What is the Blockchain of things? – Chris smith – Medium
What is the Blockchain of things?
How much cash do you have on your right now? Very likely not a entire lot. Me? I have none, but then again I hardly ever do these days. It’s no secret that we are becoming an increasingly cashless society, interchanging notes and coins for taps, clicks and touches, but the rabbit crevice goes even deeper.
For many, cryptocurrencies are the way forward and what used to be the cash of the Internet underworld is quick becoming mainstream, underpinning more than just transactions but switching the way entire financial institutions work.
A quick look at cryptocurrencies
Also known as digital currencies, cryptocurrencies are a medium of exchange created and stored electronically. They use encryption mechanisms to control the creation of monetary units and verify the transfer of funds, making them more secure and convenient along the way.
Like traditional money there is no one single currency; there are Litecoin, Dash, Dogecoin, Bytecoin, BitShares, Peercoin and uncountable others. However, Bitcoin, the very first ever cryptocurrency launched in January 2009, resumes to predominate as the most well known and widely used of all digital currencies.
Liberation of the underbanked
The purpose of Bitcoin can be summed up by its mysterious creator (which is under debate), Satoshi Nakamoto — “A purely peer-to-peer version of electronic cash would permit online payments to be sent directly from one party to another without going through a financial institution”.
At its core, Bitcoin is a system that permits value to be transferred peer-to-peer to anyone on the planet in real time, at virtually no cost with no third party needed. Anyone can open an account or process Bitcoin transactions because there is no controlling third party to dictate who can use the system. This makes it a game switching instrument for the two billion unbanked people in the world who have been shut out of the modern day financial system.
Presently the underbanked use a patchwork of financial services such as cheque-cashing services, remittance networks, pre-paid bounty cards, and mobile money. Bitcoin provides a better alternative with a free account to store, receive and send money, with a heck of alot more mobility and transparency. What’s more, the the growing invasion of cheap, internet connected smartphones means that together with Bitcoin, the devices can become a point of sale, permitting people to trade far lighter.
Bring on the Blockchains!!
Underpinning Bitcoin, Blockchains are a data structure that makes record of a transactions whilst digitally signing them in a worldwide public ledger, meaning that the details are super secure and cannot be tampered with. It enables value to be transferred globally, in real time and almost fully free. In the case of Bitcoin, the Blockchain ledger prevents double-spending and keeps track of transactions in a continuous manner. This enables the currency to operate without the need for a central bank.
This technology has even broader implications for the financial services industry and beyond. In fact, Blockchains technology is being touted as the fattest innovation since the internet and will only proceed becoming more a part of every life as time goes by.
The chain of chains
So, Blockchains help you record transactions, but how does it identify different types of asset being sent?
Whether it’s house deed sales, a stock trade or a mortgage details, Sidechains permit the existence of alternative Blockchains that run on different sets of rules. The beauty of it all is that the entire system is programmable and can therefore be adjusted to fit with the needs of any digital asset that needs to be transacted.
If you embark to apply this technology across the back-end of all financial services and products, institutions will reap the following benefits:
- Simplified ecosystem via common ledger
- Protection against fraud
- Decentralized and translucent operations
- Enhanced speed
- Low cost of operations
Internet of Things to be more of a Thing
The arousing part about Blockchain is its capability to further enhance The Internet of Things (IoT), as it increasingly becomes part of our everyday lives. With 20–50 billion IoT devices by two thousand twenty (International Business Times, 2016) a fresh economy will evolve. Autonomous entities will embark to transact with each other, enabling the optimisation of resources, providing access to fresh capacities and permitting plasticity to be traded amongst the billions of devices. Blockchain will play a critical role in this fresh machine to machine economy as a transaction facilitator and help process the billions of micropayments associated with them.
Banks can play two roles in the evolution of the Blockchain. Very first, they can be the digital identity providers — injecting a degree trust and familiarity into a fresh, scary world of machine-enabled commerce. 2nd, they can add fresh value by developing fresh services on top of the transactions which can create fresh revenue opportunities .
More importantly in this fresh economy of connected products, they can begin to act on behalf of the consumer, providing seamless, frictionless, transactions while ensuring that the customer always gets the best deal. If we take the often used example of IoT, where a connected fridge knows that you’ve run out of milk and orders it for you — the bank could help evaluate the best place to order a fresh bottle at the best price, eliminating the need for the consumer to conduct that evaluation himself. This means that in this fresh connected world, empowered by Blockchain, banks will become lifestyle providers helping customers get the best value out of a fresh age of machine-to-machine trade.
It’s this notion that indeed highlights the potential of Blockchains, positioning them as enablers of seamless practices that make our lives lighter and better. Money is switching and the world switches with it; just imagine how far it can go.