Welcome back to the third lesson in this series. In the previous videos, we discussed the evolution of the web—starting from Web1 to the dynamic, interactive Web2—and the role of intermediaries in how we interact online. In this lesson, we’ll explore how blockchain and smart contracts help us move beyond centralized systems.

The Problem with Web2: Centralized Control

In Web2, platforms like Instagram or Facebook are powered by centralized servers. When a user—let’s call them Jackie—interacts with Instagram, their data flows through a specific Facebook-owned server. This server acts as a middleman, controlling and facilitating the interaction.

This model raises key concerns:

• Lack of data ownership: Users give up control over their personal data.
• Data exploitation: Platforms monetize user data, often without transparent consent.
• Single point of failure: If the server goes down, access is lost.

Enter Blockchain: Decentralization at the Core

Blockchain offers an alternative structure. Instead of a single, centralized server, it uses a network of distributed nodes. Think of it as a board of servers working together.

When Jackie interacts with a decentralized version of Instagram (a dApp), her request (e.g., login, upload) is sent to the network. A node is chosen to process the request, while other nodes verify it through a consensus mechanism. Only when the network agrees is the action executed.

This structure provides:

• Redundancy: If one node fails, others continue operating.
• Transparency: Every transaction is visible and verifiable.
• Privacy: The system doesn’t know Jackie’s identity—just that a wallet address triggered a function.

The Role of Gas Fees

You might wonder: why would nodes perform this work? The answer is gas fees.

• Each blockchain action includes a small cryptocurrency fee.
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• This fee incentivizes nodes to process and validate transactions.
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• Unlike centralized platforms, users are not paying with personal data but with a tiny amount of cryptocurrency, preserving privacy.
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How Do Nodes Know What to Do?

In centralized platforms, behavior is controlled by company code. But in blockchain systems, we use smart contracts.

A smart contract is a self-executing program stored on the blockchain. It defines rules like:

• If someone calls the login function, perform a login action.
• If a token is transferred, update balances.

These smart contracts are:

• Transparent: Anyone can see and verify the code.
• Immutable: Once deployed, they can’t be changed.
• Replicated: Every node has a copy of the same smart contract.

Through smart contracts, decentralized nodes know how to process requests without a centralized controller.

Key Advantages of Decentralized Systems

• No single point of failure

If one server (node) fails, others continue processing.

• User privacy

No personal data is collected or sold. Transactions are tied to wallet addresses, not identities.

• Open codebase

Smart contracts are public, auditable, and predictable—unlike proprietary centralized algorithms.

• Long-term cost efficiency

Users pay small gas fees, not with personal data or exposure to targeted ads.

• Data integrity

Once stored, data on the blockchain can’t be deleted or altered, ensuring long-term reliability.

Summary

Blockchain, smart contracts, and cryptocurrencies together create a decentralized internet model where:

• Users retain ownership of their data.
• Transactions are secure, auditable, and private.
• Systems function with community validation rather than corporate control.

By replacing the centralized middleman with decentralized protocols, we unlock a more secure, democratic, and privacy-focused web.