The Internet of Value

Blockchain is said to be enabling, or will enable, Web 3.0: the next generation of how users and applications will interact over the Internet, where    Personal data of users will be owned by such users and where we can exchange assets of various kinds with each other or for money. Creation of The Internet of Value.

The informs more advanced Blockchain platforms have a programmatic nature, that is, they allow embedding programs that execute different actions based on different events. This is what is called “smart contracts”.  This will allow the development of applications that drastically reduce time and costs in processes such as claims management for insurance companies or the study of the granting of credits for financial companies.

A “smart contract” is a computer program that contains the terms of the agreement between different actors (in general, the buyer and the seller). The code and agreements contained in it exist in a decentralized and distributed Blockchain network. Actually, and in order not to deceive us by name, a “smart contract” is neither more nor less than a computer code, in particular that it is executed in a distributed environment, which allows transactions and reliable agreements to be made between parties that do not know each other without the need for a central authority. These transactions are traceable, transparent and irreversible.

From this concept, DApps (acronym for “Decentralized Applications”) emerge. DApps are decentralized applications that use “smart contracts”.  A DApp is very similar to a traditional web application for the user. The front-end uses exactly the same technology to create the page. The only important difference is that, instead of an API that connects to a database, it has a “smart contract” that connects to a Blockchain.

The enormous potential of DApps and smart contracts arises when we combine these innovations with the “tokenization” of assets. 

What does “tokenize” mean? Tokenization is a method that converts rights to a real asset into a digital token. That is, it is the digital representation of the rights or value of a real asset or a fraction of those rights or security.

“Tokenization” allows to have a representation of the “real world” in the “digital world”, so it promises a myriad of applications that will allow fast, secure, cheap and universal transactions, on commercial or legal exchanges that today take days or weeks to execute.

According to the report just published by the European Commission’s science and knowledge service, “Blockchain Now And Tomorrow”, tokenization could be applied, for example, to money, insurance policies, contracts, property titles, medical and educational records, birth and marriage certificates, purchase and sale of goods and services, or any transaction or asset that can be translated into a digital format. According to this report, the potential of Blockchain to bring about far-reaching changes in the economy, industry and society, both now and tomorrow, is being explored across sectors and by a wide variety of organizations.

An example that gives us María Parga, President of Alastria, to illustrate the potential of DApps, “smart contracts” and “tokenization” is that you can send 20 euros from Spain to your child studying in the United States that will only be used to buy a certain book or to buy a certain transport ticket. That is, money programmed to be exchanged in a certain way.