First, because blockchain uses an open architecture, all transactions are publicly accessible, immutable, and verifiable by anyone. This helps to eliminate corruption and fraud from the transaction. Second, because all smart contract transactions are recorded along a blockchain and cannot be modified ex-post, a permanent and publicly accessible ledger is available to shed any doubt about payments or other transactions throughout the process. And third, because blockchain systems are automated, security in the enforcement mechanism is all but guaranteed. For instance, failure to deliver goods by a set time will automatically trigger a default clause that transmits payment of liquidated damages to the injured party without the intervention of a judge or arbitrator,” the report added.
Blockchain technology has made great strides over the past few years speeding up processes like AI and smartphones. Studies found that improvements in technology are beneficial in classrooms and that technology has the ability to better manage accountability, transparency and overall educational experiences. Partnerships between governments and private sector can also lead the way to boost nationwide education and employment. African Operations Director of blockchain engineering company IOHK, John O’Connor joins CNBC Africa’s Zinathi Gquma to explore blockchain technology and how partnerships with governments can help improve quality of life.
Why is cross-chain technology so important? Because it’s viewed as one of the main tools to help continue the growth and expansion of decentralized finance (DeFi).
If elements of the DeFi industry are not able to work with each other in a smooth manner, decentralized finance will be hindered in its attempts to challenge, or at the very least, bring traditional finance to the crypto world.
Blockchain interoperability also allows people to make payments across multiple blockchains, fueling an energetic digital economy where many believe multi-token wallet systems should emerge.
Right now, the blockchain space remains scattered. Blockchain and its applications are there, floating in this new space that will become the internet of the future, but they lack certain aspects that will connect them more thoroughly and turn them into Web 3.0. In its current stage, the blockchain sector is not unlike the internet of the ‘90s. It has some of the aspects it needs, such as security, decentralization, financialization features, and more.
However, it still lacks the main component — the real-time data — that will allow it to go big, similarly to how Web 2.0 (the modern-day internet) exploded. This issue is well-known, and there are some working towards solving it. One example is Streamr, which seems to be in the best position among these projects.
The promise of secure, immutable, and universal registries for carbon credits highlights the importance of DLT to usher in a new generation of voluntary carbon markets. The technology has proven its merit in financial services for increasing trade velocity, reducing costs, and expanding liquidity pools. But the failure of similar projects that use DLT demonstrates the fallibility of a “build it and they will come” mentality. Instead, DLT should be harnessed as an enabler of a broader industry shift toward industry-wide standardization and collaboration through initiatives such as the Taskforce on Scaling Voluntary Carbon Markets.
A blockchain database is typically decentralized, meaning that it is collectively controlled by its participants rather than a single person or entity. This could facilitate a truly decentralized peer-to-peer energy system. Additionally, the information stored in blockchains is unchangeable, and the identity of participants is ensured through a unique identifier. This solves the issue of record keeping and tracking. It also offers additional possibilities in distributed energy management like the issuing of carbon tokens to offset an individual’s carbon footprint.
Based on open protocols and decentralized applications, agreements are enforced by code, transactions are executed in a secure and verifiable way, and legitimate state changes (ledger entries) are made immutable on a publicly searchable and verifiable blockchain.
DeFi creates an environment that can simultaneously provide unprecedented transparency and equal access rights, while still preserving privacy and reducing transaction friction.
With a wide variety of applications, DeFi can enable one to buy dollar-pegged assets using stablecoins on decentralized exchanges, move these assets to an equally decentralized lending platform to generate interest, then add the interest-bearing instruments to a liquidity pool or on-chain investment fund.
And all of that can be achieved (and more) without so much as even stepping onto the highly polished marble floor or your downtown bank.
Matthew Blake, head of the future of financial services at World Economic Forum, said: “Following several years of intense hype, examples of use cases where inefficiencies and challenges are being solved with blockchain are starting to emerge across capital markets. With the future for blockchain in financial services still being defined, a nuanced look at the opportunities this technology offers right now is particularly important for the financial services industry.”
The evolution of decentralized exchanges is linked to the advancement of the whole blockchain industry and greatly affects the development of the decentralized internet. DEXs fuel the whole ecosystem of DeFi services that are now starting to include more decentralized applications, decentralizes SaaS, facilitate tokenization of assets and adoption of the P2P model.
Despite all these advancements, we’re still in the early stage of Web3 development and adoption. Users still encounter many obstacles: it’s hard to interact with the protocols from a phone and the desktop versions require additional software like wallet extensions.
There are also problems of scalability, cost of operations, user experience and security. But this is common for newly emerging technologies and mechanisms, especially the ones that bring economic and financial value.