Headlines have been enamoured with the cryptocurrency space, with the recent collapse of Terra-USD wiping an estimated US$40 billion off the books in a span of a week. The fallout from the crash still resonates across mainstream media as millions of users await the outcome of bankruptcy proceedings in hopes of recovering funds lent out to centralised finance platforms using decentralised rails such as Celsius, 3AC, and Hodlnaut.
Bridging the gap
However, even in this intimidating climate, governments worldwide are still experimenting with blockchain technologies and cryptocurrencies.
In Singapore alone, the Monetary Authority of Singapore (MAS) continues to pursue its goal of a digital asset ecosystem and is even experimenting with decentralised finance (DeFi) cryptocurrencies through its Project Guardian initiative. This hints that governments and the institutions they work with recognise the disruptive potential of the technology if implemented according to their evolving set of rules.
On the other side, crypto-native companies which have weathered the storm are continuing to build towards a vision of a better internet, all captured under the banner of Web3.
Although lacking a concrete definition, the key principle guiding Web3 is to return power back to the individual such that they have autonomy over their digital lives. This entails having ownership over their own identity, finances, and other critical data. Innovation in this space has been growing rapidly together with the number of developers eager to build the decentralised infrastructure of tomorrow.
What is blockchain, and why blockchain?
While it is uncertain which direction the scales will tip between consumer protection and individual autonomy, the underlying technology is here to stay.
Given its novelty and complexity, blockchain has always been conflated with cryptocurrencies due to the latter holding the most potential to change the social fabric between individuals and organisations. Nonetheless, to progress past the headlines and drive real value, it is crucial that this distinction be made.
Also Read: Are NFTs here to stay (with or without blockchain)?
Blockchains are essentially a data structure which the majority of cryptocurrencies implement. Think of a table data structure highlighting the relationship between rows and columns. The first thing that might come to mind for most office workers is Microsoft Excel, but this is only one of the many implementations of the table data structure.
Likewise, decentralised digital currencies such as Bitcoin and Ethereum fall under the cryptocurrency class of blockchain data structure implementations where there are no gatekeepers to network participation and all transactions are publicly viewable.
There are other private implementations of blockchain technology targeted toward institutions which help reconcile data between a consortium of known participants. Whichever the implementation, this blockchain data structure enables us to arrive at a shared truth.
Removing complexities with blockchain
Albeit seemingly mundane, the implications are enormous as it removes the need for a trusted middleman. Taking a simple cash transfer, for example, banks are heavily involved in the process of performing identity checks, holding the cash in custody, to updating ledgers between various banks. To access the bank’s services, I must first open an account by providing my personal information, hand over ownership of my cash, and then instruct the bank to transfer my money on my behalf.
This gets exponentially complex once we factor in different banks, currencies, and countries. The more parties involved, the higher the reconciliation risks and fees that need to be paid as each party takes time and resources to update their own ledgers.
By setting out the rules of engagement in code, blockchain technology opens a new path forward in terms of efficiently maintaining a distributed ledger across a network of participants. No more referring to siloed databases that might be out of sync, but instead, getting the latest transactions straight from a shared ledger.
Not only is real transaction finality much faster, but the wide availability of data also means that any malicious activity can be detected even earlier. Data immutability ensures that transactions can never be altered, and the ledger history will always be available.
Also Read: How to venture into blockchain during a recession
Crucially, there is no limitation as to what the data on the blockchain represents, and hence this technology can be applied to any situation requiring multi-party consensus.
Forging a new path with blockchain
With the advent of Web3, it is clear that the future will involve blockchain technology and will be integrated into the future of work.
However, the blockchain industry’s exponential growth is a double-edged sword in that the relentless innovation in the space constantly adds to the vast wealth of information, which can be overwhelming for those starting out. For those who are not sure where to start, there are many amazing content creators helping users navigate through this dark forest.
Additionally, short and more focused courses such as Smartcademy’s Intro To Blockchain course, which can be completed within a month, can accelerate the understanding of key blockchain concepts and easily transfer to a preferred domain rather than diving deep into code.
This includes understanding the difference between blockchain and cryptocurrency, how blockchain is applied in both the traditional and alternative economies, and the varied use cases of cryptocurrencies.
Behind the headlines of multi-billion dollar bankruptcies and multi-million dollar ape images, blockchain is slowly but surely redefining much of the social fabric in our modern-day lives.
Critically, this disruption is already taking place as we speak: stablecoins enabling cross-country payments for fractions of a cent; decentralised finance platforms enabling trading, lending, and yield generation while maintaining full control over your own assets; Non-Fungible Tokens enabling exclusive access and rights based on ownership of a transferable digital token.
Many novel solutions are being built on top of these decentralised rails, most will fail, but those that survive will likely be our best bet to a more equitable internet.
Underlying the Web3 engine is the idea that individuals should always have the right to choose how to use their digital data and not have to rely on a trusted third party to operate their own data. Imagine accessing services without handing over ownership of your personal data and assets.
This also means that you are not locked into a particular service provider, whether these are social platforms like Facebook or monetary systems like the US dollar. The modularity of Web3 bodes well for the future of individual choice as users will no longer be arbitrarily forced into a particular system. Such opportunities might seem trivial for the average user now, but it will be priceless if and when they are forced to suddenly choose.
In other words, how much of yourself do you still own if powerful organisations outside your control abruptly change tact?
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