacingBehaviour":25,"activeRecallQuestion":858,"activeRecallAnswers":860},[859],"What is DeFi an abbreviation of?",[861],"Decentralized Finance",{"id":863,"data":864,"type":25,"maxContentLevel":29,"version":25,"reviews":868},"1b4fce66-ab89-4814-bf4b-1162902b63c6",{"type":25,"title":865,"markdownContent":866,"audioMediaId":867},"The problem with traditional finance","People use financial services providers (let’s just call them ‘banks’, though they aren’t all banks) because they need someone to trust with their money. Traditionally, that means the bank must be a centralized entity – an institution governed by a group of people with complete executive control of its operations.\n\nThis is because for most of history, the only way to ensure trust was to enter into a contract between two legal entities. When you open a bank account, that’s what you do. You enter into a contract with HSBC or Bank of America or whichever other institution you choose.\n\nThe problem with this system is that it puts an incredible amount of power and money into the hands of the centralized entities that govern our financial system. All the transactions made through centralized banks are set up to allow the bank to take a small slice of the pie.\n\nMany individuals would prefer to engage in financial processes – borrowing, lending, investing – in a way that didn’t force them to allow these institutions to take a slice of their money.\n\nThis is the problem that DeFi sets out to solve, by replacing the need for trusted central bodies in financial transactions with a trustless system built on the blockchain. \n","b049dbec-8c30-4462-9e2e-f8f48029c0c2",[869],{"id":870,"data":871,"type":52,"version":25,"maxContentLevel":29},"04e9f68e-cb63-4cda-948d-ecdeb49bb06f",{"type":52,"reviewType":25,"spacingBehaviour":25,"activeRecallQuestion":872,"activeRecallAnswers":874},[873],"What is the function of DeFi?",[875],"Replacing centralized financial authorities with peer-to-peer transactions",{"id":877,"data":878,"type":25,"maxContentLevel":29,"version":25,"reviews":882},"c286c42b-3309-45dc-b4e4-9ed51da4a374",{"type":25,"title":879,"markdownContent":880,"audioMediaId":881},"Smart contracts ","Most of us use traditional contracts with trusted bodies for managing our finances. You need a name like Citibank or Wells Fargo on the other side of the contract to ensure that you know who is responsible when something doesn’t go right with your money.\n\n![Graph](image://36cfa6a9-bde0-4bd1-a77a-638c2c417276 \"An illustration of how smart contracts work\")\n\nThe cornerstone of DeFi’s ambition is to replace centralized entities with a technology called ‘smart contracts’.\n\nIn a sense, smart contracts are very simple. The difference between a smart contract and a traditional contract is that a smart contract is enforced by a computer code on a machine, whereas a traditional contract is enforced by government power. \n\nThe only thing compelling someone to honor a traditional contract is the knowledge that the law could intervene. In a smart contract, the terms are self-executing, with the machine being programmed – visibly, and indisputably – to fulfil its side of the agreement.\n\n","c172fd7d-13ea-4fee-8df5-45940a401ba5",[883],{"id":884,"data":885,"type":52,"version":25,"maxContentLevel":29},"62104078-fd9d-4c3f-820c-d319eecc4575",{"type":52,"reviewType":21,"spacingBehaviour":25,"clozeQuestion":886,"clozeWords":888},[887],"Most of us use traditional contracts with trusted bodies for managing our finances.",[889],"traditional contracts",{"id":891,"data":892,"type":26,"version":25,"maxContentLevel":29,"pages":894},"1cf7651d-5820-498a-aa5c-57f06ee860b2",{"type":26,"title":893},"Smart Contracts and Their Enforcement",[895,913,931,945],{"id":896,"data":897,"type":25,"maxContentLevel":29,"version":25,"reviews":901},"3e5e3ea8-3cc7-47f7-8b7e-d0ce3e413c10",{"type":25,"title":898,"markdownContent":899,"audioMediaId":900},"How smart contracts are enforced","So, why aren’t we all managing our money with smart contracts, and instead making traditional contracts with centralized banks who take much of our capital gains for themselves?\n\nThe answer, once again, is trust. For most of the history of computing, it hasn’t been possible to ensure an incorruptible machine with which to make your smart contract. Therefore you couldn’t be certain that your side of the deal would be paid out, unless there was some legal entity willing to put their name on the other side of the contract. \n\nHowever, in a world where blockchains exist – meaning a trustworthy, impossible-to-tamper-with ledger of information – it becomes possible to create smart contracts that people can trust without the need for a trusted authority backing them up.\n\nFor example, say that you wanted to purchase insurance against rain. Currently, you would purchase this through a company, and after it rains on the agreed-upon date, you’d file a claim to the insurance company documenting the rain. To actually claim your money, you’d need legal proof of rain, and probably weeks of bureaucracy, while the company went through its own protocols for verifying your claim.\n\nIt’s now possible to program a smart contract to point to an “oracle” – an agreed-upon source of information – and write that “if RAIN in AUSTIN on DATE, PAY me AMOUNT.” Assuming this oracle is independent and honest, the moment rain occurs in Austin on January 1st, money appears in my crypto wallet.\n","f6aa1d56-09d2-4b13-ac36-e70f607e7516",[902],{"id":903,"data":904,"type":52,"version":25,"maxContentLevel":29},"0abea781-2b51-4216-815e-c2d1fdeb7ebb",{"type":52,"reviewType":29,"spacingBehaviour":25,"multiChoiceQuestion":905,"multiChoiceCorrect":907,"multiChoiceIncorrect":909},[906],"What is the main reason why we are not using smart contracts for managing our money?",[908],"A lack of trust in technology",[910,911,912],"Lack of software engineers","Lack of resources","Lack of legal proof",{"id":914,"data":915,"type":25,"maxContentLevel":29,"version":25,"reviews":919},"fb6b217f-8464-4db2-98ed-02124d3206b8",{"type":25,"title":916,"markdownContent":917,"audioMediaId":918},"How Blockchain enables DeFi","Blockchain, in its simplest form, allows for a totally transparent ledger of information, that all parties can refer to and no party can change.\n\nThis is the perfect forum for true smart contracts to exist in. People wanting to access financial services can do so directly by making contracts with one another, and those contracts can be automated.\n\nImagine you wanted to lend out some money at a 4% annual interest rate. Many would be interested in doing this, but they aren’t going to spend the money on lawyers to draw up contracts, ratings agencies to establish the creditworthiness of their borrowers, etc. So traditionally, you’d lend that money through a broker – buying government bond perhaps – and in so doing, you’d have to let that broker take a cut.\n\nWith a smart contract, you could guarantee all the same assurances as a broker, and that your money will be paid out. Both the borrower and the lender would benefit in this scenario, as all the traditional middlemen have been taken out.\n\nBlockchain enables this because it takes the place of the trusted third party. Both parties in the agreement can see the smart contract – which is public, readable and auditable – and know that it can’t be changed.","be0e7d93-0281-428b-a60a-0a16cefc6129",[920],{"id":921,"data":922,"type":52,"version":25,"maxContentLevel":29},"8d6e3895-4391-4ec6-a0d1-527d560865f3",{"type":52,"reviewType":29,"spacingBehaviour":25,"multiChoiceQuestion":923,"multiChoiceCorrect":925,"multiChoiceIncorrect":927},[924],"What does blockchain enable in regards to smart contracts?",[926],"It takes the place of the trusted third party",[928,929,930],"It makes it easy for anyone to write a contract","It uses AI to take the place of lawyers","It allows machines to make contracts without human permission",{"id":932,"data":933,"type":25,"maxContentLevel":29,"version":25,"reviews":937},"1b9cc182-735c-415a-a374-770a8040d275",{"type":25,"title":934,"markdownContent":935,"audioMediaId":936},"Collateral in smart loans","Currently, when borrowing or lending money, the borrowers typically put up collateral to secure the loan. When asking for a major loan, for example of $50,000, a bank might ask that you put your house up as collateral. This means that if you don’t pay them back within a reasonable stretch of time, they will take your house. This protects the lender and gives them a guarantee of repayment.\n\n\n![Graph](image://c2eb9b7b-e58d-42b0-8e46-1809e84c7fa9 \"DeFi could drastically simplify the process of taking out a loan\")\n\nHowever, currently, even if a borrower is struggling to pay back a loan, it is hard for the lender to claim the collateral. Typically, collateral needs to be collected through extensive legal action, which can be long and arduous. \n\nThe nature of smart contracts is that they are self-executing, meaning that once the contract has been agreed, the borrower isn’t going to be able to withhold their collateral if the terms are not met. In fact, if the value of the loan exceeds the value of the asset, the smart contract can automatically “liquidate” the asset, simultaneously selling it and paying off the loan.\n\nThis is a significant advantage for anyone wanting to engage in borrowing or lending money – it is a safer bet for the lender, and that can often translate to lower prices for the borrower, since the costs of lawyers to create the contract, and accountants to audit the collateral, goes down.\n\n\n","a403a82e-4ff0-4bca-81cc-95c3040f3ac9",[938],{"id":939,"data":940,"type":52,"version":25,"maxContentLevel":29},"51a75346-6238-4d29-a259-7c6417e4f282",{"type":52,"reviewType":25,"spacingBehaviour":25,"activeRecallQuestion":941,"activeRecallAnswers":943},[942],"What is a significant advantage of using smart contracts when borrowing or lending money?",[944],"It is a safer bet for the lender, and that can often translate to lower prices for the borrower",{"id":946,"data":947,"type":25,"maxContentLevel":29,"version":25,"reviews":951},"b913acb3-08cc-4ee1-aaa6-a807e9d8cfef",{"type":25,"title":948,"markdownContent":949,"audioMediaId":950},"Smart contracts and insurance","Another financial industry where decentralized finance can be useful is when it comes to insurance. The principle of insurance is that people pay a flat fee so that if a disaster strikes, for example them crashing their car, they will get a payout to compensate for their loss. Fundamentally, insurance is a way of counter-balancing risk.\n\nHowever, a significant issue with current contractual insurance is that claiming a payout can take time. Typically, you have to make a claim using a complicated form, which will then take time. Plus, insurance companies sometimes use that time to try to wriggle out of paying the claim through contractual loopholes.\n\nWith smart contracts relating to insurance, theoretically both sides can trust that the payout will be triggered when the specific conditions are met. This is particularly true when something can be easily verified by a computer. \n\nIn theory, as a result of smart contracts, it is not up to either side to decide whether a payout is appropriate. Moreover, there should be no room for disputes or ambiguity because it occurs automatically. In practice, the integration of real-world information to the blockchain via price oracles is limited, but over time as this data increases, the type and complexity of smart contracts will as well.\n","ea3ed643-d1e3-490d-8b52-d66448e35363",[952],{"id":953,"data":954,"type":52,"version":25,"maxContentLevel":29},"89b265ae-4216-4d20-a28b-18ddc24fa402",{"type":52,"reviewType":21,"spacingBehaviour":25,"clozeQuestion":955,"clozeWords":957},[956],"Another financial industry where decentralized finance can be useful is insurance.",[958,127],"insurance",{"id":960,"data":961,"type":26,"version":25,"maxContentLevel":29,"pages":963},"42c8b88a-0343-409f-92a0-7b5743f6e31f",{"type":26,"title":962},"Applications and Risks in DeFi",[964,982,998,1012,1030],{"id":965,"data":966,"type":25,"maxContentLevel":29,"version":25,"reviews":970},"74ad3a53-026b-441e-a7fb-b6668ae92865",{"type":25,"title":967,"markdownContent":968,"audioMediaId":969},"Applications in DeFi","So far, we’ve covered some of the major principles of theory behind decentralized finance. But how does one access it? If I wanted to get involved with DeFi, how would I go about doing it?\n\nWell, currently, decentralized finance is largely accessed through apps which let you buy/sell/swap crypto tokens and invest/lend money. At the moment, many apps in decentralized finance model existing financial institutions like banks, exchanges, or even casinos. However, as Web3 develops and users understand its potential, applications will develop further, eventually including the integration of real-world assets like real estate. \n\nHowever, the technology behind decentralized finance applications is not fully developed yet, so it isn’t fully reliable. Sometimes there can be bugs in the code or vulnerabilities to scammers because the technology is so new. \n\nAs a result, it is important to make sure that the decentralized finance application has been audited and thoroughly tested before trusting it with significant sums of money. Although every investment carries risk, the unique risk associated with contract vulnerabilities is called ‘smart contract risk’ and in some cases, may result in the complete and total loss of assets ‘locked’ in the contract.\n","0d5691c3-7cf2-4fa6-89cb-58e44d9209d3",[971],{"id":972,"data":973,"type":52,"version":25,"maxContentLevel":29},"5433a27b-e91b-4d2e-a193-bd87935a4b8c",{"type":52,"reviewType":29,"spacingBehaviour":25,"multiChoiceQuestion":974,"multiChoiceCorrect":976,"multiChoiceIncorrect":978},[975],"What is the unique risk associated with contract vulnerabilities in DeFi?",[977],"Smart contract risk",[979,980,981],"Financial risk","Market risk","Investment risk",{"id":983,"data":984,"type":25,"maxContentLevel":29,"version":25,"reviews":988},"979244db-60af-4370-83b1-7c7b7561eeaa",{"type":25,"title":985,"markdownContent":986,"audioMediaId":987},"Staking - locking up assets to earn yield","There are many different ways you can invest in DeFi, but one of the first that you’ll come across is ‘staking.’ Think of this as locking up an asset for a particular amount of time, often called an ‘epoch,’ and being rewarded with some amount of yield. The simplest form of staking is in the validation of the blockchain itself.\n\nFor ‘Proof of Stake’ (PoS) blockchains, a group of people choose to be validators by staking, or locking up, a certain quantity of assets to have the right to implement the chain’s consensus mechanisms, validate the authenticity of new transactions, and package those transactions into a new block to be added to the blockchain. \n\nSince this is a very important job that ensures the integrity of the chain, the staked funds act as an assurance that the validator will act in good faith. If they do this correctly, they’re rewarded. If the validator attempts to cheat or violates the validation rules, their stake is ‘slashed’ and they lose part of their capital as a punishment. This provides an incentive mechanism for proper validation of the blockchain.","c87ff1ba-3274-46a5-811f-57a682485d82",[989],{"id":990,"data":991,"type":52,"version":25,"maxContentLevel":29},"4112bf5a-674c-4469-b492-aa334e9c791e",{"type":52,"reviewType":26,"spacingBehaviour":25,"binaryQuestion":992,"binaryCorrect":994,"binaryIncorrect":996},[993],"What is the term used for locking up an asset for a particular amount of time in DeFi?",[995],"Staking",[997],"Investing",{"id":999,"data":1000,"type":25,"maxContentLevel":29,"version":25,"reviews":1004},"9c612d9b-ebeb-4841-9081-86355ff8d81b",{"type":25,"title":1001,"markdownContent":1002,"audioMediaId":1003},"Traditional liquidity","Liquidity may be one of the most important but taken-for-granted parts of our economy. Let’s take, for example, buying or selling a car. We all take it for granted that if we have money and want to buy a car, or have a car and want money, we’re able to make that happen, usually through a car dealer.\n\nIn this example, the car dealer provides liquidity to the car market. He or she has a pile of cash and a bunch of cars and is willing to buy cars or sell cars at certain prices. This ensures that your average consumer always has a liquid market between cars and money to be able to transact.\n\n\n ![Graph](image://fc13d9ab-d6b1-4bc7-9a17-0db6b6fc8e4e \"Car dealers - essential providers of liquidity in an economy\")\n\nIn the traditional financial system (TradFi), this happens through market makers. These are generally large financial firms willing to take either side of a trade at any given time to ensure that your average consumer can buy or sell their Apple or Tesla stock when they want. In exchange, the market maker may take a fee for providing this service.\n\n","dc6e3564-ee3d-4b6a-9c38-a13c95bc93f9",[1005],{"id":1006,"data":1007,"type":52,"version":25,"maxContentLevel":29},"586fff82-c253-42d0-bca9-876969fa1b68",{"type":52,"reviewType":21,"spacingBehaviour":25,"clozeQuestion":1008,"clozeWords":1010},[1009],"Liquidity is provided in TradFi by market makers willing to take either side of a trade.",[1011],"market makers",{"id":1013,"data":1014,"type":25,"maxContentLevel":29,"version":25,"reviews":1018},"ffa1e479-27a4-4bd3-9a6e-7c78a1dc7d2c",{"type":25,"title":1015,"markdownContent":1016,"audioMediaId":1017},"Liquidity in DeFi","In DeFi, liquidity is handled a bit differently. In order to trade two tokens, for example USDC and ETH, there needs to be a ‘car dealer’ willing to have some of each to enable people to swap. Rather than a single large player like in TradFi, DeFi smart contracts enable anyone to lock up these two assets in a ‘liquidity pool’ and become a ‘liquidity provider’ or LP. As other users swap these assets, they’re deducted automatically from the liquidity pool and the LP takes transaction fees in exchange for providing liquidity.\n\nOf course, this construct means that the pool that may have started with equal amounts of each asset quickly becomes out of balance. As a result, the price of the assets adjusts to compensate for demand. Although being an LP may be lucrative, there are also risks associated with the price movement of the underlying assets called ‘impermanent loss’ that are complex and should not be underestimated. As with any DeFi interaction, smart contract risk exists as well.\n","f3384c64-b514-4277-bdb9-5c2ca3529b24",[1019],{"id":1020,"data":1021,"type":52,"version":25,"maxContentLevel":29},"fdedeba1-b84b-4411-b0f3-31162bfd97d2",{"type":52,"reviewType":29,"spacingBehaviour":25,"multiChoiceQuestion":1022,"multiChoiceCorrect":1024,"multiChoiceIncorrect":1026},[1023],"What does the term 'LP' stand for in DeFi?",[1025],"Liquidity Provider",[1027,1028,1029],"Licensed Protocol","Learning Polygon","Liquid Peer",{"id":1031,"data":1032,"type":25,"maxContentLevel":29,"version":25,"reviews":1036},"304a9278-dc88-4ea5-a32a-c63d5fabbc7b",{"type":25,"title":1033,"markdownContent":1034,"audioMediaId":1035},"Yield farming - chasing LP yield and incentive programs","With thousands of crypto tokens in circulation and a limited amount of capital in DeFi, there are small cap tokens that unfortunately do not have any ‘car dealers’ with inventory, making it virtually impossible to buy or sell those assets. To combat this problem, many tokens have their own incentive programs to encourage people to provide liquidity for that asset. In some cases, this comes in the form of free tokens as an ‘airdrop’ to users willing to LP. Together, these rewards are stacked on the transaction fees earned by LPs to increase the overall yield of an LP position.\n\nYield farming, therefore, is the act of earning returns in exchange for locking up assets in an LP position. Several services, including Yearn Finance, offer a continually-updating list of yield farming opportunities for users to choose from. These often combine LP positions and staking to offer users high returns in exchange for the most efficient use of their capital.\n","3c5721aa-bd1d-47fc-930c-48cc23b5e1ae",[1037],{"id":1038,"data":1039,"type":52,"version":25,"maxContentLevel":29},"8890e4e3-7561-4a91-8522-4859253d5992",{"type":52,"reviewType":21,"spacingBehaviour":25,"clozeQuestion":1040,"clozeWords":1042},[1041],"Yield farming is the act of earning returns in exchange for locking up assets in an LP position.",[1043],"Yield farming",{"id":1045,"data":1046,"type":26,"version":25,"maxContentLevel":29,"pages":1048},"d15f9ec7-7243-4b37-871c-38d8c56fab37",{"type":26,"title":1047},"Future Directions in DeFi",[1049,1065,1079],{"id":1050,"data":1051,"type":25,"maxContentLevel":29,"version":25,"reviews":1055},"7c4a548e-101e-44af-a5f1-adf4ceaf5ef3",{"type":25,"title":1052,"markdownContent":1053,"audioMediaId":1054},"Layer one vs layer two","Bitcoin and Ethereum were designed quite a while ago with a focus on decentralization and security. As a result of the complex operations involved in running their blockchains, Bitcoin could only process about 7 transactions per second (TPS) and Ethereum wasn’t much better at about 15 TPS. As the blockchain grew in popularity, these limits were quickly reached, resulting in network congestion and high transaction (e.g. ‘gas’) fees. \n\nSeveral other blockchains have tried to solve this, most notably Solana. Ethereum has also drastically improved its transaction rate. However, these blockchains follow an older technology called ‘Layer One’, that effectively caps the speed that they could ever reach.\n\nNewer blockchains have been developed called ‘Layer Two’ blockchains that set out to solve this. They are actually built on top of existing blockchains like Ethereum.\n\nThink of L2 blockchains as the equivalent of skyscrapers. Although there is a finite amount of physical land in Manhattan, theoretically skyscrapers can scale infinitely tall, massively increasing the number of people that can live on a small piece of land. The most notable L2 blockchains are the Lightning Network and Polygon. \n","f08ef594-0f6f-4db1-9acd-ca178abe53eb",[1056],{"id":1057,"data":1058,"type":52,"version":25,"maxContentLevel":29},"8eeaa715-e4b8-4682-9041-da0bacdc0e4e",{"type":52,"reviewType":26,"spacingBehaviour":25,"binaryQuestion":1059,"binaryCorrect":1061,"binaryIncorrect":1063},[1060],"What kind of blockchain aims to build on top of existing blockchains to solve performance issues?",[1062],"Layer Two",[1064],"Layer One",{"id":1066,"data":1067,"type":25,"maxContentLevel":29,"version":25,"reviews":1071},"c320a1b8-c75d-47aa-ad17-74effa704843",{"type":25,"title":1068,"markdownContent":1069,"audioMediaId":1070},"Uses of DeFi","One of the reasons why DeFi is used is because it avoids government oversight and regulation. While decentralized finance is not fully anonymous - you can still see which computers are involved in a transaction - you don’t need to share your full personal details. This differs from existing systems for opening a bank account and taking out a loan, which normally requires giving all of your personal information to the financial institution. \n\nOne benefit of this is that borrowers with poor credit histories or who prefer privacy are able to use decentralized finance. As a result, lenders have been reluctant to provide ‘undercollateralized credit,’ or in other words, any loan that isn’t backed by at least that amount of underlying assets. By ‘overcollateralizing’ loans, the lender ensures that if the collateral’s value declines, they’re able to liquidate (i.e. sell) that asset to pay off the loan. \n\nAnother advantage of decentralized finance is that it largely avoids human error, since humans make mistakes! Whereas normal contracts can be open to subjective legal interpretation, the automatic conditions of smart contracts provide clarity and reliability to relationships.\n","67360783-d562-4562-9f1e-1b692ea0d0be",[1072],{"id":1073,"data":1074,"type":52,"version":25,"maxContentLevel":29},"3fcbd04f-3c5d-4d12-88c4-2a3af5d4ec91",{"type":52,"reviewType":21,"spacingBehaviour":25,"clozeQuestion":1075,"clozeWords":1077},[1076],"One of the reasons why DeFi is used is because it avoids government oversight and regulation.",[1078],"DeFi",{"id":1080,"data":1081,"type":25,"maxContentLevel":29,"version":25,"reviews":1085},"1a7179df-9439-4268-91a2-7ae58f23d8ea",{"type":25,"title":1082,"markdownContent":1083,"audioMediaId":1084},"Can people ever trust DeFi?","When it comes to any financial system, there is one key feature upon which all success is predicated: trust. If people don’t trust that their money is safe in a financial system, it will never be able to successfully take off. This is one problem that people have identified with DeFi.\n\nEven though the Blockchain is largely associated with reliability by experts in computer science, a big question with DeFi is whether ordinary consumers will be able to get onboard with it. Will they be able to understand the fact that their money can’t just be “hacked”? \n\nWhen it comes to existing banks like Barclays, HSBC and Santander, people trust that their money is safe because of the fame associated with the brand. They have heard of these companies before and can visit their physical branches to speak to staff. However, with DeFi, there is no centralized authority. That means there is nobody to abdicate responsibility to. There is nobody to blame when things go wrong. And, perhaps most importantly, there is nobody to bail you out if you fall victim to a scam. \n\nFor all these reasons, there remains skepticism amongst some analysts about whether DeFi is ever going to take off.\n","de39bdfa-c097-4cec-82d4-37893096ba46",[1086],{"id":1087,"data":1088,"type":52,"version":25,"maxContentLevel":29},"3ea0373c-a66e-421b-8375-995cf6d40f27",{"type":52,"reviewType":26,"spacingBehaviour":25,"binaryQuestion":1089,"binaryCorrect":1091,"binaryIncorrect":1092},[1090],"What is one of the key features of any financial system that is necessary for success?",[852],[1093],"Executive boards",{"id":1095,"data":1096,"type":28,"maxContentLevel":29,"version":25,"orbs":1099},"b4e84ac6-3dac-4b80-a68d-2370317b17e8",{"type":28,"title":1097,"tagline":1098},"Crypto Scandals","Things haven't always been plain sailing in the crypto space.",[1100,1181,1256],{"id":1101,"data":1102,"type":26,"version":25,"maxContentLevel":29,"pages":1104},"44022902-9ebd-4264-b440-05f1fbbc9a62",{"type":26,"title":1103},"Scams and Fraud in Web3",[1105,1121,1135,1150,1166],{"id":1106,"data":1107,"type":25,"maxContentLevel":29,"version":25,"reviews":1111},"600e6479-3622-4af7-95b7-3beaaafc95c1",{"type":25,"title":1108,"markdownContent":1109,"audioMediaId":1110},"Oh so scandalous!?","Obviously, the introduction of online banking made it quicker and easier to transfer money than ever before. As a result, internet banking opened new frontiers for scams and instances of fraud because of the ease of transferring money without needing to pass physical verification checks at a local bank or centralized computerized ones.\n\n ![Graph](image://9e31fdea-3140-4ecd-8ba7-f2ed23903af8 \"Crypto is extremely secure - until it isn't\")\n\nSimilarly, the invention of cryptocurrencies has opened up a new frontier for scammers and new opportunities for fraud and theft. For the purposes of discussion, we’ll refer to this new frontier of digital asset scams, theft and exploits collectively as cryptoscams.\n\nThese typically are aimed at getting one of three things: your money, your personal data or access to your computational power. While the first two of these scams also exist in Web2, the third is an emerging type of scam that is nearly exclusive to the universe of Web3.\n\n","3a94a422-1cde-4a8b-9856-5e924dd263a7",[1112],{"id":1113,"data":1114,"type":52,"version":25,"maxContentLevel":29},"1cf4b5b7-188f-4c3a-b146-b08d3f18a63f",{"type":52,"reviewType":25,"spacingBehaviour":25,"activeRecallQuestion":1115,"activeRecallAnswers":1117},[1116],"What are the three things that cryptoscams typically aim to get?",[1118,1119,1120],"Your money","Your personal data","Access to your computational power",{"id":1122,"data":1123,"type":25,"maxContentLevel":29,"version":25,"reviews":1127},"4bdda1ef-fb75-4fb0-8493-407c015eb316",{"type":25,"title":1124,"markdownContent":1125,"audioMediaId":1126},"Why are digital assets particularly vulnerable?","Of course, online scams are as old as the Web. However, it is important to understand that cryptoscams are on an entirely new scale to anything that has ever happened before. According to The Verge, in the first half of 2022, cryptoscams stole over $2 billion from Web3 early adopters. For context, in 1999 when Web1 was roughly the same age, only about $80 million disappeared to scams.\n\nBut why are cryptoscams an even bigger problem in Web3?\n\nWith the conventional banking system, there are safeguards in place to avoid susceptibility to scams and instances of fraud. Some of these are regulatory, meaning that the government forces your bank to provide them, others are imposed by the bank to protect its customers. \n\nHowever, in Web3, none of these safeguards exist. Because there is no centralized mediator in financial transactions, you cannot rely on third party measures to ensure that you don’t fall victim to a scam. Moreover, transactions are irreversible - once your funds have been compromised there is usually no way back.\n\nThe novelty of Web3 means that many users don’t typically know how it works, or how scams tend to happen. All of this means that cryptocurrencies and non-fungible tokens (NFTs) have been a perfect place for scammers to attack in recent years.\n","5f826eda-464c-4ee5-80ca-1a2f1ea0fe33",[1128],{"id":1129,"data":1130,"type":52,"version":25,"maxContentLevel":29},"2a7af308-b118-4ff5-96dc-abc14eb834a4",{"type":52,"reviewType":21,"spacingBehaviour":25,"clozeQuestion":1131,"clozeWords":1133},[1132],"According to The Verge, in the first half of 2022, Cryptoscams stole over $2 billion from Web3 early adopters.",[1134],"Cryptoscams",{"id":1136,"data":1137,"type":25,"maxContentLevel":29,"version":25,"reviews":1141},"2c79ecd0-9d56-4873-b5a9-84ffcd6e5a5d",{"type":25,"title":1138,"markdownContent":1139,"audioMediaId":1140},"Computer-based scams and exploits","So, what are the types of scams that exist in Web3? How do they work? Well, broadly, online scams can be split into two major categories. While some scams target computer vulnerabilities, others target human vulnerabilities. \n\nGiven the nature of blockchains, attackers are unable to ‘hack into the database’ and give themselves tokens the way that someone could for a centralized Web2 database. As a result, most crypto ‘theft’ is actually due to the discovery of a smart contract vulnerability. An example would be a poorly written smart contract that doesn’t validate the number of tokens in a user’s account prior to allowing a withdrawal. \n\n ![Graph](image://01c70998-223e-466b-b13a-950187ea882e \"Hackers can perform computer-based scams\")\n\nSophisticated attackers can interact directly with the contract programmatically. The attacker can then submit values to the contract that the web interface wouldn’t allow, then permitting the withdrawal of otherwise unavailable funds. The variety of exploits is infinite, but generally the attacker is looking for the opportunity to ‘trick’ the smart contract into providing them money due to an oversight by the original developer.\n\nHackers who are able to access your computer and find unencrypted passwords stored in files are able to use those to access your accounts. The same applies if you have unencrypted wallet seed phrases or private keys stored on your machine. To be safe, *never* store passwords, seed phrases, or private keys in files on your hard drive.\n\n","249e8c24-332d-480f-885a-1a9d0df8b956",[1142],{"id":1143,"data":1144,"type":52,"version":25,"maxContentLevel":29},"a0597b78-d8b4-4e0f-96ff-8ff87557fc35",{"type":52,"reviewType":25,"spacingBehaviour":25,"activeRecallQuestion":1145,"activeRecallAnswers":1147},[1146],"What are two major categories of online scams?",[1148,1149],"Computer-vulnerability","Human-vulnerability",{"id":1151,"data":1152,"type":25,"maxContentLevel":29,"version":25,"reviews":1156},"6154d433-d74c-4cbb-a7fd-5525662550d9",{"type":25,"title":1153,"markdownContent":1154,"audioMediaId":1155},"Human-based scams and exploits","Scams preying on human vulnerabilities are much more prevalent in Web3. Because transactions are instant, irreversible, and require no third-party approval, if a hacker gets into your account or tricks you to send them money, it’s gone. \n\nIn the traditional financial system, even if a hacker got into someone’s bank account, large transactions would likely be flagged as potential fraud, requiring verification, and it’s very likely that even if a transaction was sent, the bank would be able to reverse it in the future, returning the stolen funds.  \n\nNone of these safeguards are widespread yet in Web3, though ‘smart contract wallets’ are being developed to enable temporary time locks, secondary authentication, or several other safeguards using the programmability of the blockchain rather than the intervention of a third party.\n\nYou may be thinking, who’s stupid enough to give their password to some stranger on the internet? Well, it’s often more complicated than that. Scammers will often obtain your password through three different intelligent mechanisms: phishing, screen recording and impersonating websites you recognize. It is not just foolishness that makes someone susceptible to a human based scam.\n","45a02d46-2d00-44a5-8289-a6415bdedf93",[1157],{"id":1158,"data":1159,"type":52,"version":25,"maxContentLevel":29},"a371b03d-92ea-455b-8d9b-dc68651f91b2",{"type":52,"reviewType":25,"spacingBehaviour":25,"activeRecallQuestion":1160,"activeRecallAnswers":1162},[1161],"How do scammers obtain passwords?",[1163,1164,1165],"Phishing","Screen recording","Impersonating websites",{"id":1167,"data":1168,"type":25,"maxContentLevel":29,"version":25,"reviews":1172},"5ec1dc48-e6de-4485-8009-7934d524e5fe",{"type":25,"title":1169,"markdownContent":1170,"audioMediaId":1171},"Web3 phishing","One human-based scam is phishing. In phishing, scammers will send a user an email or a message claiming to be representative of a service - for example, your crypto wallet. \n\n ![Graph](image://41ab5f2d-79af-4ad8-8078-bb3cb0bead95 \"Phishing attacks are even more of a threat in Web3\")\n\nThey will often try to create an urgent reason for you to access your account, like claiming that you’ve been hacked or your account has undergone a recent major transaction and will provide you with a link to log into your wallet.\n\nThis link will take you to a website that looks identical to your wallet. That means you can trust it, right? Wrong. These websites will be designed by the scammer to mimic your wallet right up until you put your password in. However, when you do, rather than signing you in, the phishing site will send your password directly to the scammer who will then be able to sign in to your account.\n\nAccording to the Verge, in February 2022, $1.7 million was stolen from 15 different users of the OpenSea blockchain in just three hours. This shows that it's not just beginner users who can fall victim to phishing scams - experienced users can also be victims.\n\nThe moral of the story: don’t click on links in emails, chats, or sites that you don’t trust.\n\n","3d345a58-ed41-4826-ae09-2f21eecb7c60",[1173],{"id":1174,"data":1175,"type":52,"version":25,"maxContentLevel":29},"44cf3e31-833e-4a2f-baca-55b3236a0c5f",{"type":52,"reviewType":26,"spacingBehaviour":25,"binaryQuestion":1176,"binaryCorrect":1178,"binaryIncorrect":1179},[1177],"What is an example of a human based scam?",[1163],[1180],"DoS Attacks",{"id":1182,"data":1183,"type":26,"version":25,"maxContentLevel":29,"pages":1185},"c7209cbe-dc27-4c5d-a183-85ff6703d378",{"type":26,"title":1184},"Types of Exit Scams",[1186,1204,1219,1235,1241],{"id":1187,"data":1188,"type":25,"maxContentLevel":29,"version":25,"reviews":1192},"bddfe08d-b671-4edc-807c-c420da5c8b28",{"type":25,"title":1189,"markdownContent":1190,"audioMediaId":1191},"Hard exit scams","Another type of scam that benefits directly from human error involves tricking you into investing money. In these scams, the scammer will set up a business opportunity and will make it appear lucrative for investment.\n\nThey will then try to get as many people as possible on board. However, rather than building a proper, viable business, these applications are fake. Instead of investing in an exciting new app with world-class developers, it’s all a facade that’s bound to implode. Once the scammers have taken as much money as possible, they disappear. This is known as a ‘hard exit’.\n\nBecause the decentralized internet means that they can protect the majority of their identity - other than a replaceable wallet - it is easy for them to do so. While in the status quo it is relatively easy to check the identity of someone you are in business with, even if the relationship is purely online, doing so in the Web3 universe is far more challenging. As a result, Web3 users are far more vulnerable to being ‘rugged’.\n\nOne example of this occurred in 2014 when Dr Ruja Ignatova defrauded investors in her new cryptocurrency, which was called OneCoin, out of $4 billion. However, in 2017, she disappeared with the money. According to Damian Williams, Manhattan’s top federal prosecutor, “she timed her scheme perfectly, capitalizing on the frenzied speculation of the early days of cryptocurrency”. She is now on the FBI’s top 10 most wanted criminals list.","be656c82-98e4-438d-b772-0ad040d1552d",[1193],{"id":1194,"data":1195,"type":52,"version":25,"maxContentLevel":29},"df6ed7f3-84f0-4c84-9147-716a5504ce11",{"type":52,"reviewType":29,"spacingBehaviour":25,"multiChoiceQuestion":1196,"multiChoiceCorrect":1198,"multiChoiceIncorrect":1200},[1197],"What is the term used to describe when a scammer takes as much money as possible and then disappears?",[1199],"A 'hard exit'",[1201,1202,1203],"A 'soft exit'","A 'quick exit'","A 'long exit'",{"id":1205,"data":1206,"type":25,"maxContentLevel":29,"version":25,"reviews":1210},"6ceebea9-c0ad-4234-b3c2-dfe76ef10081",{"type":25,"title":1207,"markdownContent":1208,"audioMediaId":1209},"Soft exit scams","Soft exit scams are similar to hard exit scams, except they haven’t been made intentionally. These occur when businesses take on investors with the intention of creating a viable financial opportunity. However, for various reasons, the project loses momentum. \n\nMaybe the founders have found another better business. Or maybe the scheme wasn’t particularly successful, so they started dedicating less time to it. However, entrepreneurs often aren’t able to return the money invested - either because they already spent it or because they’ve forgotten to.\n\nThis is a form of exit scam because the company directors will often disappear out of fear of consequences. They are able to do this because of the relative anonymity and difficulty to trace people in Web3 because of decentralization. While soft exit scams aren’t created with malicious intent, individuals still get cheated out of their money so it is still a type of scam.\n","dfe05985-c31d-471f-8d7d-d66b14844ee8",[1211],{"id":1212,"data":1213,"type":52,"version":25,"maxContentLevel":29},"f59d09ba-7502-48e7-8cfa-802643540fed",{"type":52,"reviewType":21,"spacingBehaviour":25,"clozeQuestion":1214,"clozeWords":1216},[1215],"Soft exit scams occur when businesses take on investors but can't return the money due to forgetfulness or other opportunities.",[1217,1218],"forgetfulness","other opportunities",{"id":1220,"data":1221,"type":25,"maxContentLevel":29,"version":25,"reviews":1225},"a05453dd-bc7f-405e-8a98-458498a2cea4",{"type":25,"title":1222,"markdownContent":1223,"audioMediaId":1224},"Fake coins","Another type of cryptoscam is ‘fake coins’. Because Web3 is such a fast developing universe, there are new coins popping up all the time. These new coins can often present exciting business opportunities to get rich quick - some of the cryptocurrency coins that have been invented in the past ten years have seen explosive growth of up to 1000% in just a year. As a result, investors are keen to buy new types of coins.\n\nHowever, because growth in Web3 is happening at such a fast pace, it can be difficult for investors to find the time to do the necessary due diligence. Checking whether a coin is real, reliable and built upon a safe computational framework can take time - time that investors won’t feel they have to acquire the asset early and cheap. As a result, they’ll often experience Fear of Missing Out (FOMO) and invest their money without doing enough diligence.\n\nHaving done so, they might find out that the type of coin is fake like with OneCoin - or that their value has been misrepresented like with Luna. If you bought ten million SuperTreeFishDollars for $100 USD, you might think that you’re getting a good deal. However, if you later find out that there is an infinite amount of them in existence, rendering them as worthless, you just wasted your money. \n","204046a0-fc50-40b9-8f90-d557495987d8",[1226],{"id":1227,"data":1228,"type":52,"version":25,"maxContentLevel":29},"49e3148f-8218-4a36-b15f-0b5dbad13d82",{"type":52,"reviewType":26,"spacingBehaviour":25,"binaryQuestion":1229,"binaryCorrect":1231,"binaryIncorrect":1233},[1230],"What is the risk of investing in new types of coins without doing enough due diligence?",[1232],"The coin could be fake or its value could be misrepresented",[1234],"The coin could be worth more than expected",{"id":1236,"data":1237,"type":25,"maxContentLevel":29,"version":25},"d2043d1a-b09d-4914-830a-0d00d1b9bcaf",{"type":25,"title":1238,"markdownContent":1239,"audioMediaId":1240},"False coin endorsements","A sensible response to knowing about the issue of fake coins might be to do an increased amount of due diligence. Maybe it's worth googling the coin to see if it has a positive reputation? What if it has been endorsed by someone famous who has a good reputation for technical or business know-how? Would you trust a coin that has been promoted by Elon Musk or Warren Buffett?\n\n ![Graph](image://9535aff8-c5ea-4cce-b213-b946ff0ea8b0 \"Legendary investor Warren Buffett\")\n\nWell, this adds yet another layer to the sophistication of fake coin scams. Often, scammers will hack into the social media accounts of famous individuals or create fake profiles appearing to imitate them to promote coins. For example, there are fake lookalike profiles for Elon Musk and Warren Buffett promoting cryptocurrencies. This will make users think that the coin is reliable and as a result will purchase them. A good rule of thumb for avoiding these scams is to check whether an endorsement appears out of character for a celebrity given the rest of their profile. Is this the first time they have promoted a token? Are they unusually effusive in the language of their praise? If so, it is probably not really them.\n\n","2a176b20-199c-415a-b0de-0a55355c1c7e",{"id":1242,"data":1243,"type":25,"maxContentLevel":29,"version":25,"reviews":1247},"f584d008-52ad-4b17-9147-828182fdd339",{"type":25,"title":1244,"markdownContent":1245,"audioMediaId":1246},"Pump & dump scams\n","Another type of cryptocurrency scam which preys upon human errors is the concept of the ‘pump and dump scam’. In a pump and dump scam, an investor will buy large amounts of a cryptocurrency. They will then try to artificially raise its value by making greatly exaggerated false statements online. This might be done in conjunction with a fake coin endorsement.\n\nThey will then sell all their coins immediately, making a huge profit. However, there is no real increase in value in the coin. In fact, the value created is arbitrary, and it is likely that when people see that a huge amount of coins is being sold again that the value of the coin would crash again.\n\nThis is called a ‘pump and dump scam’ because it involves the value being pumped up and then the coin being dumped in large quantities.\n","624842e4-c848-40e9-a50c-4d368046a028",[1248],{"id":1249,"data":1250,"type":52,"version":25,"maxContentLevel":29},"e1dced32-20e2-407f-92fd-401cf1f1a389",{"type":52,"reviewType":21,"spacingBehaviour":25,"clozeQuestion":1251,"clozeWords":1253},[1252],"In a 'pump and dump scam', an investor will buy large amounts of a cryptocurrency to artificially raise its price, before selling it in large quantities.",[1254,1255],"artificially raise","selling",{"id":1257,"data":1258,"type":26,"version":25,"maxContentLevel":29,"pages":1260},"f82cf032-d00d-4906-b53e-98bd1008dc82",{"type":26,"title":1259},"Case Studies and Ethical Hacking",[1261,1279,1293],{"id":1262,"data":1263,"type":25,"maxContentLevel":29,"version":25,"reviews":1267},"ae71202f-6b65-4813-939e-1e46d9587792",{"type":25,"title":1264,"markdownContent":1265,"audioMediaId":1266},"White hat hacking and bug bounties","Not all hackers in the world are evil. In fact, there is now so much ‘surface area’ for hackers to find vulnerabilities, that an entire industry has emerged for ‘white hat’ hackers to find problems and report them directly to the developers to be fixed. Why would they do this rather than taking the money and running? Well, perhaps it’s from the goodness of their heart, but more frequently it’s because of the pervasiveness of ‘bug bounty’ programs. \n\n ![Graph](image://f27e05db-3b27-4794-b5f0-82c3f81b7f7e \"Hackers can serve a very useful purpose\")\n\nIn these programs, hackers are typically rewarded, often with a percentage of the ‘exploitable value’ in exchange for identifying the exploit and not profiting from it. These sums are often in the millions of dollars and rather than becoming a criminal, provide an excellent source of income without the negative aspects of running from the law and maintaining anonymity. \n\nFor example, when there was an issue with a cryptocurrency wallet called Polynetwork, a hacker found a vulnerability and took $610 million. However, he returned the money and told Polynetwork about the problem so it could be fixed. Immunifi offers up to $10 million as a reward for finding problems with code and it is now commonplace for companies to negotiate with hackers in the event of an exploit and settle for some white hat terms. Ultimately, this makes the entire industry stronger and is a win-win for everyone involved.\n\n","4230ffee-33ba-43f6-a2e1-43b464e5c1af",[1268],{"id":1269,"data":1270,"type":52,"version":25,"maxContentLevel":29},"ff7b7fc1-5808-4bb7-a186-3f9bbb4d3499",{"type":52,"reviewType":29,"spacingBehaviour":25,"multiChoiceQuestion":1271,"multiChoiceCorrect":1273,"multiChoiceIncorrect":1275},[1272],"What is the term used for hackers who find vulnerabilities and report them directly to the developers to be fixed?",[1274],"White hat hackers",[1276,1277,1278],"Grey hat hackers","Black hat hackers","Red hat hackers",{"id":1280,"data":1281,"type":25,"maxContentLevel":29,"version":25,"reviews":1285},"a60ee50b-969e-44ce-a826-3adc6a407f41",{"type":25,"title":1282,"markdownContent":1283,"audioMediaId":1284},"Case Study: LUNA-Terra","In May 2022, one of the most significant crypto collapses in history occurred, shaking up the entire crypto market. This crisis was caused by the cryptocurrency TerraUSD (UST), one of the most popular stablecoins out there.\n\n ![Graph](image://eaebc0f6-5405-4d99-9da4-1ab1835da212 \"LUNA-Terra - a cautionary tale\")\n\nThe promise of stablecoins is that they are stable – their price is not supposed to fluctuate, and instead match the US dollar in value 1:1. In theory, one TerraUSD was always supposed to be worth one US dollar.\n\nThe way UST worked was that it maintained its peg through an arbitrage mechanism from an independent coin – called Luna – one whose price *was* determined by the free market. \n\nThe Terra blockchain lured in customers by offering very high interest rates for people who put their money into UST. \n\nThe endless supply of buying pressure caused the price of Luna to drop suddenly – unable to defend the peg of UST. This was one of the most brutal crashes in the history of crypto. Many people had put their savings into UST under the promise that it would remain stable. Instead, they lost everything within a few hours.\n\nThis was no scam – it was a failure of design. But that will be little consolation to the many people’s life savings evaporated thanks to the LUNA-Terra collapse.\n\n\n","7a3ed2ab-39a7-477c-94cf-becaca339d31",[1286],{"id":1287,"data":1288,"type":52,"version":25,"maxContentLevel":29},"8fb50ebe-b063-497c-ad7e-d62a7d615533",{"type":52,"reviewType":21,"spacingBehaviour":25,"clozeQuestion":1289,"clozeWords":1291},[1290],"In May 2022, one of the most significant crypto collapses in history occurred, shaking up the entire crypto market.",[1292],"crypto collapse",{"id":1294,"data":1295,"type":25,"maxContentLevel":29,"version":25,"reviews":1299},"d3432f46-40fa-468e-9bb1-6c5dfac17f8b",{"type":25,"title":1296,"markdownContent":1297,"audioMediaId":1298},"Case Study: The FTX Scandal","In November 2022, FTX – one of the world’s biggest cryptocurrency exchanges – declared bankruptcy.\n\nThis was a nightmare scenario – one that many true crypto believers had warned against for years. Crypto exchanges make it very easy to buy and sell crypto, but they also eliminate a large part of the ‘decentralized’ ethos that is at the core of all blockchain technology.\n\n ![Graph](image://25c6f41d-766c-41eb-a79e-5f20749ed7fd \"Sam Bankman-Fried - likely to spend a long time in jail\")\n\nMillions of people trusted FTX with their money – without really looking into how capable this institution was of managing it. As it turned out, FTX was mishandling their customers’ money on a massive scale.\n\nFTX’s CEO, Sam Bankman-Fried, known as SBF, was in fact funneling money from FTX – money that should have been ring-fenced – into his other businesses, most notably his hedge fund, Alameda Research. He did this through a complex system of tokens and hedge funds – but it really boiled down to old-fashioned embezzlement.\n\nThe full extent of SBF’s fraud is still being uncovered. But the FTX scandal represents a massive moment for crypto – probably the biggest and most outrageous scandal in its history. \n\nThe lesson: keeping money on an exchange is risky. Maintaining self custody of your private keys on a hardware wallet ensures that no one is able to access and lose your funds.\n\n","5e66bbd4-72a8-489e-8121-7ee92b46a67e",[1300],{"id":1301,"data":1302,"type":52,"version":25,"maxContentLevel":29},"77f4341b-ebd8-41be-b89c-79c1074023f7",{"type":52,"reviewType":25,"spacingBehaviour":25,"activeRecallQuestion":1303,"activeRecallAnswers":1305},[1304],"When did FTX – one of the world’s biggest cryptocurrency exchanges – declare bankruptcy?",[1306],"November 2022",{"id":1308,"data":1309,"type":28,"maxContentLevel":29,"version":25,"orbs":1312},"90397694-3784-4faf-b481-a0449ec6b102",{"type":28,"title":1310,"tagline":1311},"NFTs","A way to truly own unique digital assets.",[1313,1376,1427],{"id":1314,"data":1315,"type":26,"version":25,"maxContentLevel":29,"pages":1317},"2659dbc6-146f-4ac5-9348-6fff9be3b928",{"type":26,"title":1316},"Introduction to NFTs",[1318,1331,1345,1360],{"id":1319,"data":1320,"type":25,"maxContentLevel":29,"version":25,"reviews":1324},"192be5fb-3503-4db1-b4c2-559b240f6c3c",{"type":25,"title":1321,"markdownContent":1322,"audioMediaId":1323},"What are NFTs?","The blockchain provides us with a way of reliably holding digital ownership of something without fear of it being stolen. The most prolific use case for that so far has been in cryptocurrencies such as Bitcoin and Ether. \n\n ![Graph](image://ffba1490-b85f-43c6-874f-953f13c7ddea \"A 'Bored Ape' NFT\")\n\nBut ownership doesn’t have to stop there. What if you could own other kinds of digital assets through the same mechanisms as cryptocurrency?\n\nWell, in short, you can. Non-fungible tokens, which is often abbreviated to NFTs, are collectible items that can be bought and sold through the blockchain. The token represents ownership of a digital or real world asset, like an artwork.\n\nWhat makes them different from cryptocurrency coins is that each token is non-fungible, which means unique. Cryptocurrencies are fungible. If you sell a bitcoin and replace it with another one, it will be identical - as if nothing has happened. It doesn’t matter which bitcoin you have, and in fact, the blockchain doesn’t distinguish between them.\n\nOn the other hand, each NFT is different and distinguishable. This means that NFTs usually have values that can fluctuate depending on the unique asset. This is similar to assets like a house. Although many houses may be similar, each one is in fact unique, has its own characteristics, and for that reason is priced individually.","0d9de335-78ea-4cdd-bff7-9b9dd412839f",[1325],{"id":1326,"data":1327,"type":52,"version":25,"maxContentLevel":29},"e01808fc-823e-4e02-81f9-9332ae1a05c7",{"type":52,"reviewType":21,"spacingBehaviour":25,"clozeQuestion":1328,"clozeWords":1330},[1329],"Non-fungible tokens, or NFTs, are collectible items that can be bought and sold through the blockchain.",[1310,200],{"id":1332,"data":1333,"type":25,"maxContentLevel":29,"version":25,"reviews":1337},"add68369-03db-4d75-90e4-de5f2ad756b8",{"type":25,"title":1334,"markdownContent":1335,"audioMediaId":1336},"What types of NFT are there?","So, what are the existing types of NFT? What do NFTs look like?\n\nWell, because artwork is by nature both unique and collectable, it has become a prime example of NFTs. Many pieces of digital art are now available as Non-Fungible Token. For example, one piece by the American artist Mike Winklemann, who is known by the internet alias ‘Beeple’, was sold by the British auction house Christies for $69 million.\n\n ![Graph](image://049c7e0c-c640-4dfa-b412-c9f78d76073e \"Mike Winklemann, aka 'Beeple'\")\n\nHowever, it is not just visual art that can be turned into NFTs. There are NFTs which are pieces of literature, music, film or games. In fact, even tweets have been sold as Non-Fungible Tokens since their invention in 2014. Provided that something is unique and that there is a market for collectors of it, either by fans or investors, it can be an NFT.\n\nNFTs can also provide utility, not just as pieces of art. NFTs could have an interesting role to play, anywhere that a unique digital asset could be useful. For example, NFTs have been used as certificates for proof-of-ownership for expensive jewelry. Other NFTs like the Bored Ape Yacht Club collection (BAYC) offer yacht parties as an exclusive perk to holders of their NFTs.\n\n","401f197e-93f2-4c63-a541-d18cbd24f906",[1338],{"id":1339,"data":1340,"type":52,"version":25,"maxContentLevel":29},"66564b77-c1b5-4dec-9ba8-035f74ac39c5",{"type":52,"reviewType":25,"spacingBehaviour":25,"activeRecallQuestion":1341,"activeRecallAnswers":1343},[1342],"Which US artist, whose real name is Mike Winklemann, sold the most expensive NFT ever?",[1344],"Beeple",{"id":1346,"data":1347,"type":25,"maxContentLevel":29,"version":25,"reviews":1351},"126718c4-1149-4118-b497-d74ef89aad2a",{"type":25,"title":1348,"markdownContent":1349,"audioMediaId":1350},"Why own an NFT?","When you buy a piece of NFT artwork, you become its owner. However, these typically don’t come with the copyright. Anyone can still download or view the artwork on the internet. They just can’t own it.\n\n ![Graph](image://6d24ff56-ed2e-49b8-9847-19edc280337d \"The Mona Lisa\")\n\nThis sounds weird until you think about the real world art industry.  The Mona Lisa is owned by the Louvre Museum in Paris. It was painted by Leonardo da Vinci. However, it didn’t get sold directly by Da Vinci to the Louvre - it had several owners, including King Louis XIV in between. \n\nMoreover, if you type ‘Mona Lisa’ into Google, you’ll be able to see it. Some people even have copies of it in their house. So why bother owning it? Well, often collectors want either the social standing that comes with owning the original copy of a famous or valuable work, or they hope the art work will appreciate in value, so they can sell it at a profit. It is the same with NFTs.\n\nAnother benefit of NFTs is that they allow access to a community.  Many NFT collections, including CryptoPunks, one of the first NFT projects, have private areas where owners can hang out together offline and online, work together as a community to promote the value of their tokens and even self-identify on social media using the same profile pictures.\n\n","038e185f-3e74-4973-a021-5748360114e5",[1352],{"id":1353,"data":1354,"type":52,"version":25,"maxContentLevel":29},"74d92369-9715-4427-84b9-e64a1ef3036a",{"type":52,"reviewType":21,"spacingBehaviour":25,"clozeQuestion":1355,"clozeWords":1357},[1356],"One benefit of NFTs is that they can allow access to a community.",[1358,1359],"NFT","community",{"id":1361,"data":1362,"type":25,"maxContentLevel":29,"version":25,"reviews":1366},"68286f25-7f10-48ff-a2c3-1c9d1cec5d0b",{"type":25,"title":1363,"markdownContent":1364,"audioMediaId":1365},"What makes an NFT special?","The way an NFT works is that the asset itself, meaning the image or piece of music, is not stored in the blockchain. After all, simply being able to show people a copy of an image doesn’t prove that you own it. I could show you a picture of the Mona Lisa but it doesn’t mean that it belongs to me.\n\nInstead, the token acts as proof of the ownership. Usually, it is digitally signed by the artist or creator so that its authenticity can be verified. For example, the NFT of Beeple’s famous work of art only has value because it was signed by Beeple. There might be a copy of the image on the blockchain, or the image might be stored somewhere else and linked to in the blockchain. However, it is the signature by the original creator that makes the NFT unique and valuable. It is that enduring connection to the original artist that makes NFTs so popular with fans of the artist.\n","9f23c7ff-4d59-4167-954a-7eafb64c6feb",[1367],{"id":1368,"data":1369,"type":52,"version":25,"maxContentLevel":29},"eb97da43-6bdd-4a6f-822a-38a435909796",{"type":52,"reviewType":26,"spacingBehaviour":25,"binaryQuestion":1370,"binaryCorrect":1372,"binaryIncorrect":1374},[1371],"What makes an NFT unique and valuable?",[1373],"The fact that it cannot be replicated",[1375],"Its inherent aesthetic value",{"id":1377,"data":1378,"type":26,"version":25,"maxContentLevel":29,"pages":1380},"ac213c8c-df6e-450d-9996-39268240f757",{"type":26,"title":1379},"Creating and Minting NFTs",[1381,1396,1411],{"id":1382,"data":1383,"type":25,"maxContentLevel":29,"version":25,"reviews":1387},"9354654b-3771-40e7-9d78-c7ea052032f5",{"type":25,"title":1384,"markdownContent":1385,"audioMediaId":1386},"Minting NFTs","Like cryptocurrencies, at some point a Non-Fungible Token has to be created before it can be bought, sold, traded, exchanged or gifted. So how does this happen?\n\n‘Minting’ an NFT is the initial process of calling a smart contract that generates art based on a predetermined set of variables. When those variables are called, a unique combination is created, an asset is deducted from the user’s wallet and exchanged for the newly created NFT. This NFT may have extensive metadata embedded, but frequently links to an external location with a multimedia asset file . All of this information is stored on a blockchain, frequently Ethereum, but Solana and Polygon host many NFT collections as well. \n\nBecause minting an NFT is calling a smart contract, the user still must pay gas fees, which can be quite expensive depending on the computational complexity of the minting contract. Currently, it costs up to $60 to mint an NFT using OpenSea, which is the most popular NFT wallet on the Ethereum platform.\n\nSometimes, ownership of an asset can also be split or ‘fractionalized’. For example, three different people could each own a third of an artwork.  These fractionalized pieces of the art may remain indefinitely or may be destroyed to reunite them into the single original piece.\n","0f3dcc77-014b-4bff-8b9d-0729587177c6",[1388],{"id":1389,"data":1390,"type":52,"version":25,"maxContentLevel":29},"bae962b9-0c9b-406d-aae4-1a8b6abefdff",{"type":52,"reviewType":21,"spacingBehaviour":25,"clozeQuestion":1391,"clozeWords":1393},[1392],"‘Minting’ an NFT is the initial process of calling a smart contract that generates art based on a predetermined set of variables.",[1394,1395],"Minting","smart contract",{"id":1397,"data":1398,"type":25,"maxContentLevel":29,"version":25,"reviews":1402},"d509be20-611c-4c58-ac01-f283c69d766a",{"type":25,"title":1399,"markdownContent":1400,"audioMediaId":1401},"Why mint an NFT?","As an artist, why would you mint an NFT? Why is creating an NFT any better than creating a piece of artwork in the real world, especially since there are more art collectors in the real world today?\n\n ![Graph](image://6db62db8-447a-4803-9b43-5df360e4b367 \"David Hockney\")\n\nWell, firstly, it can provide a new medium for sale of artwork beyond what is conventional. When big artists like David Hockney are able to sell their artworks to museums for large sums of money, it allows them to profit and have their art seen by a large number of people. \n\nHowever, not all artists are able to get big money deals with museums. Instead, they often have to sell to private collectors who might demand exclusivity, meaning the artist can’t publish the work online. This means that the work will have a smaller audience, reducing the artist’s cultural capital. However, with an NFT, the work can be sold while still allowing the artist to publish it for wider consumption.\n\nSecondly, through smart contracts, the artist can manufacture an NFT which gives them continual royalties. For example, an artist can set up an NFT so that they get 5% of the fee every time it is sold. This is particularly important because many artists don’t get recognition for their work until late in their careers. \n\nWith smart contracts, artists can be rewarded for the quality of their work in perpetuity.\n\n","ab195e22-bb2c-49ea-bcd5-afe1fc09dc44",[1403],{"id":1404,"data":1405,"type":52,"version":25,"maxContentLevel":29},"29ecf559-64a2-413b-84ee-19fbfc832751",{"type":52,"reviewType":21,"spacingBehaviour":25,"clozeQuestion":1406,"clozeWords":1408},[1407],"NFTs allow works to be sold privately while also being available for public consumption",[1409,1410],"privately","public consumption",{"id":1412,"data":1413,"type":25,"maxContentLevel":29,"version":25,"reviews":1417},"79facdbf-9761-4027-b9b5-461681e85241",{"type":25,"title":1414,"markdownContent":1415,"audioMediaId":1416},"How to purchase an NFT - buying and selling","So, imagine that you are a thriving art collector who has a collection of world class real world assets and you wanted to get into the new Web3 collecting sphere. How would you go about doing it?\n\nWell, like with cryptocurrency, you are going to need to find a marketplace. This is an application, usually a decentralized application (dApp) that exists on the blockchain. At the moment, most NFTs exist on the Ethereum blockchain so that is probably the one you are going to want to use. Once you enter a marketplace, you’ll be able to buy or sell an NFT by listing it and viewing bids on it, just like with eBay for real world items. The largest NFT marketplace is a centralized Web2-style company called OpenSea.\n\nWhen you buy an NFT, the marketplace will automatically add a block to the blockchain ledger displaying the change of ownership and the amount of money that it has gone for. As a result, as soon as you pay, you’ll receive the NFT.\n","3cd3859a-971a-4ce2-9971-4614540980f6",[1418],{"id":1419,"data":1420,"type":52,"version":25,"maxContentLevel":29},"7099f0d9-e5b9-47b4-8571-31119525c406",{"type":52,"reviewType":26,"spacingBehaviour":25,"binaryQuestion":1421,"binaryCorrect":1423,"binaryIncorrect":1425},[1422],"What is the most popular NFT marketplace?",[1424],"OpenSea",[1426],"eBay",{"id":1428,"data":1429,"type":26,"version":25,"maxContentLevel":29,"pages":1431},"5b933a0b-d332-4d63-a6a5-80d5a82e0947",{"type":26,"title":1430},"Case Studies in NFTs",[1432,1450,1465,1479],{"id":1433,"data":1434,"type":25,"maxContentLevel":29,"version":25,"reviews":1438},"658cec6d-643d-4786-83a8-f37dadd92b80",{"type":25,"title":1435,"markdownContent":1436,"audioMediaId":1437},"Case Study: Champagne Avenue Fosh NFT","The most expensive wine bottle in history was sold for $2.5 million in July 2022 to a pair of Italian brothers. But this was no ordinary alcohol sale. Instead, it was bundled in with an artistically designed label, which came with its own NFT. This means that even once the bottle of wine has been drunk, it will still hold some value for its buyers.\n\nMoreover, the brothers see the wine not as a purchase for consumption but as an investment. They believe that it will be able to hold, and even increase, in value as time goes on, potentially ushering in a new era of collectible items.\n","0b61d715-0442-4254-80b6-bae99d7b3a20",[1439],{"id":1440,"data":1441,"type":52,"version":25,"maxContentLevel":29},"538f83b1-0fee-4b26-8923-a4f255c3fb08",{"type":52,"reviewType":29,"spacingBehaviour":25,"multiChoiceQuestion":1442,"multiChoiceCorrect":1444,"multiChoiceIncorrect":1446},[1443],"How much did the most expensive wine bottle in history sell for in July 2022?",[1445],"$2.5 million",[1447,1448,1449],"$1 million","$3.5 million","$5 million",{"id":1451,"data":1452,"type":25,"maxContentLevel":29,"version":25,"reviews":1456},"b42ec061-74e9-49ee-a677-be322af7d05a",{"type":25,"title":1453,"markdownContent":1454,"audioMediaId":1455},"Case study: Crawley Town Football Club","Another noteworthy Web3 story that has been in the news belongs to a fourth-tier football club in England, called Crawley Town FC. Under new ownership from cryptocurrency millionaires, Crawley has issued a new batch of NFTs worth 0.35 Ether, which at the time of minting was worth about £350. So far, they have sold nearly £10,000, raising a significant amount of money for the club. Moreover, the NFT was designed with smart contracts, so each NFT that is resold will make them more money.\n\nHowever, these NFTs don’t just allow supporters to invest, they also allow them to engage with the club. Crawley fans who purchase the tokens are given both access to digital media, like training videos, and voting rights on key club decisions. For example, the club’s owners have allowed NFT holders to pick whether the club purchases an attacker, midfielder or defender ahead of their next season and have even promised NFT holders future voting rights on the club’s management team.\n","ecf03dbf-49e8-408d-800f-a19de42582db",[1457],{"id":1458,"data":1459,"type":52,"version":25,"maxContentLevel":29},"d7f0b63b-d804-4d53-9306-171dbae93652",{"type":52,"reviewType":21,"spacingBehaviour":25,"clozeQuestion":1460,"clozeWords":1462},[1461],"Crawley Town FC has issued a new batch of NFTs worth 0.35 Ether, which at the time of minting was worth about £350.",[1463,1464],"0.35","350",{"id":1466,"data":1467,"type":25,"maxContentLevel":29,"version":25,"reviews":1471},"9188f46d-397b-4490-81fe-ea6f076f6394",{"type":25,"title":1468,"markdownContent":1469,"audioMediaId":1470},"NFT Scams","Like with cryptocurrencies, NFTs have become a new frontier for internet scammers. NFTs are just as vulnerable to things like fake NFT generation and ‘pump & dump’ scams. In particular, many NFT scammers impersonate famous artists in order to try to sell NFTs. This works particularly well with artists who are anonymous or frequently use pseudonyms in real life. \n\nFor example, in August 2021 hackers made their way onto the Web2 website of the famous British graffiti artist Banksy and created a new page advertising a Banksy NFT sale. This link then took collectors to a NFT exchange where the NFT was listed. It eventually sold for $293 million. However, Banksy later declared that he had no affiliation with the NFT sale, which made the token itself worthless.\n\nThe moral of the story: be careful when buying NFTs, particularly when you are investing significant sums of money.\n","f12f27dd-a96c-4aff-a9c9-1cc73fd07778",[1472],{"id":1473,"data":1474,"type":52,"version":25,"maxContentLevel":29},"612fc685-5f4e-4baa-9861-7cf006567c3e",{"type":52,"reviewType":25,"spacingBehaviour":25,"activeRecallQuestion":1475,"activeRecallAnswers":1477},[1476],"How do many NFT scammers try to sell their tokens?",[1478],"By impersonating famous artists",{"id":1480,"data":1481,"type":25,"maxContentLevel":29,"version":25,"reviews":1485},"dd488584-9f7d-4bbd-bc0b-498691613808",{"type":25,"title":1482,"markdownContent":1483,"audioMediaId":1484},"NFT scams: the Bored Ape Yacht Club Instagram","Another fake NFT scam occurred in April 2022 when hackers broke into the Instagram account of the Bored Ape Yacht Club, one of the most popular NFT communities. This allowed them to promote the minting of a fake new NFT which they would give out for free and asked users to connect their wallets. Overall 133 NFTs valued at a total of $2.4 million were stolen from 44 people as part of the scam. This meant that it was one of the largest and most effective fake NFT scams in Web3’s history so far.\n\nThe moral of the story is that if something looks too good to be true, it probably is.\n","b0de6372-fcf5-45c8-bf73-37d15f4586c1",[1486],{"id":1487,"data":1488,"type":52,"version":25,"maxContentLevel":29},"6602dfc6-e397-493a-b4a4-2d2cf7afb21b",{"type":52,"reviewType":25,"spacingBehaviour":25,"activeRecallQuestion":1489,"activeRecallAnswers":1491},[1490],"Which scam saw $2.4 million stolen from NFT owners?",[1492],"The Bored Ape Yacht Club Instagram scam",{"id":1494,"data":1495,"type":28,"maxContentLevel":29,"version":25,"orbs":1498},"720dbcf6-32e0-4864-a01d-10e0ab5186f2",{"type":28,"title":1496,"tagline":1497},"Security in Web3","Blockchains are very secure - but there are weaknesses that have been exploited.",[1499,1567],{"id":1500,"data":1501,"type":26,"version":25,"maxContentLevel":29,"pages":1503},"d6d0af48-4779-45e7-971b-84dcd1ad8b7d",{"type":26,"title":1502},"Blockchain Validation and Governance",[1504,1522,1536,1551],{"id":1505,"data":1506,"type":25,"maxContentLevel":29,"version":25,"reviews":1510},"bc57f2a4-e564-448d-8b34-ed44ad4ae0bf",{"type":25,"title":1507,"markdownContent":1508,"audioMediaId":1509},"What are validator nodes?","Any blockchain requires a consensus mechanism. This is a system for validating the encrypted data in each block in the chain. There are various systems for doing this, as discussed elsewhere in this pathway.\n\nBut what do we mean when we say ‘validation’ of blocks in a chain? How can people validate all that data? \n\nWell, the only way is to download it all as a spreadsheet, and visually check every single row of course! Just kidding.\n\nValidating the data in a block is in fact an entirely automated process, with no human involvement at all. For this to happen, the person participating in the consensus mechanism needs to be running a special software that can validate the block for them. Devices that run this software are known as ‘validator nodes’, and they are essential to the operation of the blockchain.\n","700a7a33-2ca8-4060-9e8a-4ce713487f01",[1511],{"id":1512,"data":1513,"type":52,"version":25,"maxContentLevel":29},"79c98ec2-0a5b-44cf-aeed-baec3dc3af6d",{"type":52,"reviewType":29,"spacingBehaviour":25,"multiChoiceQuestion":1514,"multiChoiceCorrect":1516,"multiChoiceIncorrect":1518},[1515],"What are devices that run special software to validate blocks in a blockchain called?",[1517],"Validator nodes",[1519,1520,1521],"Validator networks","Validator computers","Validator systems",{"id":1523,"data":1524,"type":25,"maxContentLevel":29,"version":25,"reviews":1528},"1212f1be-8a8e-45be-a43b-899338c6325d",{"type":25,"title":1525,"markdownContent":1526,"audioMediaId":1527},"Challenges of blockchain validation","However, validator nodes pose a problem to most regular users. Most people don’t want to set up a dedicated computer to run a complex software that may or may not remunerate them with a digital currency. \n\nThat means that, in reality, most people won’t be participating in validating the blockchain. They will effectively be relying on other people to do that for them. This could lead to very large conglomerates running the majority of validation nodes, and dominating the supposedly decentralized playing field. \n\nMoreover, this isn’t just an issue of access. One of the lessons learned from the transition from Web1 to Web2 is that people didn’t want to run their own servers - they’d rather have the economies of scale and quality assurances associated with centralized servers. Of course, centralization is exactly what Web3 is attempting to avoid, so mechanisms and incentives are critical to ensure centralization doesn’t replicate the problems of Web2 in the Web3 world.\n","e7d57a7a-a507-416d-80c8-d508fe1af0c2",[1529],{"id":1530,"data":1531,"type":52,"version":25,"maxContentLevel":29},"cc5a5bf1-472b-4eab-ac55-7769d96d438d",{"type":52,"reviewType":25,"spacingBehaviour":25,"activeRecallQuestion":1532,"activeRecallAnswers":1534},[1533],"How can we ensure centralization doesn't replicate the problems of Web2 in the Web3 world?",[1535],"By providing mechanisms and incentives",{"id":1537,"data":1538,"type":25,"maxContentLevel":29,"version":25,"reviews":1542},"4ae781a8-6d47-4d03-91f1-40af2ffc3931",{"type":25,"title":1539,"markdownContent":1540,"audioMediaId":1541},"Governance attacks","The nature of the Blockchain is that when developers provide updates, these have to be agreed to by the majority of users. This means that the majority of users, rather than a centralized body, governs functions on the Blockchain.\n\nHowever, this means that if a criminal can get access to the majority of blocks on a given chain, they are able to change the rules of that chain. Maybe they’ll change the rules so only they can mine new coins. Or maybe they’ll change the rules that means every transaction gives them a cut.\n\nObviously, governance attacks are not a threat on huge blockchains like Bitcoin or Ethereum because they have so many different users. However, on smaller blockchains, it is easier for criminals to take control. This may also happen through them loaning out different coins so they temporarily own a majority. In fact, on the Beanstalk blockchain, over $77 million was lost through a governance attack re-regulating liquidity pools.\n\nOf course, if the community involved in running a protocol sees an attack like this take place, they can always ‘fork’ or copy the code into a new entity, exclude the attackers and continue as normal. In any case, governance attacks are an important threat to consider when managing a blockchain protocol.\n","456d8abe-761f-4f0d-ac97-842f417d7d6c",[1543],{"id":1544,"data":1545,"type":52,"version":25,"maxContentLevel":29},"24127963-430b-4c3c-812f-8f179ca94e05",{"type":52,"reviewType":21,"spacingBehaviour":25,"clozeQuestion":1546,"clozeWords":1548},[1547],"On smaller blockchains, criminals may take control by loaning out different coins so they temporarily own a majority, or through a governance attack re-regulating liquidity pools.",[1549,1550],"loaning","governance",{"id":1552,"data":1553,"type":25,"maxContentLevel":29,"version":25,"reviews":1557},"bb6f3781-91f2-4d71-9b9c-45bd7c076f40",{"type":25,"title":1554,"markdownContent":1555,"audioMediaId":1556},"Decentralized code updates","Another quirk of the decentralized blockchain is that it can be difficult to patch bugs in the code. The vast majority of ways hackers can get into a system is through exploiting bugs, or undesired vulnerabilities in the code. In Web2, developers will patch these bugs and force all users to get the update - this is something that already happens with apps, web services and operating systems.\n\nIn Web3, a decentralized protocol run by a number of developers across the world would require a majority of users to approve any changes. For a number of reasons, this process may take longer than if a centralized entity like Apple decided to update one of its software products. Many users might be suspicious of a new update. As a result, patching holes in Web3 can be much slower than in Web2. This means that users could be exposed unnecessarily to security vulnerabilities for longer.\n","77b25fef-dbe3-43e7-ab0b-c9bb385e72b8",[1558],{"id":1559,"data":1560,"type":52,"version":25,"maxContentLevel":29},"5b2fd523-f240-4298-9c50-5505dcb3d865",{"type":52,"reviewType":26,"spacingBehaviour":25,"binaryQuestion":1561,"binaryCorrect":1563,"binaryIncorrect":1565},[1562],"What is a potential disadvantage of decentralized blockchains?",[1564],"Patching bugs in the code can be difficult and slow",[1566],"Anyone can push a Trojan into the code",{"id":1568,"data":1569,"type":26,"version":25,"maxContentLevel":29,"pages":1571},"5650812a-d994-48b8-ac0d-88513b70b85b",{"type":26,"title":1570},"Identity and Security in Web3",[1572,1595,1609,1623],{"id":1573,"data":1574,"type":25,"maxContentLevel":29,"version":25,"reviews":1578},"f59ea692-9926-444d-a5e9-f85ba1d66cd9",{"type":25,"title":1575,"markdownContent":1576,"audioMediaId":1577},"Identity in Web3","Currently, to get into different online services, you need to uniquely identify yourself for each one. Everyone has a username and password for different services like Facebook, Google and Amazon. This means you share your personal data many times over with many different companies. \n\nIn Web3, there isn’t yet a clear standard for identity management. The W3 Consortium – the people who made the HTTP standard for the World Wide Web – have created a decentralized identity standard called DIDs. This makes it possible to ‘bundle’ a group of wallets under a single identity – effectively allowing you to have a unique, unfalsifiable online identity card.\n\nOther standards are being created by other institutions to create a Self Sovereign Identity (SSI). To get one, you will need to apply to an issuer, who will ordinarily be a government body. They will then add the SSI to an online international registry. \n\nSSIs could be a powerful tool for online identity management. For example, to enter Facebook, you need to be over the age of 13. Currently this is verified by Facebook when you enter your date of birth. However, with Self Sovereign Identities, Facebook would be able to ask a trusted registry whether you are over the age of 13. This is both a more reliable system and a more secure one – it means you don’t have to share your date of birth with Facebook, who currently use that data for profit.\n","57050ccb-39ee-4e43-ba29-79182ba87aaf",[1579,1588],{"id":1580,"data":1581,"type":52,"version":25,"maxContentLevel":29},"d10badb9-9d1e-4882-bd8b-c6dd38106238",{"type":52,"reviewType":26,"spacingBehaviour":25,"binaryQuestion":1582,"binaryCorrect":1584,"binaryIncorrect":1586},[1583],"What is the name of the decentralized identity standard created by the W3 Consortium?",[1585],"DIDs",[1587],"SSIs",{"id":1589,"data":1590,"type":52,"version":25,"maxContentLevel":29},"d9c8a725-6ab2-460b-9b2b-a69de3e85b5c",{"type":52,"reviewType":21,"spacingBehaviour":25,"clozeQuestion":1591,"clozeWords":1593},[1592],"The W3 Consortium – the people who made the HTTP standard for the World Wide Web – have created a decentralized identity standard called DIDs.",[1585,1594],"W3 Consortium",{"id":1596,"data":1597,"type":25,"maxContentLevel":29,"version":25,"reviews":1601},"2d105184-9629-4e13-88ab-510034597b7f",{"type":25,"title":1598,"markdownContent":1599,"audioMediaId":1600},"Smart contract audits","Another aspect of good web security in Web3 is through the auditing of smart contracts. As we already know, Smart Contracts are contracts between two parties, enforced by the blockchain. Like a regular contract, they make it possible to trust in a deal reliably without necessitating simultaneous exchange.  However, since smart contracts are written in computer code, they’re not comprehensible to anyone without a strong knowledge of computer science.\n\nTherefore, just as people would engage a lawyer to audit an ordinary contract, you can engage a programmer to do a Smart Contract Audit. This prevents you from agreeing to a Smart Contract where the person you are engaging with has put in a hidden clause that is harmful to you. Smart Contract Audits are a great way of ensuring that your interests are protected. Such smart contract audits can be costly however.","9cd28fc7-b403-4462-b084-7bcb5c6e7791",[1602],{"id":1603,"data":1604,"type":52,"version":25,"maxContentLevel":29},"b07faf19-a9a0-4079-8771-51f18d260edd",{"type":52,"reviewType":21,"spacingBehaviour":25,"clozeQuestion":1605,"clozeWords":1607},[1606],"Another aspect of good web security in Web3 is through the auditing of smart contracts.",[1608],"smart contracts",{"id":1610,"data":1611,"type":25,"maxContentLevel":29,"version":25,"reviews":1615},"6527ed76-1683-43a2-8d0b-6f5061109451",{"type":25,"title":1612,"markdownContent":1613,"audioMediaId":1614},"Where’s the deterrent?","Another security concern in Web3 is the lack of a credible deterrent. One of the primary things deterring a scammer in the Web2 universe is the threat of consequences if they are caught. Law enforcement will identify them and the scammer may face criminal charges.\n\nHowever, this is significantly harder to do in Web3. Because users don’t have to give their personal information to a centralized database, there is a greater level of anonymity. This means that law enforcement bodies can’t identify scammers as easily and bring them to justice. As a result, many scammers will perceive there to be no downside to engaging in internet criminality.\n\nIn spite of this, as Web3 matures, the onus will be on developers and regulators to find innovative new ways of ensuring that there is the right balance between protecting user identifies and ensuring digital accountability. Only time will tell whether they’ll be able to find the right equilibrium.\n","a110cb9b-0da8-47d6-b184-3dcce1af7f0e",[1616],{"id":1617,"data":1618,"type":52,"version":25,"maxContentLevel":29},"9c303cfa-658c-4391-9e35-24acef44bf96",{"type":52,"reviewType":25,"spacingBehaviour":25,"activeRecallQuestion":1619,"activeRecallAnswers":1621},[1620],"How easy is it for law enforcement to track transactions in Web3?",[1622],"It's much harder due to greater anonymity",{"id":1624,"data":1625,"type":25,"maxContentLevel":29,"version":25,"reviews":1629},"d52b6a2f-93ad-4d12-ad57-d7acb77bcc79",{"type":25,"title":1626,"markdownContent":1627,"audioMediaId":1628},"The liberty security equilibrium","In Web2, the internet started out as a place of interaction entirely with good intentions. However, as it developed, malicious actors began to use it for scams, and spreading misinformation. Web3 is likely to follow a similar pattern of development – there have already been plenty of bad actors in the space.\n\nWhat’s the solution to this? On the one hand, some government regulation and enforcement is required to ensure that Web3 doesn’t become overridden by criminal activity. However, overregulation can restrict innovation which goes against the very essence of Web3.\n\nAs a result, in creating frameworks for the governance of Web3, developers and governments are going to have to think about how to balance liberty and security.\n","1d36a368-76a1-4984-9b05-ab1775bd0dad",[1630],{"id":1631,"data":1632,"type":52,"version":25,"maxContentLevel":29},"38267963-d673-4204-88dc-c117e863af44",{"type":52,"reviewType":21,"spacingBehaviour":25,"clozeQuestion":1633,"clozeWords":1635},[1634],"Web3 is likely to follow a similar pattern of development as Web2, with malicious actors using it for scams, and misinformation.",[1636,1637],"malicious","scams",{"id":1639,"data":1640,"type":28,"maxContentLevel":29,"version":25,"orbs":1643},"0f9f474e-6ecb-455e-a169-8e21af730033",{"type":28,"title":1641,"tagline":1642},"Redefining Communities","How DAOs may radically reshape all forms of human organization.",[1644,1698,1747,1798],{"id":1645,"data":1646,"type":26,"version":25,"maxContentLevel":29,"pages":1648},"5ff2490e-da27-480a-8082-52021436d985",{"type":26,"title":1647},"Introduction to DAOs",[1649,1665,1683],{"id":1650,"data":1651,"type":25,"maxContentLevel":29,"version":25,"reviews":1655},"9dc5e3e7-3823-4754-8ae7-260745918b5e",{"type":25,"title":1652,"markdownContent":1653,"audioMediaId":1654},"What is a DAO?","One of the most important social developments of the 20th century was the emergence of the large corporation. Companies like Ford, GM, and McDonald's came into existence. These companies unleashed unprecedented economic growth. \n\n ![Graph](image://8c982426-09dd-4783-945f-127327362c39 \"Ford's first production line\")\n\nCorporations enabled tens of thousands of people to work together in harmony – some at a factory, others at their desk. Steep and rigid hierarchies were needed for such institutions to run smoothly. Essential to the cooperation of thousands of people was a strong legal framework and property rights. \n\nDAOs or Decentralized Autonomous Organizations aspire to replace the corporation of yesteryear. Rather than operating with a strong legal framework and in specific geographies, DAOs have their rules of operations enforced by smart contracts on the blockchain. DAOs operate outside any governmental jurisdiction. This means that no government is necessary to protect property and employment rights. \n\nJust as cryptocurrency does away with the need for governments to back currencies, DAOs do away with the need for organizations to be structured around government-enforced legal contracts.\n\n","a3557a0d-6bda-48fe-b890-b1b11f7a4914",[1656],{"id":1657,"data":1658,"type":52,"version":25,"maxContentLevel":29},"5b67f32a-1849-495f-becb-35908e22c004",{"type":52,"reviewType":26,"spacingBehaviour":25,"binaryQuestion":1659,"binaryCorrect":1661,"binaryIncorrect":1663},[1660],"Which of these is a characteristic of traditional corporations?",[1662],"Rigid structures and hierarchies",[1664],"Decentralized management structures",{"id":1666,"data":1667,"type":25,"maxContentLevel":29,"version":25,"reviews":1671},"2fc9b10b-91d5-4786-83d7-feb050e650cd",{"type":25,"title":1668,"markdownContent":1669,"audioMediaId":1670},"How do DAOs work?","Like traditional companies, someone needs to own a DAO. Public companies like Amazon or Volkswagen solve this through stocks or equity. If you want to own a share of Amazon, simply buy Amazon stock.\n\nDecentralized Autonomous Organizations signify ownership using tokens, analogous to stocks, but sometimes representing only governance rights rather than underlying ownership. Possession of such a token is saved and recorded on blockchain, much like with Bitcoin or Ether. \n\nThere is no CEO to make top-down decisions. Instead, any decision made by DAOs is democratized. This means that anyone who owns a token has a vote on any decision the DAO makes. The more tokens you own, the more powerful your vote.\n\nDirect democracy can be inefficient, however. As a result, many DAOs don’t allow *all* decisions to be made by their stakeholders, sometimes acting more like a representative republic than a democracy. In some cases, certain decisions are restricted to founders or only people with a minimum ownership of, e.g. 5%. This allows many small decisions to be made with greater efficiency, like the hiring and compensation of contributors. Then, only big decisions are made by the entire community, like large budgetary changes. Each DAO can set its own rules just as companies have different governance structures.\n\nGiven that these rules are transparently accessible to individuals considering buying share tokens, they don’t pose a huge problem to investors. In fact, the stability that these rules offer can often be a draw for a DAO.\n","d4b491d6-dd34-4108-a3db-0b4bc1d8850b",[1672],{"id":1673,"data":1674,"type":52,"version":25,"maxContentLevel":29},"59fc366a-dc9e-436d-9e05-96e77098cd7c",{"type":52,"reviewType":29,"spacingBehaviour":25,"multiChoiceQuestion":1675,"multiChoiceCorrect":1677,"multiChoiceIncorrect":1679},[1676],"DAOs signify ownership using what?",[1678],"Tokens",[1680,1681,1682],"Shareholder agreements","An executive board","Employee options",{"id":1684,"data":1685,"type":25,"maxContentLevel":29,"version":25,"reviews":1689},"2be862e4-af15-4189-a5e8-84ac7d2ad66a",{"type":25,"title":1686,"markdownContent":1687,"audioMediaId":1688},"Constitutional origins of DAOs","The abstract idea of the Decentralized Autonomous Organization is not a new one. \n\nYou could argue that the Federalist Papers, a series of 77 essays by Alexander Hamilton, John Jay and James Madison in 1787, set out all the key principles of DAOs.\n\n ![Graph](image://855fbb2b-b30d-41a0-b8cf-a8c08214f9f6 \"The Federalist Papers (1788)\")\n\nThese argued that central authority should be limited, that power should be distributed to the people wherever possible – and that if that contract was broken, the people should have the right to overthrow their government through force.\n\nEven further back, England’s Magna Carta, signed by King John in 1215, gave a group of individuals (admittedly, a small group of aristocrats) the right to challenge the monarchy and hold it to account. This was the first moment in the West that a nation built checks and balances into their constitution.\n\nThe philosophy behind DAOs sits strongly in this tradition of the rights of individuals to hold central authority to account. Indeed, DAOs could cut out central authority altogether – creating organizations that are operated for their stakeholders, by their stakeholders.\n\n","6fa5e9d6-2c34-4a7b-9d9a-3a7edfea8060",[1690],{"id":1691,"data":1692,"type":52,"version":25,"maxContentLevel":29},"16b251a3-18f0-413a-9aa7-238af19fa05d",{"type":52,"reviewType":25,"spacingBehaviour":25,"activeRecallQuestion":1693,"activeRecallAnswers":1695},[1694],"The philosophy behind DAOs is in the tradition of which two historical documents?",[1696,1697],"The Federalist Papers","The Magna Carta",{"id":1699,"data":1700,"type":26,"version":25,"maxContentLevel":29,"pages":1702},"37fcba23-a600-426b-b999-7f47e7839c0a",{"type":26,"title":1701},"Benefits and Drawbacks of DAOs",[1703,1717,1733],{"id":1704,"data":1705,"type":25,"maxContentLevel":29,"version":25,"reviews":1709},"a51eb8e4-0c6e-478b-b1fb-04497d88531a",{"type":25,"title":1706,"markdownContent":1707,"audioMediaId":1708},"Benefits of DAOs","DAOs aspire to overcome a lot of nuisances and inefficiencies associated with traditional companies. \n\nFirstly, they overcome a lot of the bureaucracy that is normally required to start a company. Since DAOs exist outside legal jurisdictions, much less legal overhead is required. This also means that there are lower barriers to entry. If a traditional company is registered in the United States, but wants to hire someone from Iran, there are many legal complications involved. The applicant may need a visa, or some other form of work authorization. Not so with DAOs. \n\nAdditionally, DAOs democratize decision-making substantially. Instead of the hierarchical system typical of big corporations, DAOs let all token holders have a say. Think of FC Barcelona for example. Every year, the club releases new jerseys. The design is picked by a handful of people in the club, but they never consult their large fan base. Now and then, the fans end up with shirts they hate. A DAO solves this problem, by requiring a vote - by the community, for the community - on the new design.\n\nThis ties to another advantage of DAOs. Since the community and contributors can easily hold a share of the organization, they have skin in the game. This means the community is very interested in the success and prospering of the DAO. DAOs open up the possibility of employee ownership to far more companies, without the complicated mechanisms normally needed for that.\n","e4887e94-ce8c-483f-b9d9-588b6b561b1e",[1710],{"id":1711,"data":1712,"type":52,"version":25,"maxContentLevel":29},"01dc683d-8f59-41ec-9d12-eae67fda3ceb",{"type":52,"reviewType":21,"spacingBehaviour":25,"clozeQuestion":1713,"clozeWords":1715},[1714],"DAOs overcome a lot of the bureaucracy that is required to start a company.",[1716],"bureaucracy",{"id":1718,"data":1719,"type":25,"maxContentLevel":29,"version":25,"reviews":1723},"46dfd9f7-bd5a-4b7e-b568-c8a5bd24c942",{"type":25,"title":1720,"markdownContent":1721,"audioMediaId":1722},"Drawbacks of DAOs","DAOs are not perfect systems, though. They also have significant drawbacks.\n\nFirstly, minority owners are at the mercy of majoritarian sentiment. Imagine that you own a 2% share in a DAO and someone else has a 55% stake. Your investment will be entirely at their mercy. They could pass a rule saying that you have to give up your share or need to pay additional money just to hold onto it. If one person or group can take control of a majority of shares on their own, the minority stakeholders are at risk.\n\nSecondly, because effectively every issue requires each shareholder to form an opinion, decisions are made very slowly. This means it's difficult to take advantage of time sensitive business opportunities or to protect and update software when vulnerabilities are discovered.\n\nFinally, DAOs are currently largely unregulated. That means that there is no way to ensure that they are remaining compliant with the law and steering clear of criminal activity. Moreover, even if a breach was discovered, there is no centralized management structure to hold accountable. As a result, DAOs are largely unprotected.\n","1cfc1a68-8b33-42ff-af0c-bd6579df063f",[1724],{"id":1725,"data":1726,"type":52,"version":25,"maxContentLevel":29},"6beb62cb-fb1c-4bb7-9d4a-daa3bea89624",{"type":52,"reviewType":26,"spacingBehaviour":25,"binaryQuestion":1727,"binaryCorrect":1729,"binaryIncorrect":1731},[1728],"Which of these is a threat to the integrity of DAOs?",[1730],"Majority ownership",[1732],"Corrupt executives",{"id":1734,"data":1735,"type":25,"maxContentLevel":29,"version":25,"reviews":1739},"4b8ebbbb-aa17-44c6-8c88-25ac2e0dee6e",{"type":25,"title":1736,"markdownContent":1737,"audioMediaId":1738},"Vulnerabilities of public decision making","Famously, a DAO known as the Constitution DAO, quickly found out the drawbacks of public decision-making. In December 2021, they tried to buy an original copy of the US Constitution from Sotheby's as an investment. As with any DAO, they discussed their rules and how much they were willing to bid, eventually settling on the figure of $47 million.\n\n ![Graph](image://183342a7-9bbb-4565-9d7a-ce4b2499cfae \"A member of ConstitutionDAO submits their bid for the constitution\")\n\nLittle did they know that a hedge fund manager swept in and bought the Constitution for a small amount more. He was able to do this because he joined the DAO and was able to see all the public discussions. As you can tell, the public nature of conversations in DAOs blocks the corporate secrecy that is often seen as a necessary prerequisite for beating competition. Only time will tell if DAOs are able to strike the right balance between open accountability and corporate competition.\n\n","27faf616-f83e-4345-8fbe-8548fa9c4206",[1740],{"id":1741,"data":1742,"type":52,"version":25,"maxContentLevel":29},"54e9273a-4e17-4632-bb45-d1de10e2e3ca",{"type":52,"reviewType":25,"spacingBehaviour":25,"activeRecallQuestion":1743,"activeRecallAnswers":1745},[1744],"What principle is severely limited by public decision making?",[1746],"Corporate secrecy",{"id":1748,"data":1749,"type":26,"version":25,"maxContentLevel":29,"pages":1751},"16c8bf87-0ee9-41f5-8fb7-7ea1b7688ad1",{"type":26,"title":1750},"Operational Aspects of DAOs",[1752,1766,1784],{"id":1753,"data":1754,"type":25,"maxContentLevel":29,"version":25,"reviews":1758},"919c2eb6-43b0-426b-91dd-a9950c2937d3",{"type":25,"title":1755,"markdownContent":1756,"audioMediaId":1757},"How do DAOs conduct business?","DAOs are predicated on using existing permissionless blockchain technology, which allows for the use of smart contracts. As a result, a DAO could run on a blockchain like Ethereum, but couldn’t run on Bitcoin. \n\nIn conventional businesses, central management creates a set of rules, which are then interpreted by the company’s employees. However, in a DAO, the rules can be automatically implemented and enforced on the blockchain.\n\nFor example, an investment bank might say that 20% of its finances must be invested in education, 20% in gold, 40% in technology and 20% in food services. In a conventional investment bank, the employees will then find companies fitting those categories, release the funds and make the investment. This will take time and, equally important, the employees can choose to misinterpret or disagree with the strategy. However, using smart contracts, a DAO investment bank would automatically and immediately invest in those fields once a policy decision has been reached.\n","36999c3a-68fa-4f5a-82b3-7f5d3b2d1f28",[1759],{"id":1760,"data":1761,"type":52,"version":25,"maxContentLevel":29},"835637b5-f366-4486-b763-8a85eeabb2b0",{"type":52,"reviewType":26,"spacingBehaviour":25,"binaryQuestion":1762,"binaryCorrect":1764,"binaryIncorrect":1765},[1763],"A DAO could run on the Bitcoin blockchain",[812],[810],{"id":1767,"data":1768,"type":25,"maxContentLevel":29,"version":25,"reviews":1772},"d05b309d-f0a8-4163-ae38-1d7534c198e7",{"type":25,"title":1769,"markdownContent":1770,"audioMediaId":1771},"DAOs as employers","Even though much of the business in Web3 aims to be conducted automatically through algorithmic decision making, some DAOs might still need employees. They are still able to hire them like any other company or corporation.\n\nOne advantage of DAOs is that they are decentralized in nature. This means that they can hire employees from anywhere in the world, giving them access to labor at competitive prices and allowing them to hire a workforce with significant diversity of thought. Additionally, most DAOs allow employees to simultaneously contribute to multiple DAOs, creating an interesting cross-pollination across the industry. Imagine if someone worked part-time for Apple and Google simultaneously - while possible, this is very rare in Web2.\n\nHowever, a disadvantage of DAOs from an employment perspective is that it can be challenging to get them to conform to employment law since there is no way of finding their owners or bringing them to account. It's possible that a DAO might have no physical assets in a country, so it's impossible for countries to confiscate assets as punishment. Moreover, given the prevalence of things like Virtual Private Networks (VPNs), it is almost impossible to ban a DAO from a country by restricting access to its services.\n","2225c855-be63-48fc-a9a3-014980833dde",[1773],{"id":1774,"data":1775,"type":52,"version":25,"maxContentLevel":29},"2d4be748-04ae-4b69-8cba-dae0eeac5bc6",{"type":52,"reviewType":29,"spacingBehaviour":25,"multiChoiceQuestion":1776,"multiChoiceCorrect":1778,"multiChoiceIncorrect":1780},[1777],"Which of these is an advantage of DAOs?",[1779],"More international workforces",[1781,1782,1783],"More stringent emplyment law","More easily regulated","More easily taxed",{"id":1785,"data":1786,"type":25,"maxContentLevel":29,"version":25,"reviews":1790},"142f5b5e-3579-4f52-90ac-52e8b1beac0a",{"type":25,"title":1787,"markdownContent":1788,"audioMediaId":1789},"Uses of DAOs","So far, DAOs have already been used to create whole strings of companies. One prominent example is Nexus Mutual, which offers insurance using smart contracts. Because there aren’t many time-sensitive decisions that need to be made in insurance, with much of the legwork being done automatically through the use of computer algorithms and calculations, Nexus Mutual was well positioned to enter a DAO structure.\n\nHowever, the vast majority of DAOs are currently focused on investing in Web3 development. This is because there is a large overlap between investors willing to explore other aspects of Web3 and ones who are interested in Decentralized Autonomous Organizations. Over time, the function of DAOs is expected to expand beyond simply investing in other aspects of Web3. Already a number of regional or hobby DAOs are growing, including the City of Austin’s ATX DAO or LinksDAO for golfers.\n","cc6fa533-b0a3-47b9-8346-20610b334c71",[1791],{"id":1792,"data":1793,"type":52,"version":25,"maxContentLevel":29},"f06fb4c8-48f7-4172-8fd0-a95d4c778197",{"type":52,"reviewType":21,"spacingBehaviour":25,"clozeQuestion":1794,"clozeWords":1796},[1795],"The vast majority of existing DAOs are focused on investing in Web3",[1797],"investing in Web3",{"id":1799,"data":1800,"type":26,"version":25,"maxContentLevel":29,"pages":1802},"dfd93a85-d710-4cbc-9761-8cc16be69fbb",{"type":26,"title":1801},"Ethics and Politics of DAOs",[1803,1819],{"id":1804,"data":1805,"type":25,"maxContentLevel":29,"version":25,"reviews":1809},"1f9340fb-70c6-433f-9261-d6dd1ccb9ea0",{"type":25,"title":1806,"markdownContent":1807,"audioMediaId":1808},"The ethics and politics of DAOs","One of the potential problems identified with the exclusion of the government from Web3 is that it could exacerbate inequality. There are clear reasons why tax avoidance will be significantly easier under DAOs. Many of the more controversial aspects of small-government economics – such as a lack of regulation, limits to worker’s rights, and the emergence of monopolies – could also be exacerbated in a DAO economy.\n\nAll of these factors could lead to an economy where a small section of society hoards large amounts of wealth.\n\nHowever, there are very potent arguments that DAOs will promote equality of opportunity. First, there is much less red-tape and bureaucracy involved with starting a business. Additionally, it is feasible for a kid with a great idea in Venezuela or Bangladesh to acquire funding and start building a new enterprise, or to get hired by a DAO. Your passport and access to legacy banking infrastructure matter much less.\n \nSimilarly, while they are harder to regulate, there’s no reason why DAOs are unable to give rights to their employees. In fact, collective ownership and smart contracts could mean these rights are enshrined in a more secure way than when they are dependent upon government legislation – which is often subject to lobbying, or ideology that not everyone is on board with.\n","bcf7eedb-11b6-4c2c-8866-f2c10e25abb9",[1810],{"id":1811,"data":1812,"type":52,"version":25,"maxContentLevel":29},"f6d1fb8c-713b-4d4d-bc60-597796170e01",{"type":52,"reviewType":26,"spacingBehaviour":25,"binaryQuestion":1813,"binaryCorrect":1815,"binaryIncorrect":1817},[1814],"What are the probable implications for taxing DAOs",[1816],"It will be harder to tax DAOs",[1818],"It will be easier to tax DAOs",{"id":1820,"data":1821,"type":25,"maxContentLevel":29,"version":25,"reviews":1825},"5e06a3cf-5135-450e-84b7-00bb67be3829",{"type":25,"title":1822,"markdownContent":1823,"audioMediaId":1824},"Famous examples of DAOs","One of the best known DAOs is BeetsDAO. Founded by Jordan Garbis and Sasha Rosewood, Beets is a group that launches and purchases music-based NFTs - essentially as a group investment fund. One of their most famous projects involved launching an NFT in collaboration with Snoop Dogg and Nyan Cat which netted $250,000 when sold.\n\n ![Graph](image://75a87318-4d28-4622-afdb-f46830a1054b \"Snoop Dogg\")\n\nAnother famous DAO is Decentraland, who aim to invest collectively in the purchase of Metaverse property. To date, Decentraland has taken control of more than 98,000 different parcels of virtual real estate and have recently sold a parcel of land for $2.43 million.\n\nMany DAOs exist to pool together capital from individuals for investment, including FlamingoDAO for NFTs, NeptuneDAO for DeFi, and countless smaller groups of investors. Social DAOs like Friends With Benefits exist for networking in the Web3 industry, and many localized city-specific DAOs like ATX DAO in Austin or Andrew Yang’s national Lobby3 DAO work with regulators to educate and advance legislation for DAOs and Web3 more broadly.\n\nEssentially, any cause, club, or community can create their own DAO if they believe the structure is beneficial to achieve their goals.\n\n","8ceac923-3009-4913-b7f9-2059c547ede8",[1826],{"id":1827,"data":1828,"type":52,"version":25,"maxContentLevel":29},"7d294138-b7ad-449d-892d-6e855a5b7a15",{"type":52,"reviewType":25,"spacingBehaviour":25,"activeRecallQuestion":1829,"activeRecallAnswers":1831},[1830],"Which DAO is set up for music lovers to release music NFTs?",[1832],"BeetsDAO",{"left":4,"top":4,"width":1834,"height":1834,"rotate":4,"vFlip":6,"hFlip":6,"body":1835},24,"\u003Cpath fill=\"none\" stroke=\"currentColor\" stroke-linecap=\"round\" stroke-linejoin=\"round\" stroke-width=\"2\" d=\"m9 18l6-6l-6-6\"/>",{"left":4,"top":4,"width":1834,"height":1834,"rotate":4,"vFlip":6,"hFlip":6,"body":1837},"\u003Cg fill=\"none\" stroke=\"currentColor\" stroke-linecap=\"round\" stroke-linejoin=\"round\" stroke-width=\"2\">\u003Cpath d=\"M12.586 2.586A2 2 0 0 0 11.172 2H4a2 2 0 0 0-2 2v7.172a2 2 0 0 0 .586 1.414l8.704 8.704a2.426 2.426 0 0 0 3.42 0l6.58-6.58a2.426 2.426 0 0 0 0-3.42z\"/>\u003Ccircle cx=\"7.5\" cy=\"7.5\" r=\".5\" fill=\"currentColor\"/>\u003C/g>",1778179496400]