5 Reasons Blockchain Will Be A Big Part Of Our Future

Welcome back crypto enthusiasts, to the weekly instalments of the latest news, topics and worldwide updates from Magnet Capital.

 

This week’s hot topic - 5 reasons blockchain will be a big part of our future

1.       Reduced end user costs

For most end users, be it retail or institutions, obtaining the best price for products and services is important. Blockchain reduces the need for a number of third parties that have historically been required to guarantee transactions. Trusting in companies who hold value and ensure transactions now lie in blockchain data and strength of the network.

 

2.       Increased efficiency and speed

Traditional trading of goods and services requires sign off from several parties and can be subject to paper heavy processing and human error. However, with blockchain, these processes can be streamlined and automated and transaction settlement can be conducted in near real time. For business, blockchain provides a single digital ledger that reduces the requirement for reconciliations across multiple ledgers.

 

3.       Greater transparency

Blockchains are a type of distributed ledger where all network participants have access to the same documentation, which is updated simultaneously in real time. Transactions can only be approved through consensus, meaning the network must agree on the details of the transaction. This leads to greater levels of trust and more accurate and transparent data.

 

4.       Increased security

There are several characteristics of blockchain that make it secure. To approve any transaction, the majority of the network needs to form consensus. This means that ‘false’ or unauthorised transactions broadcast to the network will not get approved unless they achieve >51% of network approval. Approved transactions, encrypted and linked to all previous transactions, means if any transaction detail from the entire history is changed, an abnormality will present as the same encrypted signature cannot be achieved with different data.

 

5.       Improved end to end visibility

Using supply chain as an example, every exchange of a good along the supply chain can be immutably written to the blockchain, providing a complete audit trail of the product from source to consumer. This can assist with providing authenticity of products.

 

Magnets Take

 

Blockchain provides many benefits and increased efficiencies that current technology struggles to keep up with, many benefits, are still undiscovered or yet to be realised. The real question comes down to what role will crypto assets have? We believe that whilst business will adopt blockchain internally before they widely adopt crypto assets, privately run blockchains or DLT’s do not unleash the full potential of blockchain to the retail market. The real test will be when existing businesses start harnessing the technology to better improve products and services for their customers, without their customers ever knowing anything different. We will see this when drastic changes are made, like transaction fees, insurance premiums and legal costs are slashed by more than half.

 

Bites

 

Mt Gox strikes again - 4 years after Mt.Gox suspended trading due to one of the biggest Crypto hacks ever, causing the famous 80% Bitcoin crash. Their incumbents are still crashing the market at every interaction. The attorney responsible for selling the 166,000 BTC that was recovered from Mt.Gox cold storage account is meant to be used to pay the users back some of their losses - there is a time and a place for a 40,000 BTC exchange market sell, this is not it. Perhaps an OTC can help?

 

Adoption

  1. Coinbase launch Index fund - Coinbase is the largest most successful crypto exchange in the US. They recently launched an Index Fund, a weighted average index that tracks the four cryptos currently sold on their platform.

  2. Sierra Leone will go down in history as the first country to have used blockchain in presidential elections - a total of 400,000 manual entries into the Agora blockchain, from the most popular regions in the country made up a large portion of votes.

  3. Winklevoss brothers mandate launching additional cryptocurrencies and tokens a top priority for 2018 across the Gemini exchange - there has been a significant opportunity for large exchanges to make US$500,000 - US$1Mn per crypto listing the twins want to capitalise on.

  4. SEC launched measures to crack down on fraudulent ICO’s and Securities tokens - they targeted exchanges to de-list the tokens classified as securities from trading.

     

  

The Market

  • The crypto market recovery was clouded by the SEC and speculative news of a Binance hack - neither of which was negative, but both had adverse effects on the market

  • Bitcoin price has seen strong support at US$8,500, while failing to break the US$10,000 resistance.

  • While the overall market performance this week has been disappointing, volatility is nothing new in this space. Swings of ~10% per day were often seen in 2015, 2016 and 2017.

  • A platform project called NEM grew by 20% as the market fell a further 20% shows more signs of promise as good projects are winning even in a downwards market.

  • Total Market Cap fell from ~US$450Bn to ~US$372Bn - some of this loss can be attributed to tokens being removed from exchanges as the total pool of tradable crypto’s becomes smaller.

Egor Sidelska