How Cryptocurrency is Changing the World
Every generation is defined by distinctive advancements and achievements. Generation X (1965-1980) brought us the Internet – the ability to connect and interact globally. Millennials (1981-1998) recognized the unlimited potential of the Internet and bent it to their will, building behemoths Google, Apple, and Amazon, and forever transforming information services, communication, and retail respectively. In 2009 a new technology was implemented – a technology with so many disruptive possibilities that it will effortlessly dwarf the Internet and everything in between. In retrospect, it will be recognized as giving birth to its own idiosyncratic generation – Generation Crypto – and it will span a century. Blockchain is the technology. It’s father; Satoshi Nakamoto.
Satoshi Nakamoto is a pseudonym used by the blockchain designer. The name has never been tied definitively to anyone, and the question remains if Nakamoto is even a single person or an entire developmental group. Nakamoto’s Bitcoin address is known and believed to hold as many as 1 million Bitcoins, giving him a current net worth of $4.5 billion USD. For an individual of such notoriety, what could possibly motivate such staunch resolve to remain anonymous? Perhaps to perpetuate the idea of absolute anonymity as it applies to blockchain? To avoid becoming the target of hacks and attacks? Or (and this is likely his motivation) to avoid reprisal stemming from the incredibly disruptive goals of the project. After all, the intent was to combat the hegemony of central banks, oppressive economic policies of nation-states, and unsustainable fractional reserve lending practices. By doing this he was assaulting the dominance of the wealthiest and most powerful men in the world, and would undoubtedly feel their wrath, given somewhere to channel it.
Cryptocurrency refers to any digital currency that relies on cryptography to regulate its creation and usage. Cryptocurrency has succeeded where other digital currencies have failed by virtue of being globally available and decentralized, effectively preventing manipulation and regulation by central authorities. In fact, it is secured by its own peers who contribute computing power to the network to confirm transactions and add them to a public ledger known as the ‘blockchain’. This process, called ‘mining’, awards participants newly created currency (i.e. Bitcoin) for solving the complex mathematical problems necessary to process the transactions. In effect, cryptographic algorithms and peer-to-peer technologies govern all transactions within the system without any intermediation necessary. By combining the willful contribution of millions with the self-perpetuating blockchain system, this technology can be easily and affordably incorporated into any existing system as a cost-saving and streamlining measure.
Already this is being done. BHP Billiton, a multinational mining, metals and petroleum company with Australian roots, has begun moving several of its administrative operations onto an Ethereum based blockchain. The InterPlanetary File System (IPFS), a peer-to-peer distributed file system, is also being used to enhance communication between vendors and the core franchise.
“Everything right now is being tracked through spreadsheets”, explains BHP geophysicist Tyler Smith.
He further reveals that BHP is heavily reliant on vendors for everything from ore testing and fluid sampling to product shipping and distribution, and the benefits realized from blockchain integration are staggering. Now, data can pass from a specimen technician to the lab technician for analysis, on to the mining engineer, followed by the supply chain manager all within the same smart contract. Provisions may even be made to give inspectors or safety custodians access to monitor the entire process. Each individual can follow development along the way, know real-time how it will affect his/her area of responsibility, and adjust operations accordingly. No data loss, no delays, no cost.
These advances do not stop with the oil industry, however. Many other industries realize the potential and are latching on.
International Business Machines (IBM), who already uses blockchain to resolve vendor disputes, conducted a survey of 200 banks in 16 countries, revealing that 15 percent intend to integrate ledger-based applications by the end of 2017, and 51 percent by 2019.
Banks, in fact, have their own crypto payment protocol, and it is called Ripple (XRP). Primarily, Ripple is used for “secure, instant, and nearly free global financial transactions of any size with no chargebacks,” but it also serves as a bridge currency, allowing any object of value to be traded for another. This is a nice convenience tool for banks as it allows them to freely exchange short term funds internationally without foreign exchange complications, but not all of the impact felt from blockchain will be positive for them.
For the broader financial services sector, blockchain represents a potential overhaul to the existing business model. Long term we could see control shift away from central authority and back to individuals (where it belongs). A decade ago no one would have thought this was possible, but blockchain has transcended that barrier.
Music artists also stand to reap substantial benefits from blockchain / smart contracts. Presently, centralized music platforms and record labels jointly take roughly $0.91 of every dollar of value generated. The artist – the actual talent – is left with just a few snippets. Platforms such as Ujo Music and Voise seek to change this by enabling music artists to capture 100% of revenue generated from their music.
These platforms will use Ethereum-based smart contracts to distribute earnings and provide decentralized music file storage. Just imagine the thriving music industry we would have if artists could distribute their music on a high profile platform with no intermediary to snipe away the profit and control the content!
Another industry already affected by blockchain is real estate. Several currencies have been created that revolve around it, most notably Kexcoin and Real Tokens. Kexcoin allows investors with any amount of capital to partner with other investors and jointly crowdfund commercial real estate. Kexcoin is the investment vessel, and it appreciates by default as profits are used to buy back and “burn” the limited existing supply of Kexcoin.
More importantly, smart contracts would make the process of purchasing a home or other property substantially easier. Currently, it involves rigorous research, compiling data from government and private databases, and a paperwork nightmare, leading to an arduous and complicated contractual process.
Smart contracts would eliminate most if not all of this by storing required information such as legal history, title history, purchase history, etc. on an immutable public distributed ledger. This information would be available to anyone, allowing potential owners to easily do the job of a real estate/mortgage team. Intermediaries would no longer be needed, and title companies, inspectors, appraisers, and underwriters would soon find themselves out of a job. Their salaries would then be absorbed into the price of real estate, reducing finance costs and making home-ownership more affordable for everyone!
These are just a few examples of how blockchain is reshaping the business framework. Education, voting, insurance, healthcare, cloud storage, and energy will also be impacted along with many other industries. Eventually, no industry that you can think of will be left untouched by this new renaissance movement.
Cryptography will continue to secure and simplify transactions and make previously complicated or expensive practices available to the masses. Those who generate value through production will be fairly compensated through zero-waste smart contracts instead of watching it evaporate into the ether of centralized entities.
There is no doubt about it – cryptocurrency is the future. It is both lucrative and logical to embrace it as an early adopter, so go ahead… climb aboard! Next stop – the moon (a metaphor that’s popular among those in the cryptocurrency community).