How the Cryptocosm powered by Blockchain Impacts Financial Services

Prolific author and thought-leader George Gilder is at it again, redefining the technological landscape in his latest book, “Life After Google: The Fall of Big Data and the Rise of the Blockchain Economy”. The book is a must-read for technologists and fintech enthusiasts looking to better understand the next generation of technology innovation.

FinTech Weekly
Dec 10, 2018 · 4 min read

by Phil Toth, Founder, Managing Director, QueensGiant

What is the Cryptocosm? Not to be confused with cryptocurrency, Gilder describes the Cryptocosm as a private crypto-key that replaces one’s public identity on the Internet. That key is unique to the individual and acts as a private signature. Most importantly, it is unbreakable by others. It is different than one’s Internet identity in that the property is owned and controlled by the individual rather than giant Internet data aggregators such as Google and Facebook. This decentralized system would replace the current insecure Internet based system using Blockchain.

Mr. Gilder’s Cryptocosm has immense cultural and business implications. Here we focus on how it impacts financial services.

Increased Privacy

In the Cryptocosm, private keys are held by people, not by Google, Facebook or anyone else. Information sharing works by what Gilder refers to as a, “challenge-response interaction” where the challenger takes a public key and encrypts a message. A responder proves identity by decrypting, amending, and returning the message encrypted with their own private key. This is what is known as a digital signature. If challenged, the owner of a private key can always prove ownership of the identity and the contents of a public ledger. Claims of identity fraud and misrepresentation can therefore be challenged by the owner of the private key by proving the records. With a digital signature, the owner can always prove title of property defined by a public key on a digital ledger.

Better Security

Blockchain technology through distributed crypto-keys has the potential of replacing a totally insecure Internet. To that end, thousands of engineers are developing a new system based on this distributed peer-to-peer technology which better protects users from data breaches. A shift away from centralized data makes hackers job incredibly more difficult. That is especially important to financial companies which store vast amounts of sensitive customer information.

Fraud Prevention

Yet, blockchain’s shared ledger only updates when all parties agree. In this way, verified contributors store, view and share digital information in a secure system, promoting trust and transparency amongst counterparties. Individuals cannot alter their personal information without another party’s consent. Limiting this potential solves a massive problem for banks, customers and merchants alike with estimated annual costs related to fraud in the tens if not hundreds of billions of dollars.

Greater Efficiency

It is more efficient for the individual consumer as well. In the Cryptocosm there is no need for the multitude of passwords the decentralized system requires. That comes as a huge relief to people who find it difficult remembering up to a dozen or more username password combinations. Cryptocosm also does away with individual credit cards as all consumer and financial information decentralize to an individual device such as a smart phone.

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