Bitcoin proved that it could create an item of digital value that was verifiably unique. As no one can alter the ledger, security cannot be “spent twice,” a bitcoin can be conceived as a single “thing” or asset. That means that we can now represent any form of value, a title deed, or a song as an entry in a blockchain transaction. And by digitizing different forms of value in this way, we can introduce software to manage the economy that operates around it.
These new digital assets take on some new “if X, then Y” properties as software-based items. In other words, money can be programmed. For example, you can pay for an electric vehicle rental with digital currencies that also serve to activate or deactivate the motor, thus fulfilling the hard-coded terms of a smart contract. It is quite different from analog currencies, such as banknotes and coins, independent of the purpose for which they are used.
What makes these programmable money contracts “smart” is not that they are automated; We already have it when our bank follows our programmed instructions to self-pay our credit card bill every month. The smart part is that a decentralized blockchain network monitors the computers executing the contract. That assures all parties who sign the smart contract that the transaction will be carried out fairly.
With this technology, the computers of a carrier and an exporter, for example, could automate a transfer of ownership of the goods once the decentralized software they both use sends a signal that payment in digital currency or an unbreakable cryptographic commitment. To pay, it has been done. Neither party necessarily trusts the other, but they can carry out that automatic transfer without relying on a third party. In this way, smart contracts take automation to a new level, allowing a more open and global set of relationships.
Programmable money and smart contracts are a powerful way for communities to direct their quest for common goals. They even offer a potential breakthrough in the “tragedy of the commons,” a very famous theoretical concept that refers to the inability of people to serve their interests and the common good simultaneously. That was evident in many blockchain proposals from the 100 software engineers who participated in Hack4Climate at the UN conference on climate change held last year in Bonn, Germany. With a project called GainForest, the winning team is now developing a blockchain-based system whereby donors can reward vulnerable forest dwellers for demonstrating that they are taking action to restore the environment.
Future blockchain prospects
The panorama that can be seen with the use of this tool in companies and businesses is as follows:
New business models: because it is a system that guarantees the exchange of secure, transparent and reliable data, companies can be created based on meeting and solving needs by promoting platforms based on the exchange or shared economy such as P2P or network models. pairs. Machines and with greater autonomy: they will have the ability to carry out self-management, that is, to communicate with each other, coordinate with suppliers and customers aspects related to delivery logistics, decision-making on the supply of inputs, make orders and payments in a manner automatic, as long as they are in the conditions previously established in the smart contract. Maintenance management: ensures the scheduling and compliance with established maintenance plans, and in the event of a breakdown or failure, it will notify the technician. Automation of processes: with the use, it is possible to free industrial processes from manual activities to make them more productive, efficiently planning the quantity and quality of the products, this allows to manufacture small or large batches in an intelligent way and with it lower costs. Total traceability: this activity is most used and has great advances, especially in the automotive, aeronautical and food sectors. It allows to detail each one of the movements from its origin until it reaches the final consumer. An example is the application of tuna traceability in Spain. Ease of payments: this blockchain technology will allow companies and businesses to become their bank. That is, payments can be made in their virtual currency or an existing one with a determined value.
To understand blockchain, it is important to determine the contributions of this technology in the transformation of the industrial sector. Therefore it is important to consider the Internet of Things (IoT) tool as a primary aspect for managing a group of activities capable of improving productivity and maintenance of equipment.
Technological changes and the globalization of the internet are advancing rapidly, forcing companies to be at the forefront of digitizing their processes and promoting personnel changes.
However, this frictionless utopian “token economy” is far from reality. Regulators in China, South Korea and the US cracked down on issuers and traders of tokens (see Exchanges Charge Cryptocurrency Security). In his opinion, these currencies represent a speculative scheme to get rich quickly by avoiding the laws of values, which as new economic models that change the world. They are not entirely wrong: some developers have pre-sold currencies through initial coin offerings or ICOs, but have not used the money to build and market products (see Initial coin offerings, under the eye of the hurricane in 2018). Public blockchains that do not require permission to access, such as Bitcoin and Ethereum, offer the best promise of absolute openness and immutability, but their growth is proving to be an ordeal. Bitcoin is still unable to process more than seven transactions per second, and transaction fees can sometimes increase, making it expensive to use (see Bitcoin is still looking for a technological miracle to grow without losing its spirit).
Meanwhile, centralized institutions that should be vulnerable to disruption, such as banks, remain the same. Although set to ensure their honesty, these entities are still protected by existing regulations, which constitute a compliance cost for new companies. Those regulations, such as the reporting burden and capital requirements that the New York State Department of Financial Services “BitLicense” imposed on cryptocurrency startups, become barriers to entry for cryptocurrency startups. Protect beneficiaries.