Cryptocurrency All-in-One For Dummies. Peter Kent

Чтение книги онлайн.

СКАЧАТЬ that converts M-pesa phone minutes from Kenya into Bitcoin. With this technology, it offers businesses a faster and cheaper way to send or receive payments between Africa and China. The trade between Africa and China is a market of over $170 billion. It takes days to settle payments across borders, and the fees are high. When you use BitPesa’s digital platform, payments are instantaneous and cheap.

      Guaranteed payments

      Guaranteed payments that are permitted through blockchain-backed transactions will increase trade in places where trust is low. Poorer countries can compete on the same playing field as wealthier nations within these types of systems. As this happens over the next ten years, the global economies will shift. The cost of commodities and labor may increase.

      Global companies pay their employees based on competitive pricing, as well as on employees’ previous salaries. If blockchains allow for equality across economic divides, it won’t happen overnight. Developers and other knowledge workers would be the exception because it’ll be easier for them to support themselves based on anonymous work.

      Financial inclusion and equal global trade are very important topics for governments. Adoption of digital currencies will more likely take place nationwide in small and developing countries. Most large countries have decentralized power structures that prevent quick changes to vital systems like money.

      The central power structures of small countries will allow them to leapfrog over legacy infrastructure and bureaucracy. For example, most African and South American countries don’t have landlines or addresses, but they all have smartphones and the ability to create cryptocurrency wallets. The missing piece is overall trade liquidity and capacity to pay for basic needs such as utilities, rent, and food through a cryptocurrency.

      Micropayments: The new nature of transactions

      Micropayments are the new form of transactions. Credit card companies may use blockchain technology to settle the transaction, reduce fraud, and lower their own costs.

Global institutions like Visa and MasterCard, which provide the benefit of delayed payments, will always be needed by consumers in capitalistic societies. Even if the backend changes, you still have the same access points for customers. But physical cards will go away. In fact, that’s happening now, even without blockchain technology. With blockchain technology, the customer identities behind payments will be more hardened against theft.

      People still need credit to operate a business and get by personally. Credit card companies will keep making money through transaction fees. Credit runs the world, and capital markets will always exist in our current social structure. The cost of sending money between groups will decrease, but that’s a good thing for financial institutions. They want to focus on the service of providing their customers with the best choices in their investment or banking markets.

Squeezing Out Fraud

      Bitcoin was created as an answer to the financial crisis, where fraud and other unethical actions caused the world economy to collapse. It shifts from a “trust or doesn’t trust” view of the world to a trustless system. This subtle difference is lost to most. A trustless system is one in which you equally trust and mistrust every person within the network. More important, the blockchain provides a framework that allows transactions to occur without trust.

      These same types of frameworks can be used for more than just exchanging value over the network. Here’s an example to help illustrate their potential.

      If you go to a bar, a man at the door stops you and asks to see your ID. You reach into your wallet and hand him your driver’s license. Your license has a lot of information on it that the bouncer doesn’t need, nor should he have access to (like your address). All he needs from the ID is that you’re over the age of 21. He doesn’t even need to know how old you are, just that you meet the regulation requirements.

      In the future, blockchain ID systems will let you choose what information you expose to what person and at what level. The more anonymous data it has, the safer it will be. Blockchain systems will help curb the theft of identity and data by not sharing information with those who don’t need it or have permission to see it.

      Another aspect of blockchain technology is that it will shift fraud from where it happened (past tense) to where it is currently happening in real time. Within our current system, audits are fractional postmortems of what has happened. A group of outside auditors comes in, pulls a few random files, and sees if everything is in place. Doing anything beyond this is too costly and time-consuming.

Record systems that have blockchain technology integrated within them will be able to audit a file as it’s created, and flag incomplete or unusual files as they’re created. This will give managers the tools they need to proactively correct files before they become a problem.

      Another feature of blockchain systems will be their ability to share data with third parties transparently. In the future, sharing data will be as easy as emailing a Zip file, except the receiver will then have access to the original copy, not a copy of the file sent via email. When someone sends a file, they now have a version on their computer and the receiver has a version. With blockchain technology, the two people will be sharing only one version.

      Blockchains act as a third party that witnesses the age and creation of files. They can tell at a granular level each person who interacted with a file across systems, internally and externally. They can show what is missing from a file, not just the data that is contained in it now. Blockchain files can also be shared in a redacted fashion that does not compromise the validity of documents.

      What this means is that you’ll be able to see the age of a file, the complete history of a file, and what it looked like over time as it evolved. More interestingly, you’ll also be able to see if anything is missing from a file. This concept is called proving the negative. Most file systems at this point can only tell you what they have within them. But you’ll be able to tell what a file doesn’t have.

      Auditing will be less expensive and more complete. Audit rules could be updated in a more centralized way. When regulatory nodes within a blockchain network have a shared and transparent view into asset transactions, the reporting of these transactions can be done through the regulator’s location, without mandating 100 or more other institutions to adhere to the same rule set.

      Blockchain-based systems that are fully integrated across an organization will be able to know where every penny was spent. The last mile of how money is spent is the most difficult to account for across organizations and governments. Because it’s so difficult to account for, those wishing to steal funds have the opening they need.

      The last mile could become a company’s greatest opportunity to save wasted resources and identify corrupt individuals. Nonprofits that have strict guidelines on accounting for how they spend their money could benefit from this type of system the most. They could meet their needs for auditing and accountability to their donors without being impeded in their greater missions for good.

      One system that has been explored would integrate directly into the workflow of aid workers. This system was originally designed to track medical records but could also track back all the supplies that are used with each medical patient. The benefits of this system would be monumental, given that so much fraud and theft occur within the NGO world.

Book 3

      Bitcoin

Contents at a Glance

СКАЧАТЬ