Haseeb Qureshi is a developer and designer Earn.com working on the Airbnb platform, and also last well-known professional poker player is told about four types of killer applications (Killer apps) on the blockchain, which will contribute to further development and promotion of the technology to the masses.
This year we witnessed explosive growth in the popularity of cryptocurrencies. This is evidenced by the capitalization of this market, which already exceeds the $615 billion, $3.7 billion raised through ICO, and more than 125 cryptocurrency exchange offices entered the market.
But despite this, work with cryptocurrencies is a chaotic mess for the end user. They are not so easy to buy, transactions in the network are time consuming and have a high Commission in cryptosuite full of trolls, cheaters and hackers, but their own funds are easy to lose because of the complexity of the storage system or the potential hacking of the robbers. And even if you manage to keep your cryptocurrency safe, yet on the market very little trading platforms that are willing to accept them for payment.
Not to mention the developer tools, where things are much worse, the whole cryptocurrency ecosystem is fragmented and divided on site. And educational information regarding the tools, documentation, and design rules can be considered at all. Cryptocurrency is terrible for users and developers alike. But despite the obvious problems, the demand for them is greater than ever and will only grow.
Although acne Buterin predicts that «killer» applications are never on the blockchain will not appear (otherwise, they would have been actively discussed and developed), I don’t agree with it, and Vice versa, believe that it is this vector of development is the only true one. Moreover, I think that the areas in which these applications will prove the Supreme value of the blockchain, not so much, namely four:
«Dark web» and payments on black markets;
Macro — and micropayments;
First the application need to those who are interested in anonymous payments. In particular, users of the «Dark web» — the part of the Internet, access to which is possible only with special anonymity protocols such as Tor, I2P and Freenet. Here you can buy wide range of products from prescription drugs and up to hacking your accounts, purchase items and even services of hired killers. Bitcoin was the first cryptocurrency that is used in the markets of the «Dark web», and this led to the first miners and users who helped to breathe life into this ecosystem.
The overall estimate of the gross revenue of all sellers in the «Dark web», a network is about $1 billion annually. And popular not only bitcoin, but cryptocurrencies are anonymous as monero and Sikes, which have all chances to become the cryptocurrency «Dark web» de facto.
The value of gold lies in its economic parameters — the rare cases of inflation, it does not corrode, and is a desirable means of capital accumulation. Moreover, no state or market has a monopoly over gold, so its price does not depend on events occurring in the country.
However, gold is not a perfect method of capital accumulation, as the bars are large and weigh a lot, gold is hard to store and even harder to ensure its safety, not to mention transportation. Gold can be stolen, they can be manipulated, saying that you have it, or hiding the information about the purity of this precious metal.
Therefore, experts have long been trying to develop the best version of digital gold, for example, in the form of such payment systems backed by gold, like e-gold and e-Bullion or centralized cryptocurrency DigiCash. But they all failed, and only bitcoin could become the first cryptocurrency which have coped with this mission. Even though the standard kollebaniya prices of cryptocurrencies in 15% (and that’s on a good day), in five or ten years the price of bitcoin stabiliziruemost and will be understandable to all financial assets. As noted analyst at ARK Investment Management Chris Burniske, the volatility of bitcoin is comparable to the volatility of oil and at the same time, it is lower than the volatility of many stocks from listing S&P 500.
Now the volatility of bitcoin is 5-6 times higher than the volatility of gold, but this gap is gradually narrowing.
I have several reasons to believe that even with the high volatility of bitcoin is an effective form of digital gold.
First, the value of bitcoin is not determined by any government or by the market. Moreover, bitcoin has already proved that its cost is virtually independent from any other asset class, including gold. Second, bitcoin can be bought and redeemed from anywhere in the world, regardless of local market, or the banking infrastructure. And, thirdly, bitcoin, like gold, is resistant to external changes. Bitcoin also has a stable road map and Melnitsa with predictable speed — one unit is added to the network approximately every ten minutes. These qualities make bitcoin predictable, making it an ideal «digital gold». Traditional gold by nature is also predictable and does not change.
Due to the high level hashing bitcoin is one of the most secure cryptocurrencies. And one of the most versatile, liquid and widespread. Like gold, bitcoin is easy to understand and has a high level of recognition as a brand. And despite the fact that bitcoin as a payment means has slow transactions, high commissions and scalability problems in the network, these aspects will help the perception of the cryptocurrency as a digital analog of gold. It is in the simplicity of gold is its huge potential for the future. On the same principle bitcoin is the simplest cryptocurrency, as bitcoin is restricted in use — it has great programming, but that makes it an excellent means of capital accumulation.
And the argument against money support of complex technical solutions, ultimately is incorrect. Take, for example, credit cards. The first credit card was issued in 1950, and a magnetic strip for them was developed in 1970. By the mid-70’s, credit cards became commonplace for American companies, which is widely used in daily life. However, as many holders of such cards can explain how this magnetic strip? Not to mention, how is their credit rating. The same can be said about smartphones ten years ago, they were something unique and outlandish, but now they have become an everyday device essential for modern life.
If bitcoin is going to be cheap, easy to use and accessible, it will meet the same fate — people will stop paying attention to it as something strange and will be taken for granted, as happened with the amazing technologies in smartphones and credit cards. Moreover, for the future generation, who grew up in the digital world, bitcoin wallets would be a more logical solution than huge safes filled with useless metal extracted from the earth.
Bitcoin in comparison with the world gold market
To date, the capitalization of the global gold market is variously estimated at $3-6 trillion, and daily trading volume is at $70-200 billion a day. Let’s take the most conservative estimate, where the capitalization of the gold market is $3 trillion, with daily trading on the $70 billion on 1 January this year, bitcoin was 0.5% of the market capitalization of the gold market, while daily trading volume was at the level of 0.1% of the volume of gold. However, by the end of the year, the market capitalization of bitcoin has reached $256 billion, and the volume of daily trading is $12.5 billion, Respectively, of its market capitalization is 8.5% from the same indices gold and trading volume of bitcoin is 17.9% of the gold.
It is likely that this trend will continue, and I think when bitcoin will start to rise to the same levels as the gold, the following will occur four things:
The state will panic and they will start to actively speak out against the cryptocurrency.
On the gold markets will be marked by a significant decline.
The financial authorities will try to impose rules to regulate bitcoin in an attempt to protect the interests of investors in gold.
Bitcoin will no longer be taken seriously as a means of payment on the blockchain.
While using cryptocurrency means impeccable management of keys, the blockchain cannot serve as a reliable solution to the problems of peer-to-peer payments. The security of the blockchain should be not only theoretical but also such that a simple man from the street could easily use the tools in the network, without exposing themselves to danger.
In many world economies have made steps towards the simplification of traditional payments: Venmo in the US, M-Pesa in Kenya and Tanzania, AliPay and WeChat Pay in China. Traditional FINTECH is moving so quickly that its advantages would soon overtake the technology of the blockchain in the short and medium term.
Despite the fact that the adaptation and use of crypto-currencies are far behind from the traditional banking systems, they have two vectors of development in which they have gone far ahead:
International payments — make international transfer, you need to go to the Bank to pay the Commission to wait a few days until the transaction is approved by all parties involved in the process, and moreover, if need to exchange for local currency to pay banks a Commission for it. Alternative was to send, for example, esters on the required amount via the Ethereum blockchain. The average transaction of the network takes about 10 minutes, and the Commission will be 50 cents. And this despite the fact that Ethereum is not bloccano optimized for the payments, or the timing and the fee could be significantly less. Despite the technical and legal problems, massive introduction of blockchain networks for international payments prevents by and large, only lack of knowledge, trust, perception of transactions with cryptocurrencies.
Micropayments — the traditional financial networks (such as Visa), any money transfer costs at least 20 cents. Thus, if a business wants to take, for example, 25 cents to view a web page, or 1 cent for the transition to the ad page, they have to macrobudgetary within the company and to pay monthly accumulated amount, as does Google. The blockchain and cryptocurrency optimized for payments solve these problems. For example dash takes 1-3 cents per transaction and processes it for three seconds. Thus, from 25 cents to view only 10% will go to pay for the transaction.
These areas still have to go through a series of improvements, and it is hard to predict what will be the end result, however, banks clearly have nothing to be afraid of. Of course they are trying to protect their own market share and to adapt the blockchain in the framework of projects such as Ripple, R3, Hyperledger and others. However, cryptocurrencies are preparing a full attack against traditional banks and their position in the market. I’m sure the next few years will be very interesting.
There are two types of tokenization protocols and assets.
Token protocols such as Filecoin serve to encourage certain actions of users. If incentives are the same as the purpose and functions of the tokens, it will be possible to build such a Protocol, where the right action users will receive a reward, but for the wrong penalty. If correctly programmed methods such incentives and provide a good payoff matrix, such a Protocol may include rules and strategies from Economics and game theory, to adjust the user behavior to produce a desired result. With the right incentives, like magic, everything will fall into place, and economy within such a Protocol will work perfectly.
In the second case — tokenization assets — converts traditional liquid assets equal in digital assets stored in the blockchain. New assets can be exchanged on the trading floors that do not require the trust to third parties, making them more liquid. In this case, one of the main advantages of such markets is the lack of centralized intermediaries. This will be relevant aspect for the citizens of those countries where financial and institutional instances are unreliable and corrupt. To participate in sustainable and liquid global market licenzirovanie assets will need only Internet access.
Another advantage is that thanks to the blockchain, you can avoid the high cost of creating an optimal trading platform. Releasing the tokens-the shares on the blockchain, you will automatically receive infrastructure for management and support of their trading platform. And the use of a standard ER20 will be available to smart contracts by which it is possible to create financial instruments for a number of tokens and use automatic pricing mechanisms. The exchangers will be able to add such tokens in the listing, and to buy the client will need only a few lines of code. Moreover, given the insurance of the ability of the blockchain, it will be possible to take a loan, for example, to buy a car providing information about its portfolio of digital assets.
Thus, the tokenization and the protocols and assets is an important vector of development of blockchain. Of course, you first need to decide a number of legislative and technical issues that will take several years before we can use such tokens. However, behind them enough developers to promote such forms of tokenization, which is a huge potential.
I have listed four key areas in which killer app will contribute to the development of the blockchain, but I don’t want to reject other promising ideas. There are many applications in which considerable potential, for example, social media such as Steemit, where customers have internal cryptocurrency for participation. Or platforms such as Gnosis and Augur that serve decentralized market predictions on the stock market or the above-mentioned storage platform Filecoin. Such projects very much and they develop at a staggering pace. However, if you believe the stories, the biggest killer app will come from the area where you least expect it.