Blockchain: Death To The Middleman

Today we entrust our health records, identity, finances, communication channels, and many other aspects of our lives to large intermediaries like insurance providers, banks, social media companies, governments and so forth. We trust they keep our data secure, our privacy private, and our money accessible. This trust does not come free to consumers, and in many cases, we pay high fees to these intermediaries to perform processes and services for us to obtain desired outcomes. But what if there was a better way? What if these “trusted” intermediaries actually kept our data secure like they claimed? Just do a quick online search of the following companies Equifax, Home Depot, Target, Yahoo, JP Morgan, etc. with “hack” after and just see how secure your data is. What if companies had a hack-proof way to secure your data? Or what about bypassing these companies altogether and transacting directly with the intended buyer or seller these intermediaries are connecting you with? What about the process of validating elections? You don’t have to look too far back in the news to see a story about vote tampering. The future of how you transact will be conducted on blockchain technology.

If you are unfamiliar with blockchain and how it works see the following description from Harvard Business Review.

How Blockchain Works: Here are five basic principles underlying the technology.

1. Distributed Database

Each party on a blockchain has access to the entire database and its complete history. No single party controls the data or the information. Every party can verify the records of its transaction partners directly, without an intermediary.

2. Peer-to-Peer Transmission

Communication occurs directly between peers instead of through a central node. Each node stores and forwards information to all other nodes.

3. Transparency with Pseudonymity

Every transaction and its associated value are visible to anyone with access to the system. Each node, or user, on a blockchain, has a unique 30-plus-character alphanumeric address that identifies it. Users can choose to remain anonymous or provide proof of their identity to others.Transactions occur between blockchain addresses.

4. Irreversibility of Records

Once a transaction is entered in the database and the accounts are updated, the records cannot be altered, because they’re linked to every transaction record that came before them (hence the term “chain”). Various computational algorithms and approaches are deployed to ensure that the recording on the database is permanent, chronologically ordered, and available to all others on the network.

5. Computational Logic

The digital nature of the ledger means that blockchain transactions can be tied to computational logic and in essence programmed. So users can set up algorithms and rules that automatically trigger transactions between nodes.

Here is a cross-section business uses for blockchain to remove intermediaries:

1. Remittance

An obvious industry that is full of intermediaries is the remittance industry. The global remittance industry topped $429 Billion in 2016. The World Bank says transaction fees average 7.45% globally, and, in many remittance corridors, they are a lot higher driving rates as high as 15%. Blockchain-based fintech companies like Uulala are leveraging the technology to drive consumer fees down and created a decentralized community to load funds, which will significantly impact existing intermediaries like Western Union, and MoneyGram in the Latin American remittance corridor. Uulala’s remittance and micro credit services will provide social impact for generations as the financial tool for Latino banking solutions.

2. Daily Deals

This market is solely based on middlemen intermediaries like Groupon and Living Social, if you have ever been a merchant on their platform, you will understand the high fee structure to access their user base. A project like NAU, directly connects customers and retailers using Blockchain technology to guarantee transparency and reliability. The user receives 95% of what the advertiser pays in tokens for each offer redemption. This is disruptive for the current market paradigm, where intermediaries share the advertising money and users have almost zero motivation to recommend and share within their circles of communication.

3. Ecommerce

In the current model, it is very difficult for existing organizations to accept cryptocurrency to transact in the traditional retail space. A primary reason for lack of adoption is market volatility and security to receive the fiat base price. Sparkle Coin with their VCoinMall provides a seamless buying experience with major retailers like Amazon and Target and leveraging their proprietary crypto payment gateway the retailers receive the orders paid in fiat. In the traditional model of buying from Amazon, no matter how many dollars you spend, the value of the dollar never goes up. The value of Sparke Coin is in direct proportion to the volume of sales in the VCoinMall, so if you own Sparkle Coin when it opens, it will appreciate in value the more you buy using it, and everyone else.

4. Human Resources

Job boards are an essential part of the recruitment process. With employers and job-seekers alike using these boards as a primary method of getting the word out about availability, it’s impossible to go through the job searching process without encountering a job board. These legacy sites are centralized and do little to find quality applicants through the high-powered engine of social networks and other information sources. These sites are time-consuming and can be overly complicated for users. The token reduces the cost to acquire new employees by removing unnecessary friction and creating a more efficient marketplace by providing crowdsourced labor an incentive to find, verify and submit candidates to job listings. The organization leverages smart contracts to ensure the bounty paid for finding crowdsourced candidates that are placed is paid out to all entities involved in the hiring process.

Because of its inherent benefits, blockchain technology can be implemented in many industrial applications. Blockchain changes the way transactions are maintained and validated, by bringing in a decentralized, incentivized, secure, and digitized method. The strategic level differentiation that blockchain brings is motivating pioneers in different industries to leverage the power of this technology to change the way business processes work.

Originally published at on October 19, 2017.