How the Blockchain is Making Other Industries More Efficient
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As of July 2018, one bitcoin is worth 7,338 U.S. dollars (according to Google). That may seem a huge price for something you can’t actually see or touch, but a closer inspection to the intricate and in my opinion, marvellous, the world of cryptocurrency reveals that the numbers aren’t so high for nothing; the effect they have had over the last few years on economics, the media and the global demographic is astronomical. But strangely enough, their biggest influence on a date may be their effect on industries.
Yeah, you read that correctly. It seems counterintuitive that Bitcoin and cryptocurrency could so strongly affect the fiscal policies of corporate giants like banks and businesses, but believe me, there is a lot more than meets the eye with cryptocurrency and industry.
Let’s dive straight into it.
What is the Blockchain?
This term, that you might have seen popping up everywhere, is quite central to the concept of cryptocurrency. You see, for any business to thrive, it needs to record its profits and losses in a secure manner. Cryptocurrencies are no different. The trouble with data on a computer is that you can’t say it is completely safe; anywhere in the world, a geek with tech skills could break in and access your information, potentially stealing it. With social media, most people don’t really care if they get hacked (in principle), but with something like money? Nobody wants to wake up suddenly bankrupt. Read more here.
Then came Bitcoin in 2008, with a unique solution to the security issue, called the blockchain. This is an online ledger, updated every ten seconds, that records all activity done within a single cryptocurrency. Some unique features of this idea include:
- It is immutable or unchangeable, due to a plethora of factors. Just believe me when I say that if someone was to hack the blockchain, we wouldn’t even be mad, it’s that impossible.
- It is extremely fast and efficient. To understand how it compares to normal (also known as ‘fiat’ currency), we should look at the typical infrastructure of one credit card transaction. As Don Tapscott said in a September 2016 TED talk, a typical credit card transaction can pass through the hands of “a dozen companies, [and] each with their own computer systems, some of them being 1970s mainframes… and three days later a ‘settlement’ occurs.”
The blockchain streamlines the system to perfection. Cutting out most of the middlemen Don Tapscott mentioned, it makes the transaction happen between just the buyer and seller.
How this Affects Industry
Now the million peso question: Why should I be concerned about all this jargon? Well, my dear cynic, the answer is because like it or not, this controls the way industry functions.
You see, when Satoshi Nakamoto invented Bitcoin and its blockchain in 2008, the world changed. Overnight, there was no longer a need to wait for days for a simple transaction; instead, the timespan reduced to minutes. Let’s look at three ways that industry has become more efficient due to the blockchain.
- The world of finance has become faster and better. Previously, banks had the monopoly of how money was transferred legally within and across borders. So, if your cousin Ted had to send you about a thousand U.S. dollars, it would take about a week for your family to get it in Asia, and Ted would lose around eleven hundred instead of a thousand. The rest was the bank’s fee for its service.
The blockchain allowed for such a transaction to be done, safely secured and verified, within a few hours, while taking just 2% in service fees.
- How this would work was that the request for money transfer would be sent, and within ten seconds picked up by data miners who would compete to upload the data first. After this, an agent within the same country and neighborhood as the family in Asia would receive the sum in cryptocurrency and would take out the equivalent sum in fiat currency, to deliver to the family’s doorstep, all in a matter of a few hours. Of course, had Ted and his family both used cryptocurrency, the process would be even quicker.
So, banks and other payment services like Paypal are under pressure to become more efficient and much quicker in service.
- With fiat currency, there is always the danger of being robbed. Even with credit cards, studies have shown that anyone with a special tool can steal all your information off that plastic card and use it instantly. You can check it out here.
This means that there is a strain on the credit card industry to become more secure. With cryptocurrency, your funds and assets are stored in a ‘wallet’ which is foolproof. Even if you use virtual cards to pay in cryptocurrency, it would still be much safer and secure than a normal card. Using a bitcoin debit card is actually pretty common in several places where the need for a safe and quick payment and verification system is understood. Even purchasing cryptocurrency, when done from the right source, is pretty safe; a large number of people buying bitcoin with credit cards is what drove its price so high in the first place.
- The transport industry is also experiencing a pressure to adapt for the better, exerted by the blockchain. You see, while companies like Uber and Lyft may seem to be doing fine at this, there is a lot of room for improvement with the blockchain’s involvement. As we discussed earlier the blockchain cuts out the middlemen and arranges service directly between those desiring a service and those who can provide it. The blockchain could actually do the job of managing your morning commute better, faster, safer and cheaper. It would negate the company’s charges and would establish a peer-to-peer service network built more on the trust protocol and user reviews than on a name, brand or other virtually useless forms of reputation.
The blockchain requires faster and safer transport and could significantly change the way existing transport companies’ infrastructure works.
So overall, the blockchain is going to disrupt business and industry explosively; by adopting its policies and making an effort to change, there is no doubt in this writer’s mind that this disruption will surely be for the better.