Crypto Currencies, Crypto Assets, Crypto Commodities; there are many debates and controversies over the value of these virtual phenomina, however what we do know, is that Cryptos are here to stay.
The next step in our technological evolution, the next Wrights Brothers aeroplane or the next birth of the internet; whether this is a major exaggeration or an accurate depiction is dependant on mainstream adoption, and to what extent it is implemented. These virtual means of transacting and recording interactions across the blockchain can offer some unique benefits to us by using the technology, which has not been accessible to us previously.
The Benefits of Cryptocurrency
We all know that as humans, we do make mistakes. Human error plays a part in our every day lives, in every industry. One of the biggest appeals for blockchain implementation is the ability to run automonously; delegating every process to cold, hard math and algorythms carefully developed so that a system can run by itself.
As we saw in 2008, when Satoshi Nakamoto first published his paper, “Bitcoin: A Peer-to-Peer Electronic Cash System”. releasing Bitcoin to the public, some may state that the timing could not have been better.
If we look into the financial crisis of 2008, we can see that before this point, there was more trust in the financial sector, believing that there was solid and reliable infrastructure in place which would prevent any such crisis from happening. And then the rest is history:
- Leman Brothers filed for the largest bankrupsy in history
- Bitcoin.org registered
- Bank of America bought Ferol Lynch for 50 billion dollars
- US Government 700 million dollar asset relief program
- Financial crisis cost trillions of dollars
How did this happen? One reason which contributed towards the crisis were sub prime loans, handed to citizens which would not be able to repay them. They were packaged into complex instruments called CMOs, which were then sold to other investors. They were enticingly packaged as diverse investment instruments as they were a combination of different types of debts, mixed into one package. This could be seen as a common practice that was taking place behind closed doors in the financial institutions.
Logs Are Permenant
Once a transaction or activity takes place on the blockchain, it can not be amended, it is permenant. This provides us with a revolutionary value proposition which can be utilized in different industries because its potential to remove fraud, counterfeiting and deception from the equation.
Two such industries which this could provide the biggest benefit are auditing and supply chain, which we will visit below in the different use cases.
No Single Point of Failure
A node, which can be any computer or system connected to the network, holds the entire history of every transaction which has occurred on the network. It is a copy of the whole blockchain which means that there is no way to delete it, without shutting down every single node that is connected.
In contrast, there are centralized networks, which have to go through a single point and can be taken down from the source. True decentralization is truely resilient in the way that it can not be taken down, which is why Bitcoin has managed to live through all the opposition and resistance it has faced.
Because there are no intermediaries (middle men) taking a cut from each transaction when we are dealing with peer to peer, the costs are much less. The only costs for transacting across the blockchain from peer to peer is through gas (the amount needed to power the transaction) or through coin burning; a strategy used to increase the value of the coin/token over time by destroying a small portion of each transaction, a strategy which aims to prevent inflation in the future of the digital asset.
Near Instant, International Transactions
One of the biggest appeals that cryptocurrency holds is for the financial / settlement networks. For banks, this is the next step in their international and fast-transaction evolution. Location is not a factor in the speed of blockchain; it will take the same time to send Nano (XRB) to the person next to you, than to someone that resides at the other side of the world from you.
Whereby currently, if you want to send money internationally, it can cost around £20 and take three working days. This is an outdated process, especially as our assets are not literally flown out to the other countries. Banks may have been lazy with their innovations or reluctant to change their procedures due to a lack of competition, however now they will need to move with the times or get left behind.
With cryptocurrencies, you will be able to transact anywhere in the world at near-instant transaction speeds, with very low fees. Ripple XRP, Nano XRB and OmiseGO are all worthy contendors that can solve the need for this issue.
Interesting Crypto Asset Uses
A privately-held company based in New York, Steemit is a blogging and social networking website that is run on the blockchain. It rewards publishers with STEEM dollars and has nearly one million registered users. The way it works is by upvoting posts just like Reddit, incentivising contributors to use their platform by publishing or sharing content.
A huge innovation into the social media sphere, from appearance, its users would not even know it is on the blockchain. It includes 3rd party applications such as d.tube (decentralized video platform like YouTube, without the ads).
As mentioned in the benefits of cryptocurrency section, blockchain will prove to be a major advancement in the next step of supply chain tracking. A large percentage of the wine that comes out of China is fake, and many goods which are produced are not adequately certified or controlled; a lot is left to trust and there is room for human error.
With blockchain, such as projects like Vechain, Waltonchain, WaBi or Ambrosus, we will be able to have our products scanned, recorded and identified at every step of the supply chain process. This will prove especially useful for medicine, food (organic, vegan, kosher, halal certifications) and for goods which are prone to being counterfeited like designer clothing.
This is because the blockchain cannot be amended, so everything thatis recorded on the ledger is stored there permenantly.
Loyalty programs will be revolutionized with blockchain technology. As companies like Starbucks come into the crypto space, there will be loyalty programs that people will not even realise are cryptocurrencies. An example is Topcoin; if you purchase a domain name off Uniregistry, you are awarded Topcoin. This is a cryptocurency which you can use to purchase more domain names with. Another example is sweatcoin; an IOS app which allows you to earn crypto while working out.
Similar to the supply chain benefits above, auditing as we know it could be transformed for the better. Everything will be recorded without the ability to amend the results, so this will eliminate any forgery which could take place.
Owning Your Own Data
One of the biggest businesses in the world today is data. Medical data, buying behaviours and browsing history are a few examples of very lucrative data businesses. The problem is, it seems that everyone other than ourselves are making money, from selling OUR data.
There are a few blockchain projects which aim to solve this issue so we can own our data, choosing to share what is needed with relevant parties and nothing more. We could even sell our own data if we want to. For example, MediBloc allows us to store our own medical records, and Civic has been built so we can store our own digital identities.
Taking out intermediary steps which usually lead to a hefty incursion of fees, payment gateways become much cheaper. This is when you go into a shop or visit a website, and press ‘pay with (crypto)’. Currently, there are a few promising contendors in this niche which could become the next Visa soon.
Currently, there are payment gateways such as BitPay for paying with Bitcoin, however the fees and time taken to transact may not make this the most efficient method of payment. A promising early-stage project is Request Network, which also falls into the Auditing category but can be an excellent way to pay with cryptos (currently they only support ERC-20 tokens but will soon allow payment with other cryptocurrencies and fiat). Request Network also have a WooCommerce WordPress plugin coming out soon so it could lead to mass integration from SMEs across the globe.
Many investors were anticipating the release of the ‘Litepay Visa Card’, however it has been delayed until further notice. As we can see, there are many opportunities in this space within early stage development, getting closer towards the implementation phase. In the coming months, we may have a better idea which projects will shine and which will fail. Only time will tell who will take the market share and become the cryptocurrency equivalent to Visa.