Where’s The Blockchain Killer App? Maybe It’s Buried Underneath All the Hype!

Photo credit: University of Agder

“Our approach, as it turns out, echoes others in the field who question whether the benefits of Blockchain add value above and beyond existing technologies, or accrue to stakeholders beyond the donors that fund them.”

This article on ICTworks really brought all the feelings I’ve been having about distributed ledger technologies (DLTs) to the fore.

I’ve been struggling in recent times to see where Blockchain has demonstrated its immensely promised value, delivered true market or stakeholder value, or disrupted an existing ecosystem. And thus far, what I keep coming up with is that “Blockchain is a solution searching for a problem.” Most of all, many of its enthusiasts and proponents are generally conceptual thinkers and snake oil salespersons who have little to no experience delivering secure, integrated, complex systems.

My confidence in Blockchain is not low because Initial Coin Offerings (ICOs) started with so much promise as an innovative way to secure capital for startups, but quickly morphed into get rich quick scams that relieved thousands of ill-informed crypto enthusiasts of their collective wealth. My skepticism about Blockchain isn’t at an all-time high because Bitcoin seems like nothing more than a vastly inferior way to consume massive amounts of electricity in pursuit of an energy-wasting, climate changing, speculative investment commodity (and one which fails spectacularly as a payment system). I am actually willing to concede that the combination of immense capital and technical effort will ultimately yield results. At present, the space is just really noisy and solutions are painfully slow in coming.

I am not saying that Blockchain doesn’t potentially have real, valuable use cases. As previously stated, there some extremely bright individuals working on developing Blockchain solutions and oodles of capital funding their work. Hopefully while I still have breath in my lungs, I will see a Blockchain product or service that is truly life-altering. But so far, there’s enough evidence to state with confidence that Blockchain has been mostly bluster and little benefit. More specifically, 10 years in there is no industry where this technology has rendered its competitors obsolete. There have been thousands of great ideas (and thousands more that have been not so great), but where the rubber hits the road, execution has been poor.

Why Bitcoin Will Not Solve the Caribbean’s Financial Inclusion Woes

What is Bitcoin? Is it electronic money?

There’s a deluge of hype around Bitcoin and blockchain technologies right now, and policymakers and regulators in the Caribbean are doing their best to wrap their heads around the advantages and disadvantages of this virtual currency. Similar questions are being contemplated in the ICTs for development (ICT4D) community, taking into account that electronic money (e-money) platforms such as Safaricom’s M-PESA have essentially solved the financial inclusion quandary for millions of people in Kenya. The service has now even expanded to Eastern Europe, Afghanistan, and India.

Besides sharing the characteristic of being digital, how do Bitcoin and e-money compare, especially with regards to reaching individuals who have previously been unable to access traditional financial services? Presently, there appear to be more differences than similarities between the two, and it’s critical not to confuse virtual currency with e-money.

Blockchain, in brief, is a record of digital events, distributed across multiple participants. It can only be updated by consensus between participants in the system, and when new data is entered, it can never be erased. The blockchain contains a true and verifiable record of each and every transaction ever made in the system. Launched in 2009, Bitcoin is a virtual, private currency that uses blockchain as an underlying, immutable public ledger. Bitcoins are ‘mined’ using distributed processing power across a global network of volunteer software enthusiasts. The supply mechanism is designed to grow slowly and has an upper limit of 21 million units as determined by a built-in algorithm. There is no central authority that controls blockchain or Bitcoin. There are no central banks that can be politically manipulated; and no way to inflate the value of a national currency by simply printing more money. Economic libertarians are ecstatic at the very thought of this. However, competing virtual currencies can be created that could have the net effect of devaluing the original.

Contrastingly, e-money is not a separate currency and is overseen by the same national regulatory authority that governs the printing of fiat money – as is the case with M-PESA and the Central Bank of Kenya. It’s an extension of a national currency like Jamaican dollars or Netherland Antilles guilders for use over digital networks to reduce the costs associated with handling physical cash. More specifically, it’s a one-to-one electronic store of value pegged to the cash receipt of the equivalent amount. To mitigate against risks like money laundering, terrorist financing, consumer protection, etc., the cash against which e-money is issued most often has to be deposited with fully regulated financial institutions.

The issue of financial exclusion

The issue of financial exclusion can be summarized into 2 categories: unbanked and underbanked. Unbanked individuals do not have an account at a regulated financial institution, while underbanked individuals have accounts, but frequently use alternative or unregulated financial services.

Before elaborating on the key factors behind financial exclusion, it is important to detail the effects of being unbanked to illustrate the severity of the problem. Unbanked individuals are faced with a heavy economic burden […]

The full article can be found on the CircleID website at: https://goo.gl/zn7Yg9