Blockchain Applications Beyond Bitcoin

The first application of blockchain technology, Bitcoin, was developed with the intention of working as a global currency that one could use to purchase goods and services. However, there are numerous applications outside of currency that can allow for the transfer of value to occur globally. We are witnessing  new and innovative blockchain use cases appear as literacy, skills and awareness of blockchain technology increases globally. Some clever applications that are being developed include:

  • Distributed cloud storage: Currently cloud storage providers (e.g. Oracle, SAP, Dropbox) are centralised and all users assets are subject to trusting a single entity with its security protocols. However, some applications are being built whereby participants can acquire storage from users with excess hard drive space for an agreed fee. The technology supporting this ensures complete encryption so that only the owner of data can ever recover it. This is done through hashing and distributing pieces of data in multiple locations.

  • Digital identity: Digital identity and identity security are huge issues globally, exemplified by the recent Equifax hack where sensitive personal data of up to 145m individuals was compromised. However, blockchain solutions can make tracking and managing digital identities both secure and efficient. It does so by ensuring that identity is owned and uniquely authenticated only by the holder of the ‘keys’ to the identity, resulting in seamless verification and reduced fraud.

  • Smart contracts: Smart contracts are cryptographically binding digitised contracts that are entered on a blockchain. Perhaps their most valuable attribute is a guarantee of execution without a required third party administrator. The blockchain will settle the outcome of the contract based on the variables written into the code and the verified real life events. The blockchain will improve the efficiency and timeliness of contract settlement and make sectors like law and insurance more equitable.

  • Distributed computing power: Globally there is increasing demand for computing power to run large applications including machine learning, simulations, robotics and the internet of things. Currently the easiest way to acquire computing power is to purchase the hardware required to support peak demand. However, for the majority of the time you will have idle power that is not required. Blockchain technology can provide the platform for a distributed network of global computers where any participant of the network can rent idle computing power for a fee. Borrowing computing power from the network can reduce costs and increase performance as resources will be closer to end users, rather than in remote, low cost, centralised locations.

 

Magnet’s take

Blockchain technology provides the platform for industries and economies to shift from centralised trust networks to decentralised peer-to-peer networks. By doing so, global systems will be more efficient in transferring value (not just monetary) globally. This will be achieved through increased inclusivity, near instant settlement and reduced transaction fees associated with centralised providers.

Whilst the majority of applications are yet to be discovered, and those that are in development are still years from working global products. It is exciting to witness the evolution of value transfer from expensive and inefficient centralised authorities to transactions finality is guaranteed by the network and value is owned by individuals. 

Bites

  1. John McAffee has made very bold claims on the price of BTC, he initially predicted the $5,000 price tag by the end of this year. Far surpassing that figure, he has now bet a $500,000 price tag for the end of 2020, using himself as collateral.
     
  2. Coinbase added 100,000 new user accounts in 24 hours. During the run up to US$18,000 Gemini, GDAX, Coinbase and Kraken saw between 40x the amount of traffic they did in the 2013 US$1,300 run up. Coinbase has increased its capability to manage this flow by 7x in infrastructure/staff.

 

Adoption

  1. ASX selects blockchain technology to replace CHESS. Functionality expected to be implemented in March 2018. ASX claims Distributed Ledger Technology will bring functionality, capacity, security and resilience capabilities to their clients.

  2. Cboe launch BTC futures on the 10th of December 5pm (CST). With contracts for 1 BTC ending 17 Jan, 14 Feb and 14 Mar 2018 the market encountered yet another unknown first. 600 contracts were processes in 4 minutes taking the Cboe website down and the BTC price to shoot up US$1,200. Institutions went long on BTC. Current futures prices are trading around US$18,000.

  3. CBA and QTC are putting semi-government bonds on the blockchain. Once regulatory approval kicks in and makes it official - it will become the first world bank to conduct such an experiment along side a government authority.
  4. In a global first the SEC have halted all operations of Munchee (an ICO) for securities violations. After raising US$15m the token has been suspending pending trial. This is a promising step towards protecting investors against questionable ICO’s.

 

 

The Market

  • Bitcoin has had an incredible journey over the last week, having hit US$18,000 on some exchanges at the start of the week, down to a correction of US$13,000 prior to Cboe futures launch. The turbulence has caused front page news in CNBC, Business Insider, Yahoo! Finance, Wall Street Journal, BBC and many more.
     

  • Litecoin the quiet sister of Bitcoin, typically fluctuates in and out of a top 5 coins, has firmly cemented its place among the greats. Off the back of a big marketing push and increased publicity, Litecoin has seen a 100%+ rise.

 

  • Bitcoin profitability has risen with price. The average trading volume this week has been $2B on a 24h period. Miners collected 509 BTC for their efforts to mine transactions and keep the network alive. That’s US$8.6M just in fees alone spread across the mining group. The miners also benefit from 12.5 BTC reward for each block they mine. Currently 19% of miners revenue comes from fee’s. As BTC goes up in price, and volume continues to grow, fee’s will outpace the reward and become the new reason to mine the blockchain.

Egor Sidelska