As a Web3 journalist, more than once I’ve had to field the question, “What is blockchain?” It’s an especially common concern of people navigating a landscape marked by emergent technologies, each promising to revolutionize industry norms, yet in their infancy. It’s no secret that the adoption of blockchain would impact all of us, no matter our profession or station in life. As such, I take it upon myself to share its potential ramifications, good or bad, from all perspectives.
What is Blockchain? Blockchain technology at its core is a decentralized digital ledger that records transactions across many computers. Imagine a public database where everyone can view transactions, but not change them. It’s simple yet complex.
The technology that powers Bitcoin and other cryptocurrencies like it has three main ideas – decentralization, transparency, and security. The term decentralization means just how it sounds. Nothing has control over the entire blockchain aside from the network of computers it operates on. This makes it strong against censorship or corruption. Transparency refers to the fact that anyone who wants to see blockchain transactions can see them. This makes cheating difficult because there are multiple eyes on the system. Finally, when it comes to security, the use of advanced cryptography ensures that no one can tamper with data.
The benefits of this technology are amazing in their own right. Industries from finance and down to supply chains can be more transparent, secure, and efficient all thanks to blockchain. In finance alone fraud can be reduced while transaction speeds increase and costs decrease. Blockchain’s Potential Impact One of the more negative aspects of technological growth is that some companies have taken over entire market segments, or large swathes of it to stifle competition or innovation and tipping the balance of power in their favor. The sort of decentralized networks underpinned by blockchain technology offer an alternative from overbearing monopolies, promising more democratic ownership of personal data and greater control of privacy. Blockchain promises to democratize the online world, granting software developers the option to create applications on a platform offering increased network effects, quicker feedback loops, and equitable incentives for growth. In that way, I believe blockchain will decentralize power and swing the pendulum back from monopolistic markets to society at large. Blockchain projects have also cultivated strong communities, creating global network effects in the process. These projects are opening up new possibilities for financial inclusion and financial freedom around the world. And as these technologies advance, there’s a need for everyone, developers, end users, and regulators, to work together and help push their mainstream adoption in a safe and sustainable manner.
Challenges Of course it’s never all rosy, especially with nascent technology. Blockchain’s achilles heel is in its ability to scale up. Blockchain networks can only handle a certain number of transactions per second, and this number is often too low to meet the needs of large-scale applications. Another challenge is performance. Blockchain networks can be slow and expensive to use. The blockchain community is working tirelessly to address these challenges. For instance, high performance and interoperable blockchains are being developed. These new blockchains are designed to be more scalable and efficient than earlier iterations. They are also designed to be interoperable, which means that they can communicate with each other. This will allow different blockchains to work together, which could lead to the development of even more powerful and innovative applications. Of course we can’t talk about blockchain without talking about regulation. Bodies like the U.S Securities and Exchange Commission (SEC) have played an outsized role in balancing innovation and public protection. However, you’ll find very few players in the industry with a fondness for such agencies, given the manner some of them have exercised their mandate over blockchain and some of its constituent technologies like cryptocurrencies and non-fungible tokens (NFTs). Parting shot Blockchain technology goes beyond just decentralization or creating new forms of digital currency; if harnessed well, it has the potential to reshape the way we live, work, and interact with each other.
The Future? Looking towards the future, I see immense potential for NFTs within the gaming industry. Play-to-earn (P2E) games, where players can earn money while playing, are set to revolutionize the gaming industry. Another exciting proposition is the prospect of NFTs representing a “share” in a business, thereby democratizing business ownership. As for tokens and staking, these have potential, too, but only for projects that understand basic tokenomics. Many investors have been burnt by tokens plummeting in value. Furthermore, communities form the backbone of successful NFT projects. A robust and active community can propel a project to new heights. Similarly, profile picture (PFP) flex NFTs, and Decentralized Autonomous Organizations (DAOs) with no central authority also have great potential if implemented correctly. In conclusion, the NFT market is a dynamic, volatile landscape that’s not for the faint-hearted. Understanding supply and demand, researching the teams behind projects, and keeping an eye on emerging trends will go a long way in charting a successful course through this exciting new frontier.