No doubt we’ve all heard of Bitcoin and associated cryptocurrencies. The value of a Bitcoin has been more volatile than any stock market of recent memory. There have been reports of a Florida based programmer who in 2010 paid for two pizzas with 10,000 Bitcoins and even at the most recent price of $9,000 USD, this is an extraordinary amount.
In recent times, there are numerous accounts of people making small fortunes from trading in cryptocurrency.
There is an underlying more intriguing concept that enables Bitcoin, this is the Blockchain.
To understand Blockchain we need to compare it to something we are familiar with. At the moment when we use your debit card, the issuing bank maintains a ledger. When we pay for groceries using the debit card, our transaction is verified by the issuing bank via a number of intermediaries. If funds are available, the transaction is completed. The transaction is protected by the unique details on the card and the pin number entered.The ledger is the single source of the truth. In the current model, the issuing bank maintains the ledger of accounts, this is a centralised model.
With Blockchain, the ledger is maintained by more than one entity. Consider the ledger as a small part of a database that is distributed. Only certain parties can update it, other participants in the community have a read only view. We will use an abstract example of how Blockchain would work. Note: the technical term Miner has been swapped with Judge. Think of community as Blockchain participants.
- We enter into an agreement, ie commit to buy something or sign a contract.
- Details of the agreement are published to the community. Upon completion, both parties announce that the agreement was successful.
- The announcement is accompanied by a unique Rubicks Cube, each Rubicks Cube is different but the objective remains the same. We may not all be blessed with the cognitive ability to solve a Rubicks Cube, but we know what one looks like when complete. This is how the agreement is verified and accepted by the other judges and the wider community.
- A group of judges in the community compete to solve the the Rubicks Cube first, why do they compete? Incentives - these could be financial reward or kudos.
- When the agreement is verified it is sequentially added to the distributed database.There is a plethora of companies competing to raise capital using ICO (Initial Coin Offering). To be clear, many are offering unsecured capital to prove a concept. This deviation from IPO and crowdfunding which are, by comparison, less of a gamble.
At the moment, ICO related startups are the wild west and a regulators worst nightmare. Some early adopters appreciate the anti-establishment approach to investing thus embracing the risk versus reward. Regulatory compliance issues need to be further clarified before a cryptocurrency will be widely adopted. Startups relying purely on an ICO miss the whole point of Blockchain and would be best avoided.
So, where would Blockchain related startups provide the most likely opportunity?
Human Resources. At present we have social media platforms which provide parts of the picture. Consider the following use case.
A producer at a digital agency requires a person to deliver a high profile project. To de-risk the project the agency needs a person of referenceable client facing success within this domain.
The hiring manager enters the person specifications to the Tinder or Uber like app. The results presented are of people who match the skills and experience, the kicker, the experience is already verified and rated by a person at the organisation. Consider this for a moment, how much money is spent on recruitment companies? How much time spent completing reference checks? The probity check would already be verified. The persons presented would be available now with reduced complications of competing offers. This is the type of functionality on offer using a Blockchain related platform.
By Corin Healy -
Creative Problem Solver, Consulting & Content Creation
Chorus NZ Limited