The advent of blockchain assets has revolutionised the way in which we perceive value transfer systems. Traditional methods have always fallen short of adequately providing the level of transparency and security necessary to make the process of transferring value equitable and faithful. Over the course of centuries we have witnessed an ever growing disparity between the intrinsic value of commodities and their market value, which has occurred as a result of centralised authorities attempting to regulate and manipulate the way in which wealth is distributed.
Blockchain assets present themselves as an innovative solution to this disparity by creating an unbreakable link between the intrinsic value and market value of commodities by socialising and democratising wealth distribution. In order to understand how blockchain assets revolutionise value transfer systems, it is important to first understand how a value transfer system works.
The 3 fundamental variables in value transfer
- The amount of time it takes to make the transfer
- The cost of the transfer
- The ability to verify that the transfer has been processed successfully
In traditional value transfer systems, the time, the cost, and the verifiability are all dependent upon either the capability to make face to face transactions, or the availability and reliability of third-party facilitators such as banks and brokers. As we move into a digital age where purchases can be made half way across the world with the click of a button, and the ability to verify the identity and dependability of merchants becomes increasingly difficult, it is essential that we have a more transparent value transfer system that a) removes the risk of relying upon third-party facilitators, and b) improves the efficiency and effectiveness of the value transfer supply chain.
Blockchain assets solve both of these issues at the same time by creating decentralised peer-to-peer networks, removing the need for third party involvement in the value transfer process. The implications of such a shift in standard procedure are so significant that the cultural perception of value and wealth is being completely redefined, opening the door for a wide range of innovative applications.
The most important innovation of blockchain based assets is their ability to significantly enhance the efficiency of the 3 fundamental variables of value transfer.
How does blockchain technology improve efficiency?
In terms of transfer times, traditionally banks and brokers can take anywhere from 1 day to 1 week to transact currency from one person to another. Blockchain based networks can process a transaction in as little as minutes and even seconds, making value transfers across any distance almost as fast as face to face transactions
The cost of transfer is significantly reduced from a few dollars charged by money transfer agencies to a few cents charged by blockchain networks, and in the case of IOTA there is no cost at all. This is because blockchain based transfer networks don't have to pay wages or fees to human agents, the only costs incurred are strictly related to the network itself and can be theoretically reduced to zero.
Typically the process of verifying transactions is handled by third party operators, reliant upon trusting those third party operators, and the records are stored on centralised databases prone to hacking and tampering. Blockchain based distributed ledgers are publicly verified on an automated, anonymous, and immutable network
In general, by eliminating the need for human interaction and publicly distributing the network, blockchain assets eliminate overheads and eliminate risk from the value transfer process
Another important innovation of blockchain based assets is that they are real assets as opposed to financial assets. In traditional markets, shares, stocks and bonds are only ever hypothetical assets, referred to as financial assets. A shareholder's stake in a company can only be transferred into cash by a broker, meaning that their asset is intangible and prone to misdealing, as opposed to real assets such as a house or car that are physically possessed by the owner.
Blockchain based assets blur the line between currency and financial products like shares and bonds, allowing people to buy and sell their assets at any time like any other real asset. The person in possession of blockchain assets has full and exclusive ownership over those assets, unlike bank notes and shares which are always technically owned by their issuer.
Blockchain technology innovations in real life
In order to fully understand the future implications of such a system, and the enormous potential for widespread innovation, we need only to look to recent examples of how the technology is being used to revolutionise the way in which markets interact.
Let's take a look at 8 uses of the blockchain technology which are altering the world right now.
Cryptocurrencies
Cryptocurrencies such as Bitcoin, Ethereum, Litecoin and XRP are the most obvious uses of blockchain technology, and the first which became popular to the masses. The technology behind cryptocurrency as pioneered by Satoshi Nakamoto changed our understanding of what money is, and also posed questions regarding the viability of the current status-quo of all national financial systems.
POWR
Power Ledger was created to empower people across the world with access to electricity – low-cost, renewable and reliable. Via the Power Ledger blockchain, households which produce energy can trade it with their neighbours. It also enables people to choose their power source via automated and transparent transactions. Power Ledger includes a variety of services like peer-to-peer trading, microgrid trading and carbon product trading. The ICO for the token of this blockchain project, POWR, became the largest crowd funding project in Australia.
Steemit
Steemit is a social media platform powered by the Steem blockchain and STEEM cryptocurrency. Based on the votes that the content on the platform receives, users are rewarded with a different amount of tokens. Users who hold more tokens get to decide where a larger portion of the rewards pool is distributed.
An important aspect of Steemit’s appeal is the way it treats it’s creator’s contributions: “While most social media sites extract value for the benefit of their shareholders, Steemit believes that the users of the platform should receive the benefits and rewards for their attention and the contributions they make to the platform.”
D.Tube
D.Tube is the first crypto-decentralized video platform – it also uses the STEEM Blockchain, as well as the IPFS peer-to-peer network.
D.Tube is ad-free and resistant to censorship (only users can censor content via upvotes and downvotes) and doesn’t have an algorithm hidden behind its workings. Its monetization process is similar to that of Steemit.
Dentacoin
Dentacoin is a blockchain solution for dentists who would like to put the focus on the patient and provide prevention whenever possible instead of treatment. Its solution will improve dental care, reduce pain and costs, and work towards a better health care in the long run. Dentacoin’s own cryptocurrency (DCN) is already available to purchase.
FirstBlood
FirstBlood is an eSports platform built on the Ethereum blockchain. Its aim is to provide players with a safe playground where they can test their abilities and bet without the risks associated with downtimes, hacking, traditional money transfers or middleman fees. Since everything happens on the blockchain, users can feel safe that their results and earnings are true and fair.
Basic Attention Token
The world of advertising can also benefit from blockchain innovations. One such project is the Basic Attention Token which again runs on the Ethereum blockchain. It’s an easy way for advertisers to obtain a variety of advertising and attention-based services on the BAT platform.
Sia
Sia is a fully decentralized cloud storage service. A more robust and affordable solution than traditional cloud storage, it also provides a safer way to handle your data assets across the network. Sia also makes sure you always have a point of recovery by saving redundant file bits all over the globe.
These are all perfect examples of how Blockchain assets innately insulate markets from each other by facilitating a Laissez-faire style economy, where each market has its own unique form of currency - separate and unique from government-issued currencies. They are all user-centric and value the human aspect of their services, facilitating the exchange of high-quality goods, services and information. They’re an example how blockchain innovates not only the way we look at money, but the way we look at day-to-day interactions too. In a nutshell, blockchain tech is a harbinger of a safer and more transparent future. Let’s facilitate it!
Disclaimer: Cryptocurrencies are speculative, complex and involve significant risks – they are highly volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of future performance. Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the relevant Regulators' websites before making any decision. The author may have holdings in the cryptocurrencies discussed.