In Southeast Asia, at least 9 out of 10 respondents in a recent survey of 3,000 people claim that they are currently using or are open to trying digital currencies. Notably, the region offers a hotbed for consumer-facing FinTech products leveraging peer-to-peer payments and smart contracts. As fast as the developments are forthcoming, so is the global adoption of Web3 technologies – and their pitfalls.
Growing opportunities in the Web3 ecosystem
Building on blockchain technologies is gaining traction in the software development industry, with platforms such as Ethereum reporting as high as 4,000 monthly active developers. The reasons vary across the board. For instance, smart contracts allow developers to build decentralized apps that rethink data ownership and digital identity models. This creates monetization models that directly connect the data creators to their consumers. This can reduce middlemen costs and ultimately generate more revenue for app builders and data owners.
Beyond data, developers have also built a suite of “money lego” applications that adopt the elements of traditional financial products. This led to the boom of decentralized finance (DeFi) including peer-to-peer payments, decentralized exchanges, stablecoins, flash loans, and leveraged yield protocols.
Why Smart Contracts are only useful in specific scenarios
Any technological improvement that streamlines business processes, whether simple or AI-driven usually comes with limitations as well, smart contracts notwithstanding. Take software development as an example. Typically, smart contracts that are launched cannot be easily changed or shut down due to their immutable nature. Simply put, this can halt important cybersecurity fixes, given that it’s highly difficult to change live smart contract code and for worse, prevent software disasters.
“Smart contracts are still inherently risky. We’ve come a long way, but nonetheless, we have bugs and errors that lead to millions of dollars being lost today. We still need more time for smart contract development to become more robust and battle-tested. Mainstream and institutional adoption will only follow once we have fewer smart contract exploits,” says Jeremy Nichols, Blockchain Marketer of Stakefish.
Smart contracts have already proven to be detrimental when exploited. Earlier this year, an NFT project known as Akutars was locked out of its $33 million auction fund by both a bug and a cyber exploit. The funds were locked in a smart contract that couldn’t even be accessed and changed by the development team.
When it comes to enterprise scenarios, smart contracts cannot fully replace traditional “off-chain” contracts because they are realistically limited in what can be accommodated. For instance, stakeholders cannot include vague terms to simplify the interpretation of technical clauses, which can lead to some parties acting in bad faith unknowingly. Smart contracts are more useful to enforce actions that have clear outcomes, such as payments and asset swaps.
Serving dynamic industry needs with a blockchain OS
Circumventing smart contracts is one alternative solution to Web3 development. However, without smart contracts, most blockchains will not have the adequate coding layer required to build such apps. That’s why Web3 protocols such as PraSaga are using a blockchain operating system (OS) in lieu of smart contracts.
The blockchain OS utilizes a variant of Python, known as SagaOS, to extend the functionalities of smart contracts. In addition, it includes the gold standards found in Web2 software development: full flexibility and dynamic coding logic. This can be highly useful to meet the complex needs of enterprise-grade software, including the supply chain and manufacturing industries.
“Auto manufacturers can use unique digital IDs to track every single part of their finished cars, from origin to final delivery. For auto manufacturers, this creates complete visibility into the entire manufacturing process, bringing an unprecedented level of data transparency and tracking,” says Michael Holdmann, CEO and Founder of PraSaga.
Blocks on SagaChain are secured using the Proof of Work (PoW) consensus mechanism pioneered by Bitcoin, in tandem with the highly energy-efficient Proof of Stake (PoS) model. Ethereum, the largest smart contracts platform, recently reduced its overall energy consumption by 99.95 percent after switching to the PoS consensus model.
Web3 still has a lot to explore
“A blockchain OS means that Python programmers can now quickly amend bugs as they would in Web2 development while reaping the benefits of the underlying blockchain technology. We envision that these factors will encourage more coders to take advantage of the latest Web3 technologies while keeping the industry standards of battle-tested software development,” says Holdmann.
The notion that Web3 is relatively new also makes it a hotbed for ambitious startups and developers. As with any new industry, time will tell as to how the next evolution of digital apps will take off.
The Human & Machine podcast is dedicated to inform and demystify the crypto, DeFi, GameFi, NFTs, and blockchain industries for the average person.
Tlahui is a man in love with words and blockchain. His storytelling and passion to communicate led him to co-host The Human & Machine, a podcast and YouTube channel. Where he rightfully plays the role of an average-minded Human trying to understand and explain in layman terms, the lingo and complexities thrown at him by The Machine, his heartless, yet brilliant co-host.
Hikaru is a blockchain lover with a weakness for cooking. His outstanding understanding and experience in blockchain technologies, plus his unhuman work ethic have earned him the nickname of The Machine. In the show, he plays the role of a hybrid all-knowing robot that goes out of his way to explain blockchain concepts to The Human while trying not to lose faith in humanity.
Kenny Au, aka The Brain, is a #Web3.0 #FutureofWork #DistributedOrganizations Outerspace OG. His brain functions in spacetime. Plus his innate visions and strategies in Web 3.0 have developed him the nickname of The Brain.
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