Curious about which sectors of African economies are likely to be disrupted by Web 3.0 tech?
For many that keep asking themselves what Web 3 is, according to brave.com, it’s defined as the decentralized web which usually encompasses both decentralized applications (DApps) and decentralized finance (DeFi), including crypto currencies, assets, or tokens.
The underlying technology for web 3.0 is blockchain which is better explained in our previous article titled understanding blockchain and Cryptocurrency.
But web3 is much more than a new way of coding or managing finance. It’s a whole new philosophy for how the web should be managed and users should access it: in a web3 world, we’re no longer dependent on monolithic, centralized authorities like governments, Big Tech, and Wall Street.
In simple words, web 3 is the next upgrade of the internet. An introduction on the technology evolution is briefly explained here.
In this first part of our article series, we shall investigate which sectors of African economies are likely to be ambushed by web 3 technologies. In other words, areas where should we expect to get the future unicorns on the African continent.
Web 3 technology is poised to innovate and transform a wide range of applications, including goods transfer (supply chain), digital media transfer (sale of art), remote services delivery (travel and tourism), platforms for example, moving computing to data sources and distributed credentialing .
Additional applications of blockchain include distributed resources (power generation and distribution), crowdfunding, electronic voting, Identity management and governing public records.
But before we dive into it, let’s explore some of the value propositions for blockchain or web 3 tech:
Why Will Web 3.0 Disrupt Sectors Of African Economies ?
In conventional centralized transaction systems, each transaction needs to be validated through the central trusted agency (e.g., the central bank). Therefore, decentralization requires trust, which is the main issue, along with lift resilience, availability and fail over, where the decentralized peer-to-peer blockchain architecture could be a better solution.
Unlike a centralized system, a transaction in the blockchain network can be conducted between any two peers (P2P) without the authentication by the central agency. In this manner, blockchain can reduce the trust concern by using various consensus procedures.
Moreover, it can reduce the server costs (including the development cost and the operation cost) and mitigate the performance bottlenecks at the central server. In contrast, in many cases, blockchain has some tradeoffs. For example, PoW cases such as Bitcoin and Ethereum, the server and energy cost are orders of magnitude higher, while the performance are also several orders of magnitude lower.
Blockchain provides the infrastructure by which truth can be measured and enables the producers as well as consumers to prove their data are authentic and not altered.
For example, if a Blockchain consists of 10 blocks, then block no. 10 contains the hash of the previous subsequent block, and to create a new block, the information of the current block is used.
Therefore, all the blocks are linked and connected with each other in the existing chain. Even the transactions are related to the prior transaction. Now, a simple update on any transaction will significantly change the hash of the block.
If someone wants to modify any information, he has to change all the previous block’s hash data which is considered an astronomically difficult task considering the amount of work that needs to be done. In addition, after generating a block by a miner, it is confirmed by other users in the network.
Hence, any manipulation or falsification of data will be detected by the network. For this reason, blockchain is almost tamper proof and considered as an immutable distributed ledger.
It is possible to interact with the blockchain network with a randomly generated address. A user can have many addresses within a Blockchain network to avoid the exposure of his identity. As it is a decentralized system, no central authority is monitoring or recording users’ private information. Blockchain provides a certain amount of anonymity through its trustless environment.
All the transactions that occur in a blockchain network are recorded by a digital distributed ledger and validated by a digital timestamp. As a result, it is possible to audit and trace previous records by accessing any node in the network.
For example, all the transactions could be traced iteratively in Bitcoin which facilitates auditability and transparency of the data state in the blockchain. However, by tumbling money through many accounts, it becomes very hard to trace the money to its origin.
It’s for the above reasons we believe the sectors discussed here under will benefit from the web 3 face lift.
In the second part of this two part series, we shall detail Web 3 applications in some sectors in Africa and also discuss some of the hindrances to these implementations.