Blockchain is no longer a new technology, considering it is over a decade old. However, aside from the speculative hype surrounding the financial aspects of Bitcoin and decentralized finance (DeFi), blockchain appears to be still trying to establish itself as a mainstream technology.
According to a 2018 PWC study, 84% of executives surveyed reported being actively involved with blockchain-based projects. Their recent report titled “Time for trust: How blockchain will transform business and the economy” predicts that blockchain could create as many as 40 million jobs and add US$ 1.76 trillion to the global economy by 2030.
Undoubtedly, the technology has grown rapidly, with potential use cases continuing to rise. Perhaps now is the appropriate time to take a step back into the blockchain jungle and explore the current status of the ecosystem and how far the technology still has to go on its journey of the internet revolution.
Where Are We at With Blockchain Technology?
Blockchain is a decentralized ledger that records and tracks digital assets. It is a shared and immutable database, meaning the ledger becomes unalterable once a transaction is stored. This seemingly tamper-proof technology has seen blockchain being heralded as the next big thing after the invention of the internet.
However, to date, the impact of blockchain is yet to be felt across every sector. According to Statista’s survey, a paltry 45% of the companies reported that they were working to implement blockchain as a crucial enabler for their operations in 2021. Another study by Finance Online shows that nearly 68 million people own wallets, representing a measly 0.0085% of the world’s population.
These statistics reveal that the technology is yet to achieve any meaningful impact in its transformational capacity. While the adoption process has been slow, we have witnessed a steady growth in the number of blockchain ecosystems, which currently stands at over 1,000 as of this writing.
This growth points to a sector that has slowly evolved over the last couple of decades, starting with the early days of the internet — also called web1 — all the way through the rise of web2. It is web2 — one that is dominated by monolithic platforms — that has ushered on the internet that we know today.
Despite its rudimentary nature, web1 was characterized by decentralized and open protocols such as the transmission control protocol (TCP)/internet protocol (IP). The earliest platforms that leveraged TCP/IP were primarily powered by open-source codes, shared forums, bulletin board systems, and mailing groups. Most of the technologies in the web1 era were unpatented and free.
Then, in the wake of the dot-com crash, a new breed of platforms emerged. During this period, we witnessed a sharp rise in internet speeds, paving the way for the launch of streaming sites, such as YouTube and Netflix. Alongside this, social media platforms like Facebook and Twitter came into being, and soon, the ability to link user experiences to media through live streaming or sharing videos became prevalent.
This era also witnessed a sharp rise in mobile internet technologies, granting even more access to web2 platforms, thanks to the proliferation of mobile devices.
However, these new platforms deviated from the core principles of web1 and were largely dominated by large corporations. The once open-source codes and platforms that defined the web1 era became proprietary artifacts. Developers could not copy or reuse the proprietary models, which could attract serious legal ramifications.
Within a short time of their existence, web2 platforms corralled users into “isolated islands,” ultimately controlled by monolithic companies, such as Google, Facebook, and Amazon. Before long, collating personal user data became a common practice — often disguised as “free services.” This is, unfortunately, the sad state of affairs that users of web2 find themselves in.
However, regardless of the trajectory, users are increasingly becoming apprehensive of the web2 platforms. Blockchain ushers in decentralized applications (dApps) that promise to wrestle control away once again from a handful of monolithic platforms in web2.
For example, decentralized finance, or DeFi, already provides millions of users worldwide the means to exchange crypto assets, earn passive incomes, take out loans, and more without an intermediary taking a cut. Blockchain has essentially brought the core principle of banking the unbanked to reality.
It is not just about DeFi and money management. Blockchain has also opened up new opportunities that even web2 companies cannot shy away from.
How Web2 Companies Are Adopting Web3 Ecosystems
As the current version of the internet continues to evolve towards web3, web2 companies are also starting to find ways of leveraging blockchain technologies in their business models. Let us look at some web2 companies that have started or intend to adopt blockchain in their core operations in the near future.
1. Meta
In October 2021, Mark Zuckerberg — founder and CEO of Facebook — rebranded the company from “Facebook” to “Meta,” claiming that the new name would reflect the platform’s shift in gears. Upon unveiling the new name, Zuckerberg announced that he intends to bring Meta to the forefront of a more decentralized and interoperable web model.
While the platform is yet to be decentralized, there are tell-tale signs that Zuckerberg intends to cement Meta’s role in the crypto space through trademark applications such as crypto tokens, wallets, and crypto exchanges.
2. Twitter
Recently, we have seen a new trend emerge where people use a non-fungible token (NFT) as a profile picture to showcase their status as authentic digital asset owners. Out of all the big tech platforms, Twitter appears to be the only one to capitalize on this emerging trend.
In September 2021, Twitter announced that it would use the NFT functionality as a way for its users to authenticate their digital assets. As of this writing, users subscribed to Twitter Blue can select an NFT as their profile picture, while those with verified NFTs now see their assets appear as a hexagon shape.
3. Shopify
Shopify is an e-commerce platform that hosts millions of online retailers. In 2021, the platform debuted the beta version of its NFT exchange ecosystem. This feature allows users to mint and sell collectible NFTs on multiple blockchain ecosystems. For example, users can mint NFTs from their favorite chains, such as Ethereum and Polygon, and sell them to other users by accepting payments in bank cards, debit cards, or Shop Pay.
4. Microsoft
In March 2022, Microsoft announced that it would support Astar Network to implement a web3 future via Astar’s incubation program. Microsoft intends to play an active role in providing various services, including mentorship and marketing support to selected startups in the Astar incubation program to help them succeed in the web3 market.
Microsoft also intends to provide the selected startups up to US$ 350,000 in benefits through its GitHub Enterprise, Azure credits, and Microsoft Teams.
Shortcomings of Current Blockchain Ecosystems That Are Holding Back Web3
Despite the overwhelming value proposition and an array of possible use cases that blockchain promises, major issues still need to be tackled to promote this vision of web3. For one, many self-described dApps that claim to be “decentralized” are far from being genuinely decentralized. It is not uncommon to find the front-end of these services running on centralized cloud servers. This means that users still depend on legacy infrastructure to access decentralized services, with blockchain occasionally being tapped to send and receive data.
Even blockchain ecosystems that should be designed as decentralized networks lose that distinction when the underlying consensus protocol has weak decentralization assumptions. This is increasing the case, even in the Casper protocol, i.e., new proof-of-stake (PoS) for Ethereum that leverages weighted stake in determining the validators. Ultimately, the protocol allows only those users or validators that have staked the largest tokens in the network as a basis for participating in the consensus process.
Another common challenge holding back progress is that the rapid growth of blockchain ecosystems has resulted in a complex multi-chain world with the demand for value between them persisting. With trade-offs around decentralization, security, scalability, and costs, it has become difficult to imagine that one blockchain will emerge to meet all society’s needs.
As such, each blockchain ecosystem has been designed to be a “walled garden.” The fragmentation across the sector has created immense barriers for users and decentralized applications (dApp builders) that want to fluidly adopt and experience the benefits of multiple chains. As it stands now, tackling interoperability challenges within the blockchain space remains the only solution toward achieving mass adoption.
Many projects and other proposals that have emerged to tackle the interoperability challenge have primarily focused on centralized solutions with limited functionalities. With all these challenges considered, it would be premature to say that web3 has made an impact. However, this does not mean the foundation is not being laid. This includes the Analog network, an omnichain interoperability protocol powered by a proof-of-time (PoT).
At a high level, the Analog network consists of a decentralized set of tesseracts and time nodes. Tesseracts act as decentralized “listeners” or “observers” on external chains and can reach consensus on relevant states and events on the connected blockchains through threshold signature schemes (TSS).
On the other hand, time nodes serve as decentralized nodes that validate the fetched event data on the Analog’s ledger, i.e., Timechain. In this regard, the network’s primary goal is accomplishing the above two functions without a single point of failure, i.e., in a trustless and permissionless manner.
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