What are the practical implications of using Web3 technologies? In our latest Whitepaper report, Ken Lyon – Ti Advisory Board Member – explores Web3 mechanisms and how they could improve operating efficiencies.
Over the past few months the failure of the cryptocurrency exchange FTX has raised the profile of digital currencies and the underpinning technology they use called blockchains. It is unfortunate that what seems to be a significant failure of basic corporate governance, may be conflated by the media as proof that cryptocurrencies are all scams and therefore so is blockchain technology.
This is understandable, but wrong. Blockchains are a section of technology that is still in the early stages of evolution and, like all technologies, will get better and eventually be successful or not on their own merits. It is also worth understanding what blockchains are not…
They are not substitutes for existing centralised databases, they are not easy to implement, they are not Bitcoin, or any other cryptocurrency for that matter – but they are the technologythat underpins cryptocurrencies. It is the technology that enables the creation of permissionless, trusted networks.
The general mechanism used within blockchains to validate transactions is that of consensus. Blockchains rely on numbers of computers to solve algorithmic problems independently and then share the results. Assuming a large enough number of independent systems agree, there is consensus, and the transaction is recorded on the blockchain. There are several consensus mechanisms used by different blockchains (Proof of Work (PoW), Proof of Stake (PoS) and delegated PoS), but all work to verify and confirm transactions.
Because of the huge numbers of independent computers required to achieve consensus, attempting to subvert them is very expensive, as you either have to gather an enormous amount of computing power (Proof of Work) or gather an extremely large stake (Proof of Stake). Because of these practical challenges, to all intent and purpose these networks are inherently ‘trustworthy’ and ‘trusted’.
Therefore, any data or information that is recorded on a blockchain is essentially immutable and can serve as a trusted reference. This has great significance across supply chains, where numerous organisations have to provide information about their operations and obtain regulatory certifications from other organisations regarding future partnerships or trading relationships.
Many of their activities require the repetitive duplication of certifications, licences, building permits, etc. By recording much of this on a blockchain in conformance with global standards, it would avoid the related costs and speed up many of the processes needed before operations are able to commence… Click here to read the complete Whitepaper.
For more analysis from Ken on how Web3 trusted mechanisms should help to reduce operating costs and improve operating efficiencies, download the White Paper in full for free: Web3 and the Metaverse, the Coming Logistics Revolution: Part 2.
