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I went from âIâm not chasing the latest shiny objectâ to âThis Blockchain Technology has potentialâ. I embarked on this journey early in 2017âââI picked up William Mougayarâs book âBusiness Blockchainâ. Though I did not understand all the technology aspects initiallyâââI was blown away by its implications. If this is even remotely true and feasible, this technology has the potential to change our daily lives, disrupt not just companies but re-shape the entire world eco-system. I will distill the basics here so you donât have to waste your time.
Why should IÂ care?
Blockchain Technology may replace your job! Not really, your role may transform to include other responsibilities. Within specific use cases integrated with AI/ML/IoT or if you work for an intermediary party then it is highly probable. However, it may take year(s) before this is realized.
With mass adoption in the near term horizon, how we hold funds (checking, savings), how we pay taxes, how we get paid, how we find a job, how we buy properties, how we access/maintain medical records, how we ensure privacyâââare all questions that weâll be asking ourselves.
Blockchain technology in its current infancy is primarily a cost play such as enabling low cost global remittances which will disrupt the high fee current remittance systems. The finance industry will see major changes in the next few yearsââânew revenue streams and potential to expand current offerings to a larger market (global).
Adoption:
Blockchain technology adoption will be far faster than the adoption of the internet. It took about a decade or more (80âs to late 90âs) for the Internet to be widely adopted. Blockchain on the other hand will have significantly reduced time for mainstream adoption due to the internet.
The internet technology back in the day was localized to Silicon Valley and other specific geographic pockets of innovation. Blockchain on the other hand is global (thanks to the internet)âââImagine technology development concurrently improved by engineers speaking every major language in the world! Some of my concerns are usually addressed by asking myself âWell, that maybe a valid issue. Can 5,000 engineers figure out a solution?â My concerns then usually transform to âWhen can we have this solution implemented?â Itâs a question of âWhen?â.
Some use cases and potential:
One of the first industries to witness this disruption is the Financial ecosystem. Specifically, within the payments domain, Blockchain has the ability the maintain common ledgers across multiple parties. Significant efficiencies can be gained by optimizing (or replacing) the Auth-Post-Reversals-Exceptions reconciliation process, which is fondly referred to as the nightly nightmare batch process. One primary resulting benefit of such an approach is the reduced need or the eventual elimination of the reconciliation process.
An up-to-date, near real time reconciled ledger presents a ânew worldâ of possibilities (and a plethora of questions). Among the thousands of use cases, here are a few:
Merchant Payments
- Merchant services will have more options and reduced interchange fees
- Merchant vendor payments can be paid automatically when goods are sold, delivered [~50% of US B2B payments are still through paper checks]
- The current cash flow challenges will morph into shorter cycles (days/weeks not months which will disrupt the invoice refactoring industry)
Global Payments
- Payments across national borders is already explored and implementedâââresulting in near real-time funds availability at reduced cost
Taxation
- Taxation is one area that will have a direct impact on all of us. Current tax payment dues can be scheduled online, the next natural progression is to pay taxes due utilizing similar âsmart contractsâ. Again, the question is not how this technology can be leveraged to replace existing systems but to think beyond legacy replacements. Theoretically, we can leverage Blockchain technology to pay federal and state taxes per transaction, similar to how we pay sales/county/city taxes. Iâve written about individual taxation being an annual affair v/s filing taxes at our own convenience here.
- Currently, the last month of financial year is a frantic time for most companies with activities stalled, so accurate accounting can be performed. Labor intensive act of creating financial year-end statements based on GAAP or other accounting practices can be streamlined.
- Some estimate that about 5% of total GDP [Unclaimed IRS payments, un-deposited checks, lost checks, etc] is âin-fluxââââmoney that is âen-routeâ to a target recipient. This macro cycle times could range from days to months. Blockchain provides an alternative to reduce these cycle times to minutes or hoursâââpotentially âfreeingâ up additional funds.
Employee Wages
- We all get paid either weekly, bi monthly or monthlyâââand that cadence is determined out of convenience and reduced overhead to employers for processing payroll. With an âalways reconciledâ ledger we may have the option to get paid daily or at reduced cycle times
Blockchain technology is still in its infancy and there are a number of challenges to address. Yes, there are leaps of improvement to be made and at times is as reliable and accountable as a toddler, as if a toddlerâs present characteristics are permanent for the rest of her life.
Policy makers must pave the way to provide optimal conditions with minimal hurdles for the Blockchain community to contribute and build. Overly restrictive regulations will inhibit innovation and may be the single most important catalyst to propel this movement. The technology itself must not be regulated but the activities (on a global level) than can be performed must be, with specific guidelines. Let this promising technology evolve and perhaps, it may accelerate our societyâs prosperity.
Iâm always looking to hear about your journey within this space, feel free to reach out to explore how we can help each other and ponder about the possibilities! Twitter | LinkedIn |Â Medium
Recommended Read:
This technology is evolving at a rapid pace and a book published today may not be relevant in a few months.
Business:
Blockchains: How they work and why theyâll change the world, Morgan E. Peck, IEEEÂ Spectrum
Naval Ravikantâs twitter storm on Blockchain networks
Technology :
Blockchain: A Pragmatic Introduction by Max Fang, Blockchain at UCÂ Berkeley
Learn Blockchains by building one, Daniel Van Flymen
As usual, any errors are obviously mine.
Blockchains: Why Should I Care? Overview & Adoption was originally published in Hacker Noon on Medium, where people are continuing the conversation by highlighting and responding to this story.
Disclaimer
The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.