Blockchain 2.0

It’s the year 2008 when Satoshi Nakamoto publishes his paper “Bitcoin: A Peer-to-Peer Electronic Cash System”, changing forever the way we think about money. Not much time later a man with a penchant for cryptocurrencies, Joseph Gleason, envisages a scenario where the technology underlying Bitcoin, the Blockchain, functions as a trust-enabler for Casinos, which despite being regulated still present cases in which games are built to favour the incomes of the house.

It is then in the name of fairness that Gleason sets up the SatoshiDice, a Casino with games in which the outcome of the bets depends on random numbers defined by the Blockchain, thereby providing transparency and making sure that no centralized authority has control over the bets.

This is one of the first examples of the transparent and decentralised nature of Blockchain being applied to solve problems occurring outside the Bitcoin sphere. Indeed, right now we are witnessing the explosion of ideas that envisage the use of Blockchain technology in sectors other than Bitcoin and financial services, the so-called Blockchain 2.0. Despite Gleason providing the first example of Blockchain 2.0 through SatoshiDice, the real precursor of this concept is Nick Szabo, a computer scientist who is thought to be the inventor of smart contracts, the real innovation brought by Blockchain 2.0 solutions.

 This relatively new concept consists in the development of programs that can be entrusted with money. The ultimate goal of smart contracts is to replace the legal system, thereby lowering costs of bureaucracy.

 Let’s think of a car purchased on credit. In the real-world scenario, if the buyer defaulted on the payments, reclaiming the title and physical possession of the car for the financing company would involve lawyers, collection agencies and repo men, which in turn translates in high costs and slow times of execution. In the case of a smart contract, the information on the Blockchain could be adjusted so that, in case of default, the car’s belonging would automatically shift to the finance company, without the need to rely to third parties. The main advantage of smart contracts is that they can run in an autonomous, decentralised and immutable way. Once specified the conditions and terms, the contracts run without the need for other parties to check its correct functioning.

This expansion in the application of blockchain technology to new sectors is exactly what we are witnessing now. If for some there can be no Blockchain without Bitcoin or any other cryptocurrency - as there would be no way to remunerate the nodes that allow the system to work – for others Blockchain 2.0 represents a big promise. Even Nakamoto never saw the use of Blockchain technology limited to Bitcoin. What’s sure is that the way trust is managed is going to change, and right now Blockchain 2.0 is set to be the main reason.