State Channels Offer Efficiency and Security for Peer-to-Peer Commerce
Web3 aims to decentralize the internet, reducing dependency on tech giants like Google and Amazon. Currently, these platforms act as intermediaries, controlling data and transactions:
- Amazon's marketplace favors its own products, with third-party sellers paying up to 50% in fees.
- Netflix relies heavily on recommendation algorithms for content viewing.
Web3 Vision and Challenges
Initially defined by Ethereum co-founder Gavin Wood, Web3 was envisioned as a decentralized, peer-to-peer internet. However, focus shifted towards financial gains during the ICO wave, leading to a speculative market. In 2021, the crypto market cap reached $3 trillion, diluting Web3's technological mission.
Decentralization Through State Channels
State channels offer an alternative to centralized platforms by enabling direct interactions between parties:
- Infrastructure: State channels function as private lanes for transactions, bypassing blockchain congestion.
- Security: Parties commit funds to on-chain smart contracts, ensuring fulfillment of agreements.
This approach eliminates the need for trusted intermediaries, allowing autonomous enterprises to operate globally using smart contracts. The goal is to extend trustless systems beyond government money printing (Bitcoin) and contract enforcement (Ethereum), removing reliance on major platforms.