This blog was co-authored by Justin Kaufman and Phillip Jackson.
There is a coming shift in how e-Commerce platforms are architected, and this shift is foreshadowed by recent technologies. You may have heard a lot of press about NFT and cryptocurrencies lately — digital artist Beeple sold an NFT for $69M, or Elon Musk is sending a dogecoin to the moon — but beyond the hype and the internet culturalization of digital currencies, there are real implications for how we transact online that are being formed by this current moment.
To understand where the market may be going, a hyper-brief primer on these technologies may be in order for some. The next incarnation of the web — Web3 — will enable a future in which people (and machines) can interact with data and counterparties through an underlying layer of peer-to-peer networks, without any third parties being involved. But it’s more than the absence of third parties; the key to Web3 is that it is completely decentralized. Centralization means control by a single party. For example, US dollars are controlled by a central authority, the U.S. Government, while bitcoins are decentralized and not controlled by anyone. Similarly, the Internet is decentralized, and anyone can host a website (although key infrastructure remains under the control of a small few).
Non-fungible token, or NFT, refers to a special type of record in the blockchain. Because every token has a unique number, they can be used to uniquely identify a digital item. When I buy a bitcoin, I’m buying a piece of data. We all know that data is infinitely copyable, so how do I retain the value that I invested in that cryptocurrency? The principles underlying NFT ensure that my bitcoin is unique and cannot be replicated. It also ensures permanent scarcity and value.
A blockchain is a digital record of transactions. The name comes from its structure, where collections of transaction records, aka “blocks,” are linked together to form a public ledger open for anyone to review and audit. Blockchains allow groups of people with no formal affiliation to exchange data and funds in a trustworthy and secure way.
The Ethereum blockchain is an evolution of blockchain technology that enables entirely new use cases through the creation of Smart contracts. Smart contracts allow Ethereum users to define and run automated processes on the Blockchain, almost as though it were a community-owned computer. The implications are head-spinning. Smart contracts allow developers to establish that the digital thing they create, whatever it may be, hasn’t existed before.
These are heady concepts many really smart people claim are going to change the world but in what ways? And when?
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