WEB 3 & SMART CONTRACTS
Before moving on to Web3, let’s go back to the timeline and review WEB 1.0 and Web 2.0.
Web 1.0
Popular from the 1990s to the mid-2000s, it is a one-dimensional Internet. At that time, Web sites had only one function, that of displaying a list of information. So, you can read it.
It is not possible to post, share and interact with other people because it has not yet been thought of.
It is the era of reading.
Web 2.0
Widespread from the mid-2000s to the late 2010s, is a two-dimensional Internet.
Example websites are Facebook, Instagram, Snapchat with more functions. In addition to reading information from their platform, you can also post your content so that other people or users can also read yours and vice versa.
It is the era of reading and writing.
Web 3.0
Web3 refers to a decentralized online ecosystem based on blockchain.
Web3-based platforms and apps will not be owned by a central server.
But from users who will earn their share of ownership by helping to develop and maintain such services.
Web3 is the era of reading,writing, and owning.
All this is made possible thanks to:
- Blockchain network
As discussed earlier, blockchain technology is the foundation on which Web3 is built. Using a blockchain network, data is decentralized so that users own their data and can exchange it without losing ownership. There is no risk of data breaches and there are no intermediaries involved. It also allows users to securely access various services.
In addition, blockchain is also essential for cryptocurrency, which is another important element of Web3. Non-fungible tokens (NFTs), which are used to power transactions in Web3, are also based on blockchain technology.
- Artificial intelligence
Although Web 2.0 has its share of artificial intelligence (AI), it is still mainly controlled by large technology companies. In Web 3.0, we will see AI used to support decentralization
- Augmented reality/virtual reality (AR/VR)
AR/VR is another important component of Web3 because this technology will form the basis of the metaverse, which in turn is important for the future of Web3. We will talk more about the metaverse at the end of the article.
- Without permission
In Web3, users do not need specific permissions to use the Internet. Users will be able to access specific services without sharing their personal information. There is no need to compromise on privacy or share other data.
- Safe
Web 3.0 is much more secure than Web 2.0 because decentralization makes it difficult for hackers to target specific databases.
The smart contract we can infer, concretely, is software based on blockchain technology.
They define rules and conditions to be met by tracing, digitally, all the characteristics of a traditional contract.
To clarify the operation of these application software, it is necessary to distinguish all the stages involved in the emergence of these digital bonds.
Fassi
The first step is the agreement: this involves entering into the contract and signing the clauses that bind the counterparts
They are then translated and recorded into a smart contract that is entered and transcribed into the blockchain, which will perform a check on the availability of the funds of the user registering the digital agreement.
identified by a hash code, the contract becomes part of a blockchain block that guarantees its maintenance,
Within the block, validation by blockchain participants takes place.
After being validated, obtaining consent from the nodes, the created block is added to the chain by being time-stamped
The operation at this point turns out to be public and visible within the platform.
as the last step, there is the execution of the contract, which occurs automatically once the input is received.
example
A smart contract could be roughly likened to the activity performed by any vending machine .
An agreement arises between a buyer and distributor in which the distributor agrees to perform its task only in the event of input from the external party.
Of course, the issue is not so simple.
The “code” prefigures a set of instructions with descriptions of conditions upon the occurrence of which specific actions also defined in the code are automatically triggered.
Carried out by a computer that follows the “clauses” preset and decided by the parties, without the possibility of modification or interruption, with the main ultimate purpose of producing legal effects between the contracting parties.
his vanatges:
- Efficiency and speed of execution: by entrusting execution to software and not to the technical time of procedural steps related to the bureaucratic apparatus, these agreements can be executed in real time, speeding up relations between the parties.
- Reduced costs: standardized smart contracts have the ability to escape commercial negotiations by merging them within the agreement, without the need for a third party regulator, thus avoiding any transaction or administrative costs. In addition, automatic enforcement, and thus the certainty that fulfillment occurs as agreed through the consensus mechanism, means that the costs of performance monitoring and, consequently, the number of disputes that may arise are reduced.
- Accuracy: By not depending on human intervention and operating transparently, the execution of smart contracts is less prone to errors and the risk of manipulation. 10 IV. Clarity: the ambiguity of natural language and, as a result, the misinterpretation of traditional contracts can be the cause of contentions and disputes or can be used by the party to free itself from contractual conditions that it no longer wants to comply with. This is not the case with regard to smart contracts, given and
From centralized payment systems with the concept of “trust” to a third-party guarantor, we have moved to a diametrically opposed solution with the absence of trust and total decentralization.
tokenization
This process can be described as the encapsulation of a value in an exchangeable and tradable unit of account called a token
blockchain technology thus turns out to have disruptive potential in that it allows the concept of exchangeable and quantifiable value to be extended into items such as labor, reputation, voting rights, or even copyright and property rights for creative works.
With blockchain, it is possible to “tokenize” these expressions of value in order to detect and account for them.
Digital abundance is one of the fundamental and successful properties for the Internet.
It must be pointed out, however, that while such a feature in the late-stage web has its positive values such as mass dissemination of information at a very low cost, it is equally true that it poses a problem at the time when the information must represent something of value that is unique and attributable to its “owner.”
Tokens can be divided into three main categories:
- Payment type: these are tokens that present themselves exclusively as “cryptocurrencies” and are therefore used to make payments. This type of token can be exchanged with other tokens of the same type or with “fiat” coins, but cannot be used to access services or features of any project.
Utility type: utility tokens, as can be guessed from the name, are made to provide a utility to the holder. This means that holders can use their tokens to access services or features that are offered by a DLT platform, the issuer of these tokens.
Investment type: investment tokens represent asset value such as shares 20 of real values or companies
By owning such tokens one acquires rights generally to vote on decision-making matters or rights to receive payments such as dividends or interest.
BTC and ETH cryptocurrencies can be classified as digital tokens.
They can also be said to be native tokens because they are tied to the basic functionality of the respective Bitcoin and Ethereum systems.
The Blockchain 2.0 category extends blockchain to sectors other than finance through the implementation of smart contracts.
Blockchain 2.0 technology enables the creation/management of additional tokens
These tokens therefore exist and are managed within a contract (smart contract)
as an independent database, with separate management from native tokens.
A distinctive property of native tokens and ERC-20 tokens is their fungibility, i.e., interchangeability
“Non-fungible tokens” can also be created, and to this possibility Crypto Art owes its birth.
A non-fungible token is a set of data, uniquely assigned to a Blockchain address
The token constitutes a unique digital resource
Blockchain ensures that non-fungible tokens cannot be duplicated.
ERC-721
ERC-721 is an Ethereum standard that allows you to implement an API (application programming interface) for NFT, then create an NFT.
Following ERC-20 and ERC-721, Ethereum has designed and developed the new ERC-1155 standard, which enables the creation of an intelligent contract interface that can represent and control both fungible and non-fungible tokens
ERC stands for Ethereum Request for Comments, a document with which an improvement process begins and formally concludes with an EIP (Ethereum Improvement Proposal), allowing the system to be used in the most efficient and secure way.
The ERC-20 standard, introduced a few months after Ethereum’s genesis block, allows for the optimal creation and management of fungible tokens other than ETH.
The smart contract includes six core functions and three optional functions:
functions:
- TotalSupply (total amount of tokens entered into the system).
- BalanceOf (token balance of a specific address).
- Transfer (sending of tokens) – transferFrom (withdrawal of tokens).
- Approve (permission to draw).
- Allowance (limit imposed on withdrawal).
- Name (name of created token, optional).
- Symbol (symbol of the token created, optional).
- Decimal (the smallest transferable amount, optional).
The ERC-721 standard, which creates and manages non-fungible tokens (NFTs), adds other functions to the functions related to the ERC-20 standard. These additional functions are used to define the uniqueness of the token and define/manage the ownership title.
The ERC-721 standard:
- tokenMetadata (identifies the URL address, uniform resource locator, of the digital object underlying the NFT property title)
- ownerOf (provides the owner address of a given NFT)
- takeOwnership (transfers ownership of an NFT)
- takeOwnershipByIndex (is used in the case of NFTs with edition number ≠1, to track individual editions)
Management is done with reference to metadata corresponding to file storage, which is generally done by using the InterPlanetary File System (IPFS) protocol for storing and sharing data in a distributed peer-to-peer system.