Beyond a currency: blockchain applications to look out for in 2018
Privacy coins, more IoT, and a transformation in payments
By now, most people have heard of cryptocurrencies: the big three, Bitcoin, Litecoin, and Ethereum, are easily accessible with a few clicks. Coinbase, one of the most popular exchanges that sell cryptos for fiat, has seen a tremendous increase in usage. It was no surprise when it hit the top charts on app stores and entered the mainstream.
Yet, cryptocurrencies and blockchain are not just about the big players or the top 10 on CoinMarketCap. In fact, those with lower market caps have all the room to grow. With a plethora of use cases, blockchain technology and the respective tokens are set to appear in even more headlines: in anticipation of future developments in this space in 2018, here is an overview on projects related to privacy, the Internet of Things, and payments.
Privacy: Enigma
The decentralized nature of blockchain technology makes for great applications of privacy. Coupled with the consensus technology of cryptography, this new technology ensures only those who should access information can do so. Privacy takes a further step in maintaining anonymity on public blockchains (where everyone can see every transaction), making exchange of cryptocurrencies just as anonymous as an in-person exchange of cash — a key tenant in the early champions of cryptos, the cypherpunks. I write about them here.
Several existing projects have come to attention in this space such as Monero and ZCash. One protocol to pay attention to is Enigma, a second layer, off-chain network that works to solve the issues present blockchains face of privacy and scalability. In using secret contracts, Enigma protects the privacy of the data being transmitted by keeping it encrypted while it is being processed in a transaction. As an off-chain network (such as the lightning network), it lightens the load of network nodes, allowing for more resources to process transactions offline.
Besides combating these two issues, Enigma is also working on Catalyst, a “Bloomberg” for cryptocurrencies. This one-stop-shop looks to be a data feed for those active in the crypto markets, providing price data, news, as well as the feature to connect the system to various crypto exchanges. Given how Bloomberg was able to dominate a huge market share of the finance industry, it is definitely possible to see Catalyst play a key role in providing crypto data (this article is pretty optimistic about it).
Blockchain in the IoT / Supply Chain: WaltonChain and Modum
I first came across use cases for blockchain in the supply chain through reading this article on tracking tuna. Imagine the tracking of not just fish, but of physical assets turned digital — the applications are profound.
WaltonChain works through combining RFID with blockchain technology to record the movement of physical goods as they go around the supply chain. RFID sensors, as small as a grain of rice, are implanted into goods (and humans as seen here!)to then be tracked on the blockchain. As an immutable ledger, the respective blockchain then holds a record of these locations, automatically adding new entries as the goods move. WaltonChain is starting in the garment industry by inserting RFID chips into clothing.
Modum, with a coin that functions like a security (granting voting rights and profit sharing), plays a part one-step removed as a manufacturer of sensors that can record data into a blockchain. The company makes IoT sensors integrated with the blockchain, and the current sensor has the ability to measure temperature. It is set to work with pharmaceuticals, ensuring correct storage conditions throughout the supply chain. Interestingly enough, this sensor manufacturing company conducted a token sale to create MOD with these security-like features — a great example of what is basically an IPO (initial public offering, when a company first issues stock) using the blockchain. Instead of functioning as a token to be able to use a network, MOD rewards holders with a share of the project profits.
Payments: Request Network, Stellar Lumens, OmiseGo
This section could easily be a whole other article that would include discussion around what’s been happening with Ripple, but let’s not go there…
Crypto Venmo
Request Network can best be compared to the PayPal/Venmo/Chase Quickpay (now Zelle) of cryptocurrencies. With the key feature of being able to send a request payment invoice to anyone else in the network, there comes a myriad of applications: not only are the transactions recorded on an immutable ledger atop the Ethereum blockchain, they can also be linked and traced to the source. This makes for the application of smart financial statements — if every transaction can be linked to a starting balance such as a payment account, then any change will automatically adjust the balances. No need to manually reconcile various records to trace back the source of a charge! (These changes can bring many implications to the accounting profession).
There is already an app for the Request Network, to see a deeper dive, see here.
Blockchain Western Union
Originating as a fork of Ripple, Stellar Lumens aims to be a financial protocol and also has the ability to run ICOs (see Mobius). The most clear-cut use case is in currency transfers by using the Lumen, XLM, as the bridge currency. If there is no way to directly exchange one currency for another, the Stellar network will convert the money of the sender into Lumens, which it then uses to buy the currency that is desired. In turn, the receiver will get his or her desired currency from the sender.
Further applications of Stellar according to it’s website include micropayments, mobile banking, and services for the underbanked. Unlike Ripple, which is working with large financial institutions, Stellar is targeting the market of individuals looking for payments solutions.
Unbanking the Banked
OmiseGO (OMG) has the ambitious plan to provide banking services without the need of a bank. It does so through various steps: a wallet stores funds and cryptocurrencies while the network connects different EPPs (electronics payment providers) to facilitate exchange through a decentralized exchange as well as plasma, off-chain liquidity pools. What a handful!
Essentially, OMG looks to link different payment networks while maintaining decentralization through the OMG token. It’s purpose is to serve as a bridge currency and as a validator — holders of tokens can put some in a smart contract to be used to verify transactions, earning transaction fees for their service. Each liquidity provider stores a reserve of currencies off-chain with plasma to ensure the quick transfer of funds among network users even if there are no exact matches to currency pairs.
Run by Thai startup Omise, a company already providing services similar to Stripe (allowing merchants to accept credit card payments online), OMG is set to release the first public version of it’s software development kit in Q1 2018 and runs as a second layer of the Ethereum network.
Bitcoin was the first, and now come many more. Litecoin was built off of Bitcoin, and now the lightning network comes next as a second layer. More and more technological advances will happen and the applications will be many. After all, it’s about decentralization — keep that in mind and many use cases will come. But make sure to note that blockchain will NOT solve every problem.
