While bitcoin aims to revolutionize money, ethereum aims to revolutionize… everything else!
The first thing we suggest in this ebook is to stop thinking of ethereum as a money system.
Instead, think of it like Lego. Ethereum is a place for building things with blockchain technology.
We know that blockchain is revolutionary, but Ethereum actually gives us an easy way to use it.
That’s why huge companies like J.P. Morgan, BP, and Intel are experimenting with the Ethereum blockchain to create new apps and services.
The potential for Ethereum is phenomenal. But there are lots of hurdles to overcome. A few hundred words are not enough to cover the topic, especially if you’re looking to invest in the cryptocurrency.
Blockchain technology is often referred to as one of the most disruptive developments of the 21st century. From medical records to artificial intelligence, the list of potential use cases is endless. In particular, the finance sector is one of the best fits for this technology.
Blockchain has several key advantages. It is secure, transparent, and immutable (meaning it cannot be edited and transactions cannot be reversed). That makes it the perfect way to store data and funds, and open doors to the world of big money.
With the debut of smart contracts (contracts that execute automatically when certain criteria are met), the blockchain world got a massive step closer towards wider adoption. These features are sending ripples through the financial world in the following ways:
A decentralized, digital system has the potential to weaken fraud attempts, improve document turnaround times, and streamline accounting for businesses. Moreover, by working with smart contracts, the consortia aims to progress in cross-border trading and to enhance the supply chain industry.
At this point in time, the third-most-valuable cryptocurrency is Ripple’s XRP, which has announced more than 100 partnerships with major banking institutions around the world. Most of the banks are using Ripple’s blockchain solution called xCurrent. However, at least three companies are now using Ripple’s cryptocurrency service, xRapid, to settle cross-border payments.
Initial pilots reveal that blockchain solutions can reduce international payment times from days to minutes (and at a 40-70% discount in fees).
Blockchain and the Stock Market
Wall Street is one of the best places for the implementation of blockchain technology, and the conversation is ramping up around “security tokens.” Security tokens are issued by companies, much like stocks and bonds, but on a blockchain.
It has benefits for shareholders and the company itself.
Shareholders, for example, can take advantage of increased transparency and simplified stock market duties, like dividends and voting. Companies may also add extra features to their security tokens, which might be access to products, discounts or memberships.
For the company, issuing stock on a blockchain improves liquidity, distribution, control and investor relations. Companies that issue security tokens will also benefit from customizable trading settings, automated whitelisting processes and the tracking of their investors.
Several big institutions have expressed interest in issuing tokenized securities. The most popular supporters are Overstock’s subsidiary tZero, cryptocurrency exchanges Coinbase, Binance, and OKEx, as well as the main stock exchanges in Switzerland and Malta.
The real estate sector is one of the most profitable businesses in the world, but there are many ways it can be improved. Real estate agents, as well as private investors, usually face high costs for bureaucracy and notaries. They are also flooded with tremendous waves of paperwork. Blockchain and smart contracts would undoubtedly save time and wealth by cutting out intermediaries. It also provides a secure and reliable place to store data.
The tokenization of assets would drastically reduce the time needed to trade property. And it would allow us to easily divide the ownership of property among multiple investors. As a consequence, investing in property may become available to everyone around the globe, and not just wealthy individuals.
Insurance corporations represent another industry primed for the introduction of blockchain technology. On the one hand, there are lots of people in the world that can’t live without insurance for health or property. But dealing with insurance companies is extremely time-consuming, especially when trying to claim refunds.
Meanwhile, most businesses in this sector are confronted with several issues in terms of verifications, data collection, and auditing policies.
One of the world’s largest insurance companies, People’s Insurance Company of China (PICC), has teamed up with the blockchain startup VeChain to address these problems. According to VeChain, its native blockchain VeChainThor “provides enterprises with the tools, securities, and governance to properly control their assets while collaborating across multiple verticals, industries, and even countries.”
S&P 100 enterprise MetLife is also wading into the blockchain space. With their Singapore based innovation center LumenLab, the insurance company is actively experimenting with smart contracts on a private blockchain.
In their sandbox project Vitana, the customer connects electronic medical records with their smartphone to issue a policy in a matter of minutes. In addition, a smart contract triggers an automatic payout upon diagnosis, without the need to make a claim.
Blockchain and Cross-Border Payments
Everyone who has ever made an international wire transfer has experienced the huge effort and time it requires to do so. Cryptocurrencies and blockchain are perfectly poised to fix this issue. Projects like Ripple and Stellar are already building an ecosystem to transfer value across borders, yet these digital assets still face serious obstacles before a wide adoption is in sight.
To become a viable form of money, currencies need to store value fairly well. Most cryptocurrencies do not fulfill these requirements due to their extreme volatility. However, many people depend on a currency with a relatively stable value. Tether’s USDT is probably the most popular stable cryptocurrency at the moment. Unfortunately, this does not solve the problem of fiat currencies, as the token is pegged to the US dollar and controlled by a centralized power.
Consequently, many projects are working on an alternative, more suitable, method of creating a stable coin. One of the main ideas is to back a cryptocurrency with all kinds of assets, including precious metals, stocks, property, and other cryptocurrencies. Stable coins and tokens are still in a very early stage of development, but the potential to substitute all fiat currencies is real if a project eventually succeeds.
A handful of international governments, such as Russia and China, are currently exploring the potentials of having their own cryptocurrency. The South American nation Venezuela announced its official cryptocurrency petro, which was created after the hyperinflation of the bolivar this year. The petro is based on NEM’s blockchain and backed by the country’s oil and mineral reserves. However, many critics denounced the project for its lack of transparency and decentralization, which are originally the fundamentals of a blockchain currency.
Obstacles for Blockchain Adoption in Finance
There are still some hurdles standing in the way of worldwide acceptance. Not least the problems of scalability, speed, and decentralization. Applications that include micro-transactions or high-frequency trading, like decentralized exchanges, are particularly in need of a fast, scalable and secure blockchain architecture.
There are hopes for improvement. New concepts are being developed, like “proof-of-stake”, where block validations are conducted through owning stakes instead of computation power. Sharding is another alternative, where the blockchain history is split into multiple sections and computed in parallel.
A decentralized network is also required to maintain extraordinary security standards. A blockchain is generally referred to as a secure place to store funds and data. Yet, we occasionally observe serious security issues like 51% attacks, which happened at least half a dozen times to prominent cryptocurrencies in the last year.
In other cases, the chains of major cryptocurrencies face problems when consensus nodes go offline all of a sudden. The fear of quantum computer attacks is something every digital currency has to deal with.
Apart from the blockchain itself, there are also many incidents where smart contracts have been reported as wrong. In order to convince massive enterprises to adopt the technology, blockchain constructions are required to provide a predictable and trustless experience.
There’s one more problem. Blockchain and cryptocurrency communities are split as to whether the technology should offer full anonymity or explicit transparency. The dilemma is a stumbling block for convincing big institutions and governmental authorities. The vast majority of governments around the globe are not in high spirits about privacy coins. Tax bureaus and other regulatory entities demand insight into transaction histories.
However, most companies and institutions refuse to use cryptocurrencies as long as the histories of their accounts are public to everyone. In order to find a fitting solution, several international universities are collaborating in the “Accountable Privacy” initiative. With its project Abelian, the initiative is proposing a concept of privacy, where the user determines the transparency level of his transactions.
We are still in the experimental phase of blockchain in the financial world. But as we can see above, there is phenomenal scope for this technology to transform the way we do business. Just don’t expect it to happen overnight.
Many years ago when I first stumbled across bitcoin, I’ll admit, I didn’t understand it. I remember reading explanations that looked like this: “Bitcoin is a decentralized, peer-to-peer, cryptographic currency, built on an immutable digital ledger called a blockchain…” I zoned out. It took me another year before I put in the time to learn how the technology worked.
And then it clicked.
This thing is revolutionary. Not just bitcoin the cryptocurrency, but the whole ecosystem that makes it work. It could change everything.
The only problem is finding simple, clear information about it. There’s so much misinformation out there. Some of it is biased. Most of it is too technical or confusing to get your head around.
Elon Musk famously said that artificial intelligence (AI) is “more dangerous than nukes.” But can blockchain bring more trust and security to AI? Blockchain can track how AI systems make decisions (solving the “black box” problem). And since the blockchain can’t be tampered with, there’s an added layer of security from outside attacks. Guest writer Stevan Mcgrath explores.
Today, we find AI systems in pretty much every technological gadget. It has become so common that it’s difficult to find a system that doesn’t rely on it.
While usually only flashy, groundbreaking uses of AI are reported on, today it is used for basically everything. Things like translations, photo retouching, and even software updates lean on an AI methodology.
But there is, of course, a dangerous side to AI. How much can you trust the decisions made by AI systems? Blockchain, potentially, offers a solution. Let’s start by understanding how blockchain technology works in relation to AI.
How Blockchain and Artificial Intelligence Work Together
On top of that, the “ledger” is distributed, existing in thousands of computers at the same time. Every time anything is added, the existing data is compared to that in other computers, thus guaranteeing its integrity.
Blockchain’s main use so far is directly tied to cryptocurrency. It was, after all, originally developed as a ledger for all bitcoin-related transactions. All bitcoin data is kept in the Bitcoin blockchain, although it is encrypted for the safety of its users. The most widely used blockchain in the world, the Ethereum blockchain, works in much the same way.
Now, there are other uses for blockchain. There are proposals for its use in a wide array of markets, from real estate to health care. While not all these proposals might come to fruition, blockchain is poised to revolutionize not one, but several markets.
With such a potent tool, it is only natural to look for ways to merge it with anything we can. When it comes to AI, blockchain has shown promise to help begin a new era. Meanwhile, AI itself has been proposed as a tool to make blockchain more trustable.
The Problem with AI…
While AIs are almost ubiquitous today, usually they’re only blindly deployed on low-risk systems. For text prediction on a phone, for example, the risk is minimal and there are no reasons to mistrust an AI.
The same can’t be said about all industries. One of the main issues AIs face on larger scale projects is how difficult trusting their choices can be.
This is partly due to the “black box” nature many AI systems have. “Black box” refers to the problem in which we don’t fully understand how machine learning develops or how AI decisions are made. You can often see an input and a result, but no information about the reasoning is offered. It’s particularly troublesome for systems based on neural networks.
It requires blind trust in the AI system and its decision.
While this is fine for some systems, it isn’t always so. If systems require human input it’s generally fine, as humans will often catch any errors in the computer’s logic. But with completely automated systems, a faulty AI is a liability. A faulty AI can, after all, not just hinder but also at times outright destroy a whole process.
Blockchain Does it Better
Blockchain could help fix this problem. By keeping a secure record of every single action an AI takes, auditing the software becomes much easier. This secure ledger of every decision made by an AI gives users insight into how it is working. By better learning how it works, we could work on making more robust, reliable AI systems.
Blockchain is better for these processes than a regular log simply because it can’t be tampered with. A bank’s software for transactions log could be hacked to delete suspicious transactions, for example. A blockchain record can’t.
By using a permanent, impossible-to-edit record of all steps, systems can be made more secure. A bank could then audit its ledgers knowing all its data is accurate. Or a company could check its optimization processes, knowing everything in it was genuinely done by the AI.
Giving an AI access to a blockchain can also bring huge benefits. In some cases, such as healthcare, blockchains are being proposed to deal with sensitive or private data. While giving a person access to this would be risky, an AI wouldn’t pose a privacy risk. Moreover, it could use the historical data from health care systems to establish patterns.
It could then apply these patterns to patients to predict if, or when, they are likely to suffer health problems. The patients could then receive automated warnings, letting them know visiting the doctor wouldn’t be a bad idea.
AI Can Improve Blockchain, Too
AI and blockchain are a perfect fit. You can think of it as a symbiotic relationship. Both technologies can be used to improve the security and reliability of each other. In other words, AI can make blockchain better, too.
Artificial Intelligence could be used to help curb these kinds of attacks. By having an intelligent system learn transaction patterns of its users, it would be possible to flag suspicious ones. These transactions would then be taken to review, as banks often do, and require confirmation from both parties. The key would be finding and establishing use patterns so that only truly strange transactions are flagged.
In summary, while the above is just a pick of possible uses, a greater horizon lies ahead for blockchain and AI. We can be assured that we’ll see a hybrid of these technologies sooner than later. When we do, mankind will be the better for it.
Block Explorer scours the globe for the best crypto conferences and events every month. In September, it’s all about London with at least five events taking place in the British capital. You’ll find a complete list of events at our Conference Schedule, but for now, let’s look at some of the best conferences this September.
Blockchain Live has the most star-studded lineup of the month. Speakers include Ethereum co-founder Joseph Lubin (now founder of ConsenSys), Nick Szabo (who created smart contracts), representatives from Ripple and EOS, and a member of the European Parliament.
There are nine different “stages” to explore, including blockchain, C-suite, fintech, government, development, product, crypto, energy and creative. Your experience at the conference is entirely tailored to your profession, whether you’re a developer, investor, industry expert or public sector work.
Key speakers: Joseph Lubin (ConsenSys), Nick Szabo (smart contracts inventor) Brendan Blumer (Block.one), Michael Alexander (EOS), Eva Kaili (European Parliament)
Token Fest is a huge networking event for anyone in the blockchain space. Entrepreneurs, developers, and CEOs are all welcome. Talking points include how to apply crypto economics to the world around us, how to crowdfund new tokens and the commercial use of blockchain.
Attendees include representatives from Ripple, Steemit, Ledger as well as Nike, Google and Facebook.
Key speakers: Jeremy Allaire (Circle), Jon Najarian (trader and member of NYSE, CBOE).
The Digital Identity Summit is all about privacy, fraud and security. It takes a broader view across the financial industry, but expect plenty of discussion on blockchain technology. Ideal for business leaders and managers.
Key speakers: Rees Atlas (Coinbase), Kara Swisher (Recode).
CryptoBlockCon is a one-day event aimed at bringing the best minds in blockchain together. The agenda focuses heavily on ICOs (from kickstarting a campaign to successful case studies). There are also some more technical demonstrations, such as building smarter smart contracts.
This conference is for developers only. So if you want to get your geek on, talk coding and smart contracts, this is where you need to be. The conference is built around active workshops and insightful talks. It’s a relatively small event compared to some of the others on this list, but this is where the future of blockchain development is happening.