Blockchain: The fools chase

Today blockchain technology is looked upon as the silver bullet that'll purge everything of imperfection, but is that quite true? Well, it definitely has a variety of use cases, yet it's being speculated merely for the sake of making XXX-profits buying shady coins or for the jump in stock price by means adding the word ‘blockchain’ or ‘crypto’ to the company’s name, yep, talking 'bout you, long blockchain (former iced tea)

Evidently, some investors and even mass media can be misled by the sole mention of bitcoin or blockchain.Savvier ones would probably question the necessity of implementing the distributed ledger on the specific platform in the first place. If we were to examine the real benefits blockchain technology is carrying it'd surely be traceability, cost-effectiveness, immutability, elimination of human error, speeding up transactions and helping parties to reach agreements faster and more reliably by means of smart contracts. That said, as anything, Blockchain doesn't come as only positive, it has certain disadvantages and attributes that make the use of it simply impractical or just overkill in many cases, biggest one probably being the necessity to dedicate huge amounts of computing power to sustain its work, and hence, it doesn't take a genius to understand that the industries that'd benefit from leveraging blockchain are those in need of all that positive qualities, but who won't take a huge hit from it's shortcomings. Take state bodies and governments, for instance: the service is mostly bad and costly plus everything is dependent on government officials. In light of recent data privacy scandals and notorious cases of private user data breaches, it seems like putting Facebook or Twitter on blockchain may be the right step. And it’s probably about to happen in a matter of months: Meanwhile Telegram — an encrypted messaging service, that Russia tries so desperately to block, is setting a new ICO-cap record by raising over $1.2 billion as we speak! As Tim Draper (the person who was one of the first to invest in Google and Amazon) fairly notes, blockchain’s biggest power is the capability of safeguarding user personal data, which leads to a number of other use cases for all those industries that need accurate and secure data to run smoothly: healthcare, e-commerce, insurance, etc.

And we don’t need to go far to see examples where world top-tier corporations are leveraging blockchain to enhance their operation. Bank of America has just received the patent for the blockchain-based storage system. It addresses the issue of data transferring and tracking, and describes a system with automated data authentication and secured access to data. All the big names in IT and telecom are actively implementing distributed ledger for data protection and securing transactions too: Amazon also filed for the patent for streaming data marketplace that would enable users to receive real-time cryptocurrency transactions data. This development is seeking to assists corporations in managing big data by processing streaming data on a large scale with relatively low latency. Google is also in the loop: last week it announced two blockchain projects it’s working on: a “tamper-proof” auditing system and a cloud operations platform. Another telecom giant Cisco is now working on confidential communication system based on blockchain to ensure confidential and secure group messaging, file sharing, and tracking of membership history.

Healthcare is one of those industries where once applied blockchain has the potential to serve the good of humanity on a global scale. And it’s developing quite rapidly: a company based in Germany has just developed a Blockchain-based solution for the management of sensitive medical data, United Health Group — a big industry player in America — has also made its entry into blockchain. What all of those startups are doing is basically improving security and effective distribution of information among involved parties, providing for the integrity of medical records and speeding up insurance claim payments.

Turning to fintech, recent cases count Mastercard’s patent for a Blockchain system to store and verify identity data: “Marsh sees great opportunity in leveraging Blockchain technology to better serve our clients by maximizing efficiency and creating new opportunities in the insurance value chain”.

Of all those use cases, the most global in terms of its potential to shift the whole economic system is probably blockchain’s implementation into supply chain system. And it well looks like e-commerce use cases are in a way stemming out of there. Making online payments easier and more secure is only the top of the iceberg. The whole idea of applying blockchain to supply chain is coming from its power to tokenize assets. Why tokenize? Well, the economic reality now is that there is a large gap between the amount of money available and the number of valuable assets. And tokenization would allow any business to place their existing assets like real estate and inventory on the blockchain, i.e. in a virtual space. This week’s headlines featured the news of Salesforce working on a blockchain product. Salesforce is delivering a CRM product and sells commercial applications of social networking through acquisition and internal development.

Speaking of secure payments, one of the things that are in a bad need of change is definitely payment system, online payments in particular. Its importance for the global economy and business growth cannot be overestimated. Blockchain might fix it by making the transactions easily traceable, quick and, most importantly, with low transaction fees. And this is hugely important: if one can easily transfer any amounts of money, for instance, from the Netherlands to China in one sweep and with low transaction costs, imagine all the business possibilities it would open! One of the recent examples here is a Sweden-based startup Cryptonex that ultimately seeks to create a win-win situation for consumers and businesses alike by making the payments with cryptocurrency as easy as payments with credit cards thus contributing to the adoption of cryptocurrency. Not only does it provide a functional tool for keeping and transferring money, it also supports Proof of Stake mining that brings in approx. 12% annually with the rewards coming in every day, and, on top of it all, unlike the conventional deposits, you can withdraw your funds anytime. Cryptonex is poised to bring blockchain to the masses and fuel the growth of the global sharing economy.

However, sometimes blockchain use cases that first looked ridiculous in terms of the necessity to be put on smart contracts, now appear to be making more sense at a closer look. Take ‘Cryptokitties’ for instance. Is it just about buying pretty kitties and choosing fancy accessories for them? Or an attempt to create a virtual universe with virtual goods to be able to capitalize on? If you are a gaming and VR fan, you totally see what I mean. This possibility has recently been pictured by Steven Spielberg in his most recent work "Ready Player One"

I’m a strong advocate for the distributed ledger. But as with any emerging technology, the adoption time naturally varies greatly from one industry to another: a conscious team leader or CEO would not be pushing for ‘putting the business on blockchain" when realistically there are absolutely no grounds for that. At the same time, tech-community and crypto-economics researchers should make every effort to raise public awareness of how blockchain operates and in what ways it may benefit the businesses. Ultimately, like any new fundamental technology shift, the distributed ledger has great potential to reinvent the way the global economy works contributing to the development of sharing economy or even paving the way for some sort of new economic model — let’s see what happens in the next 10 years.