Blockchain Technology Signify the Beginning of Internet of Value Era
This technology was vigorously discussed at the recent World Economic Forum in Davos. Bankers from Wall Street invest money in it. Mark Andreesen, the famous developer of the world's first Web browser (Netscape) and one of the founders of Netscape Communications, called it the most important technology since the advent of the Internet. What is it about? Of course, about the blockchain.
Created by a mysterious hacker named Satoshi Nakamoto, distributed register technology, which is the basis of the crypto currency, Bitcoin, also known as a blockchain, can drastically change many industries, from finance and real estate to the entertainment industry. This forces the Silicon Valley titans, world financial leaders and even independent developers to hastily calculate the consequences of the appearance of this technology, so as not to be caught unaware.
Tim Swanson, the head of R3's development department (a New York start-up, organized with the support of a consortium of large banks), called the blockchain something like glutene: everybody talks about it, but no one really knows all the details. Quite simply, the blockchain is used to transfer something that has value: money, shares, property rights, digital license fees, even the votes of voters in the elections through the Internet from one party to another...
We offer blockchain development solutions for any kind of buisness: online payments, financial software, royalty collection.
Today, such transactions often pass through many intermediate parties in the process of authorization, clearing and processing, and are stored in centralized registries of organizations such as the Central Bank (if it comes to financial transactions) or the system of electronic registration of mortgage transactions.
Blockchain distributes the functions of validation and storing the transactions between several computers in a safe and open way, eliminating the need for intermediaries. As a result, the time and costs of processing transactions are practically reduced to zero. Alex Tapscott, CEO of Northwest Passage Ventures (specializing in block chains), sees this technology as the next generation of the Internet, which he calls the Internet of Value.
Since both the original technology of block chains for bitcoins and its new variations, according to Tepskott, have the most powerful potential for transforming huge branches of the economy, the first attempts to develop solutions based on blockchain were made in two areas: in financial services and in creativity, namely music and advertising.
Financial services
The most obvious area of application of software developing technology for blockchains, as a system of registers, is financial software. According to some estimates, Wall Street's cost of blockchian technology can reach 400 billion US dollars over the next few years.
Tapskott notes that in a market where the price of a competitive advantage is measured in nanoseconds, the bidding process can still take up to three days, whereas a blockchain system can shorten this time to minutes or even seconds. This technology can become especially attractive for participants in complex trades, for example, derivatives, where the market conditions can change even before the end of trading, creating a significant risk for counterparties.
The US Commodity Futures Trading Commission (CFTC) is exploring the potential of using distributed register technology in the derivatives market. Recently, the first trades with the use of blockchain technology software were held on the NASDAQ exchange. "We are starting a process that can revolutionize the infrastructure systems of capital markets," said Bob Greifeld, NASDAQ's CEO. "This will have enormous consequences for accounting and obsolete administrative functions."
Another financial markets that require radical changes are the currency exchange and cross-border money transfers. The volume of cross-border transfers, including that sent to relatives by people working abroad, is almost $500 billion a year. This is a slow and burdensome procedure, which demands the payment of considerable commissions from hard-earned money. The startup Abra has developed a mobile application based on the block chain. They optimise the process of money transfers and allow you to transfer money from one continent to another and convert currencies instantly and without paying stout commissions.
Music and advertising
Reducing the time and cost of transaction processing, the technology of distributed registers opens the way for making literally penny micropayments. This is truly "sky is the limit" for such areas as music and advertising, which are suffocating under the yoke of the rigid economy of the Internet and an outdated system of royalties.
The technology of blockchains opens up opportunities for the rapid development of new business models that are convenient for the creative people. For example, musicians will be able to get literally on a cent every time someone listens to the song they recorded. Similarly, journalists will be able to receive small amounts if someone reads their article. Some artists, including the Grammy Award-winning Imogen Heap, are already trying to use blockchains to distribute their works and receive royalties. In addition, a lot of works of art, from films to songs, are created by the author's collectives, and in this case the blockchain development can make the monitoring process and payment of royalties more efficient and transparent.
The technology of blockchain is still very young, and, as it was with gluten in its time, there is a lot of noise around it. There are still a number of unresolved issues - for example, the possibility of scaling the distributed registers without overflowing the block chain. But all these problems are solvable, says Tapskott, adding: "Blockchain is a major breakthrough that can eventually change the nature of the business."
