Episode 7 – What’s Up? Blockchain Actual and Potential Use Cases
“We’re going to start this week’s episode by doing a little homework. Once you spend a little time in crypto one of the daily routines you fall into is checking the charts on a website like Coinmarketcap or Coingecko. Cast your eyes to the top left of the screen and look just how many cryptocurrencies are listed. Today it’s 6,667. That’s a lot of what this space loves to call ‘SHIT’coins. Why do we need so many, you’ll justifiably ask yourself. And with good reason. It’s one of the hardest hurdles to overcome when you arrive in blockchain, uncoupling yourself from the fiat model you’ve known your whole life and embracing a completely different model of transacting value. Because these currencies are all radically different one from another and can be used in a myriad of ways. Too many to list in one video but here we’re going to take a look at a handful of the ones gaining the most traction. Because, away from the gaudy headlines about yoyoing market prices blockchain is already quietly revolutionising the worlds of finance and logistics and it’s not going to stop there.
Is it going to change the world? Good question. And its answers to questions exactly like those that keep us up at night. So break out the cookies and ready a mug of steaming hot Blockoclate. It’s time for School of Block.
In our last episode we covered the nuts, bolts, blocks and whistles of what a blockchain actually is. Quick recap: it’s a digital record of all transactions ever made within a given system. That system might be Bitcoin, it might be Ethereum, or it might be a private proprietary chain made by a company like IBM. Yes that IBM. Crypto isn’t just for the weird and wacky tech nerds out there, there’s real enterprise usage going on because it’s a hugely versatile technology.
The Blockchain might have been invented by the mystical Satoshi Nakamoto, but it has been gleefully adopted by large tech firms desperate to find a competitive advantage and offer unique solutions to their customers. And why? It’s not just that they see an opportunity to make money – there’s a plethora of real world problems that blockchain can address in ways that weren’t possible before.
One of the biggest concerns of life in the 21st century has become a deep lack of transparency. Something we’ve seen at every level of digital life, across social media, government and media in general. In the era of ‘fake news’ we’re forced to start from a position that nothing can be trusted and that’s a big problem. Under blockchain conditions trust is no longer required. It’s trustless. This is being adopted by the Supply Chain Management industry to track everything from manufacturing to food production and healthcare. The whole sorry mess of voting in the 21st century also looks set to be radically overhauled thanks to blockchain. Whether or not you believe large scale fraud is possible, the manual voting process – whether in person or by mail – is time consuming, expensive and subject to delays and inaccuracies.
Proving you own something, indisputably, from your identity to digital goods has become increasingly difficult in the digital age. But a blockchain is immutable, once data is recorded it cannot be rewritten after the fact. This has huge implications for copyright, real estate and our very identity itself. If who you are can be proven beyond a doubt then this becomes an incredibly powerful tool in digital life.
And one of the most powerful attributes of a public blockchain is that it’s permissionless. Meaning nobody can stop you using it. Now this may not sound like a big deal to a western audience, accustomed as we are to being welcome mostly everywhere. But the truth is our financial system operates a highly privileged system of gates and doorways. A dollar is a dollar, right? Well not if you’re in Lesotho and you only have ten of them. Never mind that those $10 dollars represent a month’s wages. An open financial system, one built on blockchain doesn’t give a monkeys who you are, how much you have or where you are. If you own a wallet and can fund it, even a tiny amount, then you can go to work.
So there’s no shortage of challenges out there facing us. And it might not have been immediately apparent with the emergence of Bitcoin in 2009 how blockchain could address all of these.
Because Bitcoin’s FIRST GENERATION protocol is really only concerned with value transfer. Very good at what it does, sure – but not all that flexible.
But the emergence of SECOND GENERATION blockchains, complete with an application layer and smart contracts, has begun to show us what the true potential of blockchain can be. The most dominant of these is of course Ethereum, but there’s no shortage of pretenders to ETH’s crown.
And these are just the permissionless, or public blockchains. IBM are very keen to sell you one of their permissioned, or private blockchains. Deloitte are hot to trot for distributed ledger tech. JP Morgan even launched their own coin. In 2021 blockchain is still considered edgy but a quick glance through the websites of the biggest names in banking, management and finance shows it’s not if but when for mass adoption. A recent GARTNER SURVEY found that 14% of ENTERPRISE BLOCKCHAIN projects moved to the production phase in 2020, up from 5% in 2019 – that’s a 280% increase despite the hindrance of a global pandemic. It’s happening… oh yes… it’s happening.
HOW WILL BLOCKCHAIN AFFECT YOU?
But let’s say you’re just Joe or Jane in your living room, which is more likely these days. What difference can blockchain make to you?
Well, some of these applications are still in their infancy, but they’re coming. Imagine internet shopping in 1998. You could do it, sure. But it wasn’t quite the amazon-one-click-buy-whatever-the-duck-you-want experience we’ve got today.
Let’s take the big one that’s hot on everyone’s lips this year. DEFI. What is it? Complicated, unfortunately. But also amazing.
DECENTRALIZED FINANCE offers every Joe or Jane out there a completely democratic access to financial products. Do they want to invest their wealth and get paid interest? No problem. Do they want a loan? Well, if you’ve got collateral – no problem. No sniffy bank managers to say no because your hair is too long or your income too unpredictable.
Whether you live in Twickenham or Timbuktu, your access to financial products is the same. DEFI offers an opportunity to create a more equitable world economy, and more secure and transparent into the bargain.
And next year regulation coming to the DeFi sector will open the space up to institutional players, making the range of offerings even greater.
One aspect of Joe and Jane’s digital life that’s got a bit messy over the last ten or fifteen years is their DIGITAL IDENTITY. They’ve got their facebook profiles, twitter feeds, instagram posts and maybe even a cobweb encrusted myspace page. But who owns the images, the data, the history connected with their digital lives? Well, it sure as hell isn’t them.
The integration isn’t quite there yet, but make no mistake – quicker than you can say Netscape Navigator blockchain will be giving Joe and Jane control over their digital identities.
And when Joe and Jane next come to buy or rent a house, there’s a pretty good chance that the REAL ESTATE business will be in transition, as smart contracts executed on blockchain revolutionise the way property is owned, rented and changed between hands.
We’re not forgetting, of course, the big obvious fat one. PAYMENTS and MONEY. Want to transfer some money to your long lost relative on the other side of the world but extortionate wire transfer fees and exchange rates meaning they only see eight dollars for every ten you send?
Well, cross border payments are easy as pie with blockchain – more efficient, more secure, less friction.
It’s fair to say that trillions of dollars in untapped value is waiting to be unlocked through financial empowerment across the world, as developing countries finally find themselves on a level playing field. And blockchain’s operational efficiency is the icing on the cake.
Things are moving pretty fast out there right now. To quote our friend Ferris – If you don’t stop and look around once in a while, you could miss it.
So here’s the latest in the space. First up – COVID VACCINES. Two UK hospitals are already trialling blockchain technology to keep tabs on the storage and supply of the incredibly temperature sensitive vaccines. And you guessed it – IBM – now has a working system and is in talks with Moderna with the aim of launching a pilot project.
And Rakuten’s Blockchain Lab has just completed a proof of concept with Irish startup WIA to track companies’ COMPLIANCE with Covid 19 regulations, using occupancy information from Internet of Things enabled devices in in their buildings.
On the payments side VISA just announced that transactions can be settled using USD Coin (USDC), a stablecoin, or cryptodollar powered by Ethereum. And that means I can use this very handsome crypto debit card to make payments directly in USDC, without them needing to be converted into USD? And if you tune in next week we’ll be looking at what happens when you try to go completely decentralized. Just for 24 hours mind but boy…what a trip that turned out to be.
You’ve been watching School of Block, presented by Ledger and the Defiant, demystifying decentralisation, one block at a time. Don’t forget to subscribe, drop us a like if that’s what you’re into, and as always – here’s to your financial freedom.”