25 Feb 2022

Web 3.0: distributed ledger and blockchain.

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The Internet is an organism in continuous evolution: indeed, ever since the web came into being, it has never ceased to take on new incarnations, changing, growing and offering a constantly new experience to users. Today, when we talk about Web 3.0, we refer to the final frontier in chronological order reached during this development path.

So, what does Web 3.0 involve? One of the first features to consider is the transformation of the network into a potentially infinite database. An orderly container, a blockchain where information is both accessible and monitored, where security is guaranteed to the highest degree.

Blockchains

Distributed Ledgers are the building blocks through which this new incarnation of the web can be achieved, the Internet of Value, composed mainly of five structural elements: the network, algorithms, the distributed registry, transfers and assets. Within this vast family of distributed ledgers we find blockchains, a tool able to particularly efficiently integrate the typical features of other technologies.

Let's get into the specifics, trying to understand what blockchains are and why their use is revolutionising the very concept of the Web.

What are blockchains and what are they used for?

First, let's try to define exactly what a blockchain is: it is a particular system of structuring distributed registries, rearranged in blocks linked together by means of encryption that contain transactions within them.

The main purpose of blockchains is to allow information transfers as securely as possible. This level of guarantee is given by the consent that is granted to the individual transaction by all the nodes that make up the blockchain: in short, every time a variation occurs within a block, it is not recorded and allowed by the single node in which it takes place but is validated by all the nodes that make up the system. In this way, the validation process is shared and exponentially limits the risk of tampering, theft or fraud.

The birth of Blockchains and their relationship with cryptocurrencies

The history of blockchains is inextricably intertwined with that of cryptocurrencies. 2009 is the birth year of Bitcoin, the first virtual currency that bases its existence, precisely, on the blockchain system. Thanks to the impetus given by the rapid growth of bitcoin, work was also done to grow the technology of decentralised registries, so that the circulation of this currency was completely free from the control of central authorities.

How are the movements of these virtual currencies structured? A distributed registry monitors all transactions, regulating trade in an absolutely secure manner. To allow the operation of the distributed ledger, however, a very high amount of computing power is needed: in fact, there are bona fide factories that make their computers available in order to keep the various nodes that make up each blockchain active. In exchange for this service, which is particularly expensive in terms of energy, you get bitcoins as payment.

The specific characteristics of a blockchain

Let's take a detailed look at the elements that characterise blockchain technology:

  • Decentralisation: the nodes that make up the blockchain contain all the information relating to the digital registry, thus ensuring the stability of the system even if one or more nodes are "attacked";
  • Traceability: when an item is saved in the registry, it becomes immediately traceable in its entirety. In addition, it will be possible to trace its specific origin, as well as to perfectly reconstruct the entire history of changes made;
  • Transparency: each user can access and view the content of a blockchain. You can view and check the flow of information and transactions from any node of the network, but there are also specific services that allow you to query the registry without affecting the content. The data can never be hidden without the network becoming aware of it;
  • Robustness: any information added to the registry cannot be manipulated in any way without the consent of the whole system (or the authorised part of the system) for the modification;
  • Programmability: it is possible to schedule the various transactions in advance, in order to activate insertion or modification operations when certain specific conditions occur;
  • Disintermediation: the validation system linked to the nodes makes any type of third party responsible for data certification useless, since it will be the monitoring provided by the nodes themselves to ensure the security of the entire system.

These characteristics highlight the strengths on which the strong growth and development of blockchain systems has relied in recent years: thanks to this technology, in the near future, most validation services will go digital, as is also reported in the Blockchain and Distributed Ledger Observatory 2022. The work of banks, financial institutions and notary offices can easily be replaced by blockchains in the certification of authentications and transactions.

Tokens and NFTs

Another component to consider when talking about blockchain concerns tokens. The term "token" identifies a specific grouping of digital information that is theoretically able to confer the right of ownership to a subject inside a blockchain. Simply put, a token has basically the same prerogatives as a cryptocurrency in terms of transferability and security, but it will not be native or internal to the blockchain in which its transactions are recorded: in practice, the token is the digital representation of a real asset, which obviously exists outside the blockchain system.

Among the best-known tokens are NFTs (Non-fungible tokens), created to guarantee the exclusive ownership of a single tangible or intangible asset: specifically, they are mainly aimed at regulating copyright, inventions, works of art and projects.

The future of blockchains

The next step in the process of growth and deployment of blockchains will no doubt be linked to Dapps, or decentralised applications. Through these apps, we will be able to use blockchain technology directly on our smartphones, TVs and other electronic devices for an increasing number of functions and services, potentially extending to every digital field.

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