Do not write off ‘Blockchain’ for what happens in Crypto or Bitcoin by Sidhartha Sharma
I recently wrote a post on the use cases of Blockchain tech (DLT=DISTRIBUTED LEDGER TECHNOLOGY) and Smart Contracts in the financial services sector.
It is very surprising almost shocking to notice, that while the entire world is focusing only on the ‘crypto’ and ‘bitcoin’ movement they are missing the underlying infrastructure and technology that powers it- Blockchain.
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What is -Blockchain technology and what is Bitcoin?
Bitcoin is, according to the whitepaper from Satoshi Nakamoto, a “peer-to-peer electronic cash system that allows for online payments to be sent directly from one party to another without going through a financial institution.”
Solved the double-spending problem :
2008–09 stockmarket crash and the 2020 COVID stimulus is only diminishing the value of money. 90% of the states (other than few well-managed ones like Singapore etc )are printing money indiscriminately. The excess money supply will eventually lead to inflation and affect the wealth of the rich in the long run if stored in cash.
I truly think that the executive summary of the paper is a real goldmine. As Satoshi writes:
“A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution. Digital signatures provide part of the solution, but the main benefits are lost if a trusted third party is still required to prevent double-spending. We propose a solution to the double-spending problem using a peer-to-peer network. The network timestamps transactions by hashing them into an ongoing chain of hash-based proof-of-work, forming a record that cannot be changed without redoing the proof-of-work. The longest chain not only serves as proof of the sequence of events witnessed but proof that it came from the largest pool of CPU power. As long as a majority of CPU power is controlled by nodes that are not cooperating to attack the network, they’ll generate the longest chain and outpace attackers. The network itself requires minimal structure. Messages are broadcast on a best effort basis, and nodes can leave and rejoin the network at will, accepting the longest proof-of-work chain as proof of what happened while they were gone.”
On 17th Feb, 2021, Bitcoin price has already surpassed 50000 USD and it is even being projected to reach 1 million USD by some speculators. Companies like Tesla (bought 1.5 billion USD) worth of bitcoins and plans to accept them for their products in the future. Mastercard, Visa, and Paypal have already shown a lot of interest not just in bitcoins but also in helping the states build their own digital currency exchanges.
Bitcoin may or may not emerge as a global and decentralized currency that operates without an intermediary (central bank) or a regulator. There are enough loyal fans of it around the world.
But, Bitcoin alone is not what Blockchain is all about. Here are some industries it may disrupt apart from Financial Services
- Decentralized Social media networks- Telegram launched TON Labs in May of 2018 in order to develop a vertically integrated software stack for the Free TON blockchain. Currently, the social networks and messaging apps are highly centralized- this creates privacy threats and also gives immense power to the tech companies that run them.
- Governance and public sector- Blockchain tools will form the core infrastructure for casting, tracking, and counting votes — thus eliminating the need for recounts by taking voter fraud. Voter ID authentication and vote tampering can be caught with blockchain.
- Digital ID: IBM Verify Credentials IS creating a decentralized approach to identity management. Powered by blockchain — it is building on top of open standards in combination with Decentralized Identity Foundation (DIF), World Wide Web Consortium (W3C), and other standards groups. Who knows in the future this becomes what ‘SSL” and “ISO” are for websites and quality standards?
- Cybersecurity for Industrials: Xage secure fabric is building for its clients- Blockchain-secured identity & access control and Multi-party, multi-location secure data sharing systems. Blockchain technology protects and safeguards all unmanaged identities and unprotected systems with universal control.
- Mobility and Ride hailing: Arcade City is trying to disrupt ride-sharing centralized models by introducing a new peer-to-peer model. Arcade City Austin became the world’s first self-governing ridesharing network. It is operated exclusively by the local community/drivers with no day-to-day involvement from Arcade City HQ. There is still a lot of time, innovation and marketing dollars required to make it disrupt the big boys of mobility
- Car leasing, Insurance, and asset exchange/verification- Docusign is a member of the Enterprise Etherium Alliance, collaborating with other industry/business/ public sector leaders to define and deliver blockchain-based solutions, and the Accord Project, helping set the stage for broad acceptance and adoption of smart legal contracts.
- Real estate: Ubitquity winning product is a Software-as-a-Service (SaaS) blockchain platform for financial, title, and mortgage companies. Tokenization of real estate is another big opportunity. Sweden’s land authority- Lantmäteriet has a fully-functioning blockchain-based digital land register platform.
- Healthcare- Philips collaborated with blockchain recordkeeping startup Tierion as EMR (electronic medical records) is a big pain point in the healthcare sector. Use-case can also be extended to vaccination trials and molecule source checks to stop counterfeit drugs.
- Energy platforms for peer-to-peer transactions- LO3’s own technology platform, Pando, offers a simple way to pool local distributed energy resources and enable customers to buy and sell local energy and optimize the grid at a community level.
- Retail- Originating from MIT- OpenBazaar is an open-source project developing a protocol for e-commerce transactions in a fully decentralized marketplace. It uses cryptocurrencies as a medium of exchange and was inspired by a hackathon project called DarkMarket.
- HR Industry and Labor/Skill marketplaces: Chrono. tech is a Fintech company focusing on HR-solutions for business. Imagine not having to go through the ‘centralized marketplace’ or “recruitment agencies” models that keep a certain ‘cut’
- Food and Beverage Supply chains: Starbucks partnered with Microsoft on coffee traceability. Creating a network to track coffee sold by Starbucks, which sourced beans from over 380,000 farms in the last year, is no mean task. The transparent blockchain will store each point in the coffee’s journey using immutable distributed ledger technology (DLT).
- Agritech: The AgriDigital platform is a cloud-based commodity management application that has been built to be blockchain-enabled so that the AgriDigital Community of users can stay ahead of the latest digital supply chain technology developments and meet the demands of their customers and partners. Smart contracts will play a big role too, For example, a crop-insurance smart contract might use a trusted Internet feed of weather data. If the temperature goes above 85 degrees Fahrenheit in April, the smart contract will automatically trigger a crop-insurance payout, again via the Internet. This total automation eliminates ambiguity and promises large savings in time and effort for all parties involved.
- Travel and Hospitality- Online marketplaces that take a ‘cut’ out of hotel and airline bookings are being disrupted by Winding Tree that aims to offer a blockchain-based platform that will be free for the “suppliers”
Basically in a nutshell by enabling a Trusted Peer To Peer network, a platform and a currency, Blockchain can disrupt almost all the business models that have an intermediary. Thus, a real threat to centralized platforms and marketplaces.
Read the above 3lines again and absorb them.
By Sidhartha Sharma (views are personal)
Digital Strategy and Ecosystem Expert
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