Demystifying the principles of Web3, blockchain and cryptocurrency | The future is bright — Find out why

Many people are lost when we talk about these subjects and don’t know what they are about and how these concepts are organised. It is urgent to demystify, essentially, because one of the principles of this technological evolution is its adoption by most people. The future is here, it’s bright, so we must try to deconstruct it objectively.

If two heads think better than one, can you imagine creating a system where millions of heads think for themselves in a collaborative, integrated and democratic system when it comes to making decisions? We would certainly have more information security, produce more, and the information would be more solid and practical.

Let’s demystify: this is a possible way to start, explaining the principle of blockchain technology. It’s more straightforward than it sounds but very complex to do. Entrepreneurs in this area are constantly asked what it is, how it works and, above all, where and how it is applied!

To understand blockchain, we can think of LEGO pieces strategically fitted into each other that together form a block.
Only in this case, this block keeps the history of information and transactions of each piece, between thousands of users, in a decentralized and immutable system (it is not possible to forge the data stored in the blockchain). All this information is stored in an isolated and secure way; thus, we are creating blocks of information accessible and owned by all who are part of that block.

Doesn’t that sound revolutionary? Well, just as the Internet has changed the way we live our lives in the last decades, the future passes through a new concept called Web3, a new generation of the Internet that comes to solve many of the problems we are currently facing, essentially based on centralised companies and monopoly companies. We regularly use the Internet today for exchanging e-mails, financial transactions, information sources, experiences in social networks and browsing websites and platforms called Web2. In this case, Web3 is revolutionary because it brings new ways of using this network, with more democratic, fair, less bureaucratic and more efficient principles. A true evolution and disruption!

The decentralization of business models is the core of Web3 — it brings the power back to the users, to the people. This paradigm shift in the way we structure information represents greater control for the “common user”: there is no need for intermediaries in transactions because everyone trusts the decentralized network and the group, composed of everyone who is part of it, as a whole — transparency and security are fundamental.

The next question is always this: What does cryptocurrency have to do with all this? Let’s go back in time and recall the most well-known cryptocurrency: the famous Bitcoin, which goes hand in hand with the blockchain. As this network grows, it becomes increasingly complicated — and going back to the LEGO analogy — to take any piece out of this block, which is increasingly secure. As all users can see the history of transactions from the beginning, it is known that it is immediately discovered when someone tries to alter a transaction and appropriate bitcoin. It becomes invalid on the network, which, let’s face it, makes one dare not. For all this, it was necessary to create a new layer to allow financial transactions, which presuppose a currency, or a coin, to have freedom, their democratic regulation and not be dependent on the tremendous international political lobbies and inflationary capitalist systems.

Technology has brought this; new currencies or tokens that always have a purpose, a project and a broad group of information available and controlled by all who are part of it. If this process has accelerated how financial resources are transferred, it has also brought some speculative risks, which are natural to what is new and generate enthusiasm. Some caution is required for the fluctuations in value (in the real financial context) that these cryptocurrencies can have. However (and finally!), evolution has arrived, and our wallet — our new wallet, but digital — will have more currencies applied to different contexts.

“Still, why is this revolutionary in practice?”

The potential of blockchain and cryptocurrencies is superb. Not only does it allow us to transact tokens or assets — as smart contracts — in real-time, immediately and with fewer associated fees, by not having a central authority, it gives us greater freedom and avoids problems such as money laundering, for example. Also, you’ve undoubtedly heard the term NFT. NFTs are smart contracts for digital assets, allowing you to certify its ownership and the rules for its future transactions.

But this also applies to other products and services. In the food industry, for example, information stored in blocks makes it possible to develop policies on product traceability, faster and more cost-effective delivery, and better real-time coordination of suppliers and the food chain in general.

In the case of the food industry, the inviolable digital system for recording commercial transactions that is blockchain allows the parties involved to protect operations and the entire supply chain while promoting better performance, control and security.

That said, there is no doubt that global privacy can be significantly improved by introducing blockchain into our lives. The cryptocurrency was developed, in part, to help protect users and information, and other cryptocurrencies followed.

However, it is equally important to mention other negative consequences of this new paradigm brought by Web3. Cryptocurrencies have the characteristic of anonymity or protection of individual identity, which, when misused, favors illicit transactions on the deep web. The initial goal of bitcoin was to allow immediate and fast transactions, but it quickly took other paths.

Today, it still takes solid financial literacy and knowledge to invest in cryptocurrencies and understand why these price rises and falls occur. There is a way to go, certainly, but increasingly clear and easy to understand for the “common user”.

The future is indeed bright. There is no doubt about the potential of blockchain and other Web3 technologies, and now we need to start betting on this new generation of the Internet.

We no longer do anything without using the Internet; of course, we must prepare the new generations for that and for what is to come. Because the future of these technologies may still be a little uncertain, but it’s bright.