How cryptocurrencies have increased blockchain’s public visibility
This is the second of a series of many parts. Read the first part here: https://capodieci.medium.com/the-roots-of-blockchain-and-decentralization-f5fb049f8681 and see at the bottom of the article the links to all the other parts.
In my previous article, I addressed the historical origins of peer-to-peer (P2P) networks and consequently blockchain technology, detailing its journey to reach decentralization as we know it today. Now, let us talk about what “today” looks like for blockchain technology and decentralization.
Looking at the current popularity in mass media of blockchain and its most talked about offshoot — Bitcoin — it is interesting to note that in the year 2013 or even 2014, very few people were aware of cryptocurrencies, and even fewer people were familiar with this new technology for decentralization: the blockchain. What has accounted for the popularity increase of the technology?
First of all, it is only when large financial institutions had understood that a prominent competitor was raising “against” them, that the mantra “Bitcoin bad, blockchain good” had started, which stimulated public discourse on the blockchain. Blockchain had been seen as a useful tool to be adopted, and cryptocurrencies an enemy to fight.
Yet, with the passage of time, eventually, even large financial institutions have realized that the acceptance of cryptocurrencies is inevitable. For example, DBS Bank, the largest bank in Singapore, has launched a crypto exchange, Morgan Stanley offers bitcoin funds to wealthy clients, and the mantra has almost reversed. The trends of established financial institutions offering crypto products started in late 2020, so it’s relatively new.
With more and more people becoming familiar with how the cryptocurrencies differ from the conventional banks, each time conventional banks make it difficult for clients to complete a certain transaction, they are actually giving cryptocurrencies free advertising, espousing the benefits of their decentralized nature.
The decentralization of finance that started with a simple currency that moves money from person to person without the middleman that imposes roadblocks of various kinds, has made a lot of people aware that there are indeed alternatives to conventional banks. Many people have become more aware that it is possible, through their smartphone, to simply send funds to their friends directly through their cryptocurrency apps, anytime, anywhere. This way, they are no longer hindered by the administrative requirements of conventional banks as the P2P nature of these cryptocurrency apps works smoothly 24/7 without any institutional confines; the decentralized transactions simply follow the group consensus of the parties involved.
What made me realize the threat for banks is real, and above the simple remittance of cryptocurrencies, is when I saw, in a now-deleted tweet, someone claiming to have bought a Subaru Forrester car with a loan taken using MakerDAO, a decentralized finance (DeFi) tool. It is no more just about cryptocurrency remittance, decentralization is really taking away the role of financial institutions.
We saw how the potent powers of cryptocurrencies to help people financially have increased the visibility of blockchain technology. The financial aspects of blockchain technology have also made people aware of the core solution that it offers: decentralization enabled by peer-to-peer (P2P) transactions.
Seeing just how successfully the decentralization solution is transforming the financial sector, we can even more understand how the major film studios and large record labels had actually missed an opportunity at the time when Torrent came out.
They should have understood that selling their content in digital format via peer-to-peer (P2P) networks could have made them a lot of money by being able to sell it to customers in any corner of the planet. Yet, back then, the understanding of the potential of P2P networks by people in those industries wasn’t enough to see the technology as an opportunity. Instead, these creative giants were lobbying governments to arrest some kids who had ripped their contents off the BitTorrent system, instead of thinking about how to leverage the P2P networks for their own benefit.
In my opinion, technological ignorance had played a big role in this missed opportunity. With the right knowledge, they could have used the peer-to-peer network to sell their products to the most remote places on Earth with close to zero costs, just by working on how to monetize the process.
Offering a legal alternative to piracy as practical as downloading content from Torrent, they could have gained a large clientele overnight. With the right know-how, the majors could have shifted from an anti-technology stance to an “if you can’t beat ’em, join ‘em” attitude. They could have made the most out of the technology instead of making an enemy out of it. As the financial giants are doing with blockchain.
Only recently, people in the creative industry have seemed to have the right knowledge to leverage the P2P network for their own benefits. Thanks to this increasing awareness, people have of late been able to tell that beyond its influence in the financial realm, the blockchain’s decentralized solution can also help make life easier for people working in various other sectors, including the arts, with lots of auction houses conducting auctions via blockchain. In the realm of creative writing, we saw people using non-fungible tokens (NFTs) to sell even a media column.
Beyond NFTs, blockchain has also been making big impacts in making documentation flow and supply chain management more effective and efficient. I’m talking about these industries since I’ve also had some hands-on experience in running the technology.
In late 2013 I became involved in a project called NXT (pronounced “next”), which interested me because, instead of being marketed as a “cryptocurrency”, the project was promoted as a “decentralized applications platform”.
Thus, from the get-go, the NXT has been advertised as the basis for decentralized apps, and it included many interesting tools, such as voting, marketplace, messaging, and many more, to make users’ lives easier.
The technology was so fascinating that we collectively made a book to chronicle our experience with it: “Snapshot: Nxt, unsurpassable blockchain solutions”
From there, in 2014 I started a project called DeBuNe, which stands for decentralized business network. As you can see, I belong to the one percent chunk of computer geeks who are more interested in how blockchain’s decentralized solutions can make business better, other than simply the monetary parts of it.
Ethereum was launched in July 2015, so back then there were no “Smart Contracts” to play with, and this has been a blessing for me, as I was forced to work on the lower level of the blockchain code, thus learning consensus mechanics architecture and P2P transactions logic.
In 2015, I implemented a trade finance platform using DeBuNe, giving birth to Open Trade Docs, a solution for trade finance document management. In 2016, I started MagniSign, a pivot of SoundKey, a hardware solution to produce cryptographic signatures safely. This video gives a glimpse into how the system works.
These projects have actually laid the foundation for my current journey toward decentralization. We will discuss that in the third article of this series.
This is the second part of a series of many parts. Here the links to the other parts.
Part 1: https://capodieci.medium.com/the-roots-of-blockchain-and-decentralization-f5fb049f8681
Part 2: is the article on this page
Part 3: https://capodieci.medium.com/blockchain-zoo-and-the-first-phase-of-decentralization-solution-development-19111290ce51
Part 4: https://capodieci.medium.com/decentralization-will-make-our-lives-much-better-57b6f544b1de
Part 5: [coming soon]