Finance

Cryptocurrencies have a future. This is told by the denunciation of violence written forever on the blockchain

You can’t talk about cryptocurrencies without talking about blockchain. There are areas still to be explored, innovations to be developed. And a few criminal acts cannot obscure the potential of this technology which remains revolutionary

*Giorgio Scura is the founder and director of Decripto.org

It is truly useful and valuable to be able to discuss in prestigious newspapers such as La Repubblica and La Stampa with highly experienced and capable colleagues such as Riccardo Luna on such a difficult and thorny topic as cryptocurrencies. In my opinion, to better understand the phenomenon and what it represents, we need to “zoom out” and talk about the technology behind crypto, tokens, NFT etc: the blockchain or chain of blocks.The blockchain was born with Bitcoin in 2008 as a response to the subprime mortgage crisis and the consequent collapse, not only in terms of trust, of the entire American banking system saved at the last minute by the Government with the injection of hundreds of billions in liquidity. Others, more capable and knowledgeable than me on the topic, will be able to talk about the profound technical details of Bitcoin.It was enough for me to observe how for 15 years, thanks to a protocol illustrated in a white paper of a few pages signed by the pseudonym Satoshi Nakamoto, strangers have exchanged billions of dollars, every day, without knowing each other, without any “man in the middle”, in a few moments and paying very little. Bitcoin, among the top 10 most capitalized “companies” in the world, is without a president, without a board of directors, without anyone who can make decisions independently, everything is completely transparent and public.Everyone’s money, where everyone is controller and controlled, where cheating is not a possibility. A prodigious asset also in terms of returns, still too volatile for payments, of course, but which is demonstrating extraordinary qualities of resilience and reliability. Real public money. Control of the currency in the hands of citizens. Democratic, transparent, uncensorable. One of man’s most extraordinary inventions in my opinion.

What is blockchain

In addition to a formidable digital currency, Bitcoin has given us a technology, the blockchain, which goes beyond the merely financial aspect. And here, zooming out becomes more complex. In fact, few have managed to give an overall vision, managing to identify the boundaries of this invention and all the areas of application. It’s a difficult exercise, and always open to outside help, which we will try to do here. First of all, let’s try to understand what it is, in the simplest way possible.Do you know the ledger? Or the school register left on the teacher’s desk at school? Well, the blockchain is nothing more than this: a public register on a table that everyone can read and check, everyone can help compile and that no one can modify, corrupt or censor without all the participants realizing it. This is precisely thanks to cryptography and the “chain of blocks”, each dependent on the other to such an extent that a modification of even a single piece of data contained in a single block would lead to the “unpairing” of the entire chain, therefore to the general alert . Blockchain is just that, but why is it so important? Because it introduces two new, unprecedented concepts that are also fundamental to understanding cryptocurrencies: possession and decentralization.

What does ‘possession’ mean on the web? 

Already, for the first time in the history of the Internet, someone can be recognized as possessing a digital (but also physical, as we will see later) asset. Precisely because the information is immutable, public, uncensorable and incorruptible, it can represent a sort of “certificate of possession”. On the blockchain we can assign to a certain identity (a wallet, a public address) a certain quantity of an asset, of a cryptocurrency for example, which, although it may have a disturbing name, means nothing more than a currency that uses cryptography as safety and protection. The scenarios opened up by having found a way to recognize the possession of an asset on the Internet are boundless and we are discovering them in recent years.It is not a world apart, the blockchain is closely connected to the Internet of which we can understand it as a natural extension. And in fact the whole Web that is being built using blockchain technology is called Web3 to distinguish it from web1 (1995/2000) when you could only write and publish textual information and a few photos on a website, passing through web2 ( 2005/2023) which introduced the possibility of interacting and creating content, social media so to speak, up to and including Web3 which adds two new concepts to these things: decentralization and possession. “But what do I do with owning digital assets? I don’t have digital assets and I don’t want to have them.”

Wrong.We all have digital assets, only they are not in our possession but in the hands of centralized entities that provide us with a service in exchange for possession of the data itself. We all have an email, or a mobile phone number, but in reality they are not really ours. If someone came to offer us a million euros for our phone number, we wouldn’t be able to close the deal because the digital asset of our phone number is simply not in our possession. Google or Meta or Having possession on the web for the first time is a real revolution, it is the next big thing that will overturn the web as we know it from the foundations, which will completely change the meaning of virtual worlds and will make them more real and more useful because they are more connected with the physical world. Furthermore, since we are now members of an extremely digitalized society, it is destined to change society itself. And if you don’t believe it, look at how social media has changed our lives (often for the worse) and our businesses (often for the better) in recent years.

Decentralization

The other extremely important concept that blockchain introduces is decentralization. And here we are talking about a political, social, sociological, philosophical revolution even before an economic one. The blockchain system is designed to be distributed across thousands of nodes (even simple computers) that participate in the writing, control, verification, storage and management of data collectively. In fact, the blockchain does not need servers (server-less), the information is disseminated on this innovative, armored, very secure, encrypted cloud. And they are uncensorable, unchangeable except by the majority of the network.It’s the end of dark rooms. The end of decisions made by very few people on the heads of many. The end of corruption. Because in a centralized system, with one or very few men in command, corrupting those at the top, if you can operate in opacity, is extremely efficient child’s play. In a decentralized, transparent, incorruptible, public system, this is not possible. It is no longer necessary to trust those men in command, who, as we know, have always made men thieves.

The system does not allow them to act for purposes that are not approved by the entire community, or at least 50% + 1 of it. This is why it is called trust-less technology, which does not need trust.If the system does not allow cheating, stealing or counterfeiting, the ethics of the people who are part of it do not matter. We can also include Al Capone, Lupine, Hitler, it doesn’t matter: it is the public rules of the system and the transparency of its functioning that guarantee that choices are made for the collective good. Very good, but in practice, what is this blockchain for? Eh, it’s not easy to answer, it’s as if in 2000 they asked us: “But what can you do with this Internet?”. Well a lot of things.I will try to give a quick overview here, but for each sector a specific in-depth study would be needed. I am not a technician, and I invite experts to intervene to correct the inaccuracies, but we have identified some extremely heterogeneous fields of application and unrelated to coins, tokens and NFTs . In fact, a blockchain can exist even without an internal currency, if this is not necessary for operation and does not have several full-blown use cases. I would start from data security, the Achilles’ heel of Italian companies, continually under attack by hackers specialized in ransomware (system blocks, often through advanced phishing, for extortion purposes). Well, blockchain allows for an extremely more efficient and inviolable level of data security.

The certifications

Certifications of any kind. From the certification of the supply chains, to that of the materials used, from the certification of energy consumption, to the certificates of authenticity, all very precious killer apps in a country like Italy which focuses on artisanal art, attention to detail, the protection of small and very small excellences is, or should be, its strong point. On the blockchain it is possible to create certificates that attest, always in a public, transparent, incorruptible and imperishable manner, practically anything.Of course, stupidly, you can always lie, you can always publish false data, but you expose yourself to very high risks and, once the mendacious declaration is discovered, you will have to pay the consequences as you will no longer be able to go back and take back what you have done. he declared himself publicly (blockchain in Italy has had legal value since 2019 with the Simplifications Decree). Imagine the fight against fakes which alone costs our country 10.5 billion euros a year. The blockchain here can be used to create a “digital twin” or “digital twin”, which necessarily accompanies the physical object and guarantees its authenticity. So all the numbered pieces of a bag collection, for example, will be released on the market with a digital certificate in NFT format (no, they are not dead at all and we’ll talk about it in a moment). So many bags, so many NFTs, immutable, not falsifiable, not reproducible. Paradoxically, it is technically much easier to recreate a fake stock exchange than a certificate on blockchain with the risk that in the future these certificates will be worth more than the object they guarantee.Regarding supply chain certifications, how useful it can be! Do you grow organically? Are you a 100% Made in Italy company? Do you have 10 degrees? Do you consume very little water? Do you separate waste collection? Very good, write it on the blockchain, publish all the documents that demonstrate that, in a world of thieves, your company behaves in an ethical and transparent manner and you are a model citizen. A bit like the same principle according to which restaurants choose to have the kitchen open to customers. Transparency.Obviously, this technology would have the most disruptive and effective uses if the State took it into its own hands. Zero tax evasion systems could be created, for example, the State could recognize rewards, the original meaning of token, to reward the positive behavior of its citizens and not just punish them when they make mistakes. And be careful, not indiscriminate bonuses showered upon anyone, regardless, but meritocratic rewards which, based on on-chain certifications (get used to hearing this word more and more often, they are not online, on-chain) can be verifiable and visible to all.

NFTs are perhaps not as dead as they say

Nft, we were saying, another dirty word that means “Not fungible token”, but to understand it, imagine it simply as a container of digital assets (but also physical ones as we have seen). While the newspapers sound the requiem, no one explains what practical uses they may have. A killer app, for example, can be found in ticketing, tickets for concerts and sporting events. Using blockchain technology, “mining”, i.e. minting, an NFT could be canceled or at least controlled the secondary market.The smart contract (the brain) of the NFT can be programmed so that the token-ticket cannot be transferred, and therefore cannot leave the first destination wallet. Or you can program it to allow resale, but providing that a portion automatically ends up in the artist’s wallet. Ask the opinion of Coldplay who have seen the price of their concert tickets go from 70 to 700 euros without receiving a cent. Billions of euros a year to be taken out of the pockets of touts and given to artists. Today.For the same reason, works of art can be certified by linking them (forever) to the artist who produced them. With the same mechanism it will be possible to set up that the NFT that accompanies the work of art can recognize a percentage on future sales of the work to the author or his heirs, in a transparent, immutable, irreversible, automatic and forever. Without intermediaries.

Music and blockchain, a terrain to explore

Would you like to invest in your favorite emerging singer? Bet he’ll become a star and help him pay the bills in the meantime? Or is being a fan of an international star not enough for you and you want to invest in him/her? Ask Rihanna and Justin Bieber who gave away 1% of the millionaire royalties from their latest albums to the 300 holders of an NFT they launched.It’s not the future, it’s the past, while in Italy the world of music fiddles around without realizing that, by no longer selling records, surviving only on the crumbs that the platforms and live shows give back is limiting and extremely risky (see Covid). Speaking of platforms that take everything and give nothing back, social networks are also destined to be disrupted by the blockchain revolution. The social system, now 20 years old, shows its limits and signs of aging. The social media managers of Repubblica, Stampa or any other large community know this very well. Those millions of fans marked on the profile are completely virtual.Each link or post, if it is not sponsored, so it is said organically, reaches much less than 1% of the fan base. This is because Facebook, Instagram, Youtube, X, Tik Tok do not allow us to reach our fans without paying. In some ways it’s as if they’re holding them hostage: do you want to be seen by your users? You have to pay for it, and a lot. Not to mention freedom of expression on the web, too important a commodity to be left in the hands of a handful of millionaires sitting on their centralized empires created with our content, our time, our attention, and in exchange for what?Access to a website, a great deal we did. But we agreed there were no alternatives, but the Internet doesn’t stop. The invention that has marked the human race more than any other was born only a short time ago, it will change, evolve, become more of a true “network” and less of a pyramid. And this certainly also involves a strong redistribution of wealth derived from online activities. And it was time.

Crypto social networks

So let’s imagine for a moment the communities of tomorrow, or rather the super communities made up of super fans, much fewer than those of today, but much, much more effective. First of all, on crypto social networks (there are already dozens, just google it) I will always be able to reach my entire community, without men in the middle who want money to make me talk to my fans.Super fans will be super fans and no longer simple fans because they will be able to invest in the community itself (whatever it concerns: a singer, a team, a newspaper, a supermarket, nothing changes) and therefore feel truly part of it, feel a bit like owners of their own passions in a certain sense. Having a certificate attesting to this closeness and this activism opens up new and explosive scenarios that could completely redesign marketing and advertising on the web as we know it now.It is not certain that the token or crypto is sold for an economic compensation, it can also not be put up for sale but given only to those who carry out certain actions (visiting a shop, reading articles, writing posts on social media, trying a product and review it, contribute to the daily life of the company, anything) to reward their loyalty and participation.Therefore create super communities that in exchange for a token give value to the company, the singer, the newspaper, the supermarket but in the meantime also to themselves. Protagonists of the fate of our reference community, they could become a phenomenal marketing machine, certainly more efficient than investing budget on banners on websites that no one clicks on or advertising spaces on television channels that no one watches.

Legislation and traditional finance

I’ll stop, otherwise this article will become an ebook, but first we need to talk about two other important things, if we want to understand cryptocurrencies, blockchain and NFTs well. Two things that are very closely related to each other: legislation and traditional finance. And there is an important date: May 31, 2023, the day on which the European parliament approved the Mica Regulation (Markets in Crypto-assets).A broad, precise law, which for the first time gives a taxonomy, gives the official meanings to some terms, from token to crypto asset, from e-money to stable coin, up to CBDC, Central Bank Digital Currency and state cryptocurrencies if we want. The digital Euro, in short, which will follow the Digital Yuan already used by China, together with Russia and its digital Ruble. In America, despite the mega FTX scandal which showed the embarrassing flaws in the American political and financial system incapable of recognizing a scoundrel like Sam Bank Friedman, they are now thinking about Bitcoin ETFs.Scams are a problem in this sector, of course, we at Decripto specialize in this, but a handful of crafty people cannot be allowed to ruin such an extraordinary technology and force us to throw the baby out with the bathwater. The world is embracing cryptocurrencies by leaps and bounds, either due to inflation problems, see South America and the Middle East, or due to the impossibility of accessing bank accounts (Africa and the Third and Fourth World), or due to problems of freedom (millions of people live under authoritarian regimes).And even traditional finance can no longer pretend nothing has happened. It has been discussed at Abi and the Bank of Italy in extraordinary conferences and it continues to be discussed with webinars and courses. In fact, from next year, all European banks will be authorized to provide any type of crypto asset. In Germany and Austria, but also in Italy, several credit institutions are making the first moves, but even very large companies are opening up to the sector (Ferrari will accept crypto payments from 2024) and other corporates have already made very interesting experiments (see ‘Nft of Telepass). In short, having established that progress cannot be stopped, we must study it, understand it, ride it, or at least try if we don’t want to end up crushed by heavy hooves like those in a bull race. Which seems to be upon us.

Against censorship

I would like to close with a small episode related to violence against women. In China a few years ago a girl was raped in a Chinese university. The girl wanted to publicly denounce what happened but she was constantly censored by the school leaders and the regime. That story that she had written she couldn’t see the light of day in any way. Until she published it in a transaction on the Ethereum blockchain ( 

https://etherscan.io/tx/0x2d6a7b0f6adeff38423d4c62cd8b6ccb708ddad85da5d3d06756ad4d8a04a6a2 ). Here it is, her story, in Italian and English, written in the stone of the blockchain forever.

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