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DIGITAL CRYPTOCURRENCIES rely on blockchains for their bookkeeping. Yesterday, we discussed the basics of why cryptocurrencies may be shady, but blockchains aren’t inherently at fault. Today, we continue this theme and cite innovative blockchains in applications as varied as diplomas and international contracts.
Blockchain tradeoffs are discussed by the World Economic Forum in its article, “The Future of Cryptocurrencies? The View of Two Experts.” Michael Lee and Antoine Martin are economists involved with the Federal Reserve Bank of New York’s Money and Payment Studies.
Cryptocurrencies have not been trouble-free. Lee notes the crackdown on Silk Road, also discussed here at SimanaitisSays in “The Ulbricht Caper.” In 2013, Ulbricht got a life sentence without possibility of parole.
Lee also observes, “Criminals, who typically use cash for the anonymity and security it provides, may be moving to cryptocurrencies. The Drug Enforcement Administration reports a sharp decline in bulk cash smuggling in 2016.”
Another aspect of blockchains noted in the article is the concept’s intensive use of computer power. All this cryptology does not come cheap. Indeed, Martin observes, “… the process of picking random validators takes time, is expensive, and consumes tremendous amounts of energy.”
Nasdaq has expressed an interest in the blockchain concept, as described in nasdac.com’s “5 Blockchain Innovations Wall Street Is Watching In March 2018.” The following are several tidbits gleaned from this article.
Blockchains, Not Credit Cards. “Right now,” Nasdaq notes, “over $500 billion in cryptocurrency exists. Yet, current owners have limited ways to spend them.” However, there would be no particular problem replacing today’s card-to-buy/cash-to-pay-card with a direct blockchain transaction.
No Middlemen. Traditional financial transactions contain middlemen who inevitably collect fees. Blockchains inherently eliminate the middlemen. They involve one computer dealing directly with another.
Mainstream Bank Adoption. “In June 2017,” Nasdaq notes, “a group of seven of Europe’s largest banks formed a Digital Trade Chain Consortium. Deutchebank, HSBC, KBC, Natixis, Rabobank, Societe Generale, and Unicredit selected the IBM Cloud as a repository for online transactions.
Thus far, this consortium is Europe-specific. Others are being developed around the world.
”Blockchain is this year’s buzzword—but can it outlive the hype?” asks The Guardian. In particular, the concept of blockchain is being extended beyond currencies to other aspects of value or ownership. Notes The Guardian, “The University of Nicosia in Cyprus awards all diplomas with digital credentials that allow for secure and instantaneous verification.”
As another example, the time-stamped nature of blockchain documentation also has application in dealings of trade certification. Citing coindesk.com, The Guardian writes, “ A recent study showed that using blockchain technology cut the time devoted to paperwork in the sale and delivery of 25 tons of tuna from Mexico to Spain from a week to three hours.”
The blockchain jury may still be out. But there’s evidence that it could well outlive the cryptocurrencies involved in its birth. ds
© Dennis Simanaitis, SimanaitisSays.com, 2018