Ethereum is a blockchain implementation that has paved the way for the evolution and actualization of the web3 paradigm. The mass implementation of smart contracts has birthed innovations such as sidechains, L2 networks and rollups aimed at overcoming initial challenges and continue to deliver on decentralization. This writeup will breakdown the following:

  • Introduction to blockchain technology and web3
  • Ethereum
  • Use cases.

Blockchain

A blockchain is a digital ledger that is distributed and supported across a network of machines. The data for the databases grouped into blocks that are linked to the earlier one forming a chain. Once a block has been created, it cannot be changed or dropped, and the network of computers verifies and agrees on the data accuracy.

Key features include decentralization, transparency, security, and immutability. It therefore means that no single entity has control over the network, anyone can view the blockchains content, the network is robust, difficult to hack and once data is recorded, it is difficult to alter. These features support true digital ownership of digital assets and trustless transactions without intermediaries which support real world applications such as cryptocurrencies, smart contracts, and decentralized finance.

Web3

Web3 is the latest paradigm in the evolution of internet-based systems, based on decentralization, blockchain technologies and token-based economics. The first iteration was the static informational web, where websites were structured using basic HTML. Websites were one-way communication tools optimized for desktop viewing and the prevalent dial up connections. The second generation presented a significant shift in how people used the internetas a platform for services through the rise of smartphones and use of user generated review and content sites. The technology vastly mproved with better interactivity, emergence of social media, personalization, and collaborative content creation. The age gave birth to giants such as Twitter, Facebook, YouTube, Airbnb, Uber, and Netflix amongst other services.

The new paradigm builds on the gains of the former dispensation by focusing on reducing reliance on centralized servers and large tech corporations by placing the ownership and control firmly within the control of the users and natively creating trustless systems and permissionless access supported by native payments. Simply put, this iteration is meant to empower users to control how generated data is collected, used, and giving unparalleled transparency in how the data is collected, used as well as enabling remittance of revenues earned from such. The paradigm is still in its infancy as much of the infrastructure is underdevelopment and currently faces several challenges in the scalability of underlying technologies, financial irregularities regulatory uncertainties that have hampered mass adoption and acceptance.

Ethereum

Building on the concept proposed by Nakamoto, Ethereum was proposed in 2013 by Vitalik Buterin, touting a network of computers harmoniously adhering to a commonly shared protocol as a basis for the creation of decentralized communities, applications, organizations, and digital assets. This new iteration of blockchain technology implemented the use of smart contracts, which transformed the role of nodes in the network from mere register maintainers into active parties that can collaborate and act on behalf of principals, whilst supporting a commonly shared state. With the recent successful completion of The Merge, Ethereum has moved from a proof of work consensus mechanism to a proof of state, which has resulted in a more energy and compute efficiency network that supports multiple level networks and sidechains that relate with the base L1 chain.

The whole initiative is open sourced, which permits auditing and maintenance from a wide range of players. The Ethereum Foundation supports initiatives to spread awareness and usage of the platform, with the recently completed Translatathon aimed at delivering content in various languages.

Use Cases: An Intrsopection

Decentralization, censorship resistance and parallel economies are apex needs on the hierarchy as the fundamental basics are often in place in the developed world. However, due to poor infrastructure and deprivation of basic civic liberties, web3 technologies are leapfrogging the developing world to access world class payment, storage and computational resources and bypassing local regulations and oversight.

Decentralized Finance

Access to affordable finance and financial services remains a challenge in the global south. Decentralized finance platforms such as Aave, Uniswap and Compound provide readily accessible finance with minimal to no collateral; with few jurisdictions affected by international laws and policies. The use of smart contracts in efficiently allocating capital without intermediaries promises to vastly improve user experience in the financial services industry, thereby contributing to the greater good.

Payments and Remittances

Payments remains a teething problem as governments struggle to push businesses to come online and digitize their processes. As such, web3 technology provides a more robust, secure, and scalable platform for stablecoins to thrive. Circle’s USDC and Tether’s USDT are popular stablecoins whose values are based, backed, and linked to USD cash positions or assets. This has pushed global payment processors in Mastercard and Visa partner with Metamask and Gnosis to create card products that tap enable users to benefit from the best of both solutions and bridge the gap between the two paradigms into a single flawless and ubiquitous solution.

Social Networking

Social media giants have been riddled with scandals, mass migrations and others face potential closure. Web3 is centered on the power of communities and has brought the portability of data across multiple decentralized social media networks to tap into various communities and build a following that supports and benefits from a creator. Content has wider appeal and creators have a greater degree of control and stand to benefit from any returns generated from published materials across multiple platforms. Platforms that champion this initiative include Lens Protocol and Nostr.

Asset tokenisation / RWAs

Web3 has extended fractional ownership of high value assets such as companies in the form of equities by introducing the same concept for similarly high value assets such as high value real estate, art pieces or machinery. This has opened a new class of investment instruments accessible to a wider population at low affordable cost. With cryptographically verifiable certification of the underlying assets, secondary markets for such investments have emerged, with other synthetic assets wrapped on the initial assets, unlocking liquidity for holders.

Decentalised Storage

In the face of censorship and mutilation of human rights in democratic spaces, it is a pertinent need to have robust and reliable means to securely store and publish materials in an accessible format. Using the concepts of decentralization and cryptography, files can be uploaded to decentralized storage platforms such as Arweave and Filecoin. Powered by the IPFS protocol and file system, content uploaded is encrypted before being peered across the decentralized network thereby ensuring that stored content stays permanently on the internet and can be accessed through the correct private keys.

Regenerative Finance

Blockchain powered platforms have been deployed to unlock capital for projects that participate in carbon sequestration and promote green economies. With the greater need to verify the existence of assets in operation, web3 platforms have the ability to create cryptographically secured proofs as well as transfer both funds and carbon credits to help corporations meet their ESG requirements. Projects such as have been in the works to streamline the process, promote greener operations and unlock value from assets.

State Of the Nation

It is a documented fact that Zimbabwe has been through the paces of modern inflation multiple times as the country has gone through various currency implementations to the latest innovation of a gold backed currency that is holding its fort. Due to the economic challenges that have been bedeviling the country, the country has seen severe emigration. To support families back at home, diasporans remit funds to their families to assist with living expenses, health, education and investments. According to recently released statistics, the country has seen an increase in remittances to USD 1,5 billion, a notable rise from USD 1,2 billion in the same comparative period last year.

The official remittances channels in the country have been sourcing their off-ramp payouts and transporting cash movement to their various locations. This amount of cash often disappears into the informal sector. In an attempt to tap into the said funds, the central bank proposed several initiatives that would bring these funds into the banking system.

This raised alarm around the country, with few prominent services going offline and delayed payouts earmarked for certain deposits. In some instances, the delayed funds were sent for medical emergency and the delays were an inconvenience that would turn users to alternative, unofficial and unreliable means to transfer funds into the country

Although the situation above has been remedied, it has offset a number of economic reactions that often stifle economic growth and erode trust in the local currency. Ethereum presents a huge opportunity for users to save their funds in more stable currencies and still be able to perform peer to peer transfers that complete in fractions of seconds and usable using partner card platforms.