Blockchain could revolutionize global banking

The era of globalization is drawing to a close. Evidence of that has been made clear by President Trump’s withdrawal from global affairs, his attempt to build an economic and physical wall around the United States. It’s a clumsy attempt to express the genuine concerns of Americans who have been left out of the prosperity reaped by a few.

     image: Urban Forex

Two billion people around the world have no access banking. They are unable to make loans to start small businesses; they have no credit, and no means of sending or receiving money.

And the rest of us have is rigged banking system. We are nickeled and dimed in every banking transaction and pay exorbitant interest rates on credit cards.

We are told that a healthy banking system is fundamental to a healthy economy. Yeah, right. Banking funnels money into the pockets of the rich who have so much that it just lays around in piles, uninvested, while worthwhile social programs and enterprises go threadbare.

When U.S. banks failed during the Great Recession of 2008 -because of bad business practices- they were bailed out with taxpayer’s dollars. They were rewarded for bad investments while homeowners who couldn’t pay bank-approved mortgages were thrown out on the street.

Not only is there an asymmetrical relationship between banks and clients in terms of wealth distribution, there is also an imbalance of transparency. While banks know exquisite details about us, we know practically nothing about them. Social scientist Shoshana Zuboff calls this one-sided, extractive interaction “surveillance capitalism.”

The technology of blockchain holds promise to restore balance and eliminate excessive fees through use of a universal digital currency, or cryptocurrency.

The first digital currency, Bitcoin, leaves people wondering. It has a reputation of being highly speculative.  But there are many versions of cryptocurrencies that would work and many possible versions of blockchains –the digital ledger which records transactions.

The advantages of cryptocurrencies over banking are that your money is held in a digital wallet and easily accessed; credit card payments are quicker and less expensive; you remain relatively anonymous (pseudonymous) with minimal information shared; you are the master of your money, there are no banks or boundaries to the flow of money.

If it all seems to be too good to be true, there are hurdles. One is just who controls access to your digital money. If banks control applications that access cryptocurrency wallets, we can expect business as usual. Cultural anthropologist Natalie Smolenski explains:

“This is the crux of blockchain’s catch-22: the public won’t use blockchains without user-friendly applications. But user-friendly applications often achieve that ease through centralization, which replicates the conditions of control that blockchains sought to circumvent (Scientific American, January, 2018)”

A new era would bring public control of cryptocurrencies. As Bitcoins have demonstrated, we already have a blockchain that is open-source and maintained by a global network of volunteer core developers. We have a network of individually-owned computers that process the indelible transactions –a process called “bitcoin mining.”

“Creating digital identities whose existence is independent from governments and corporations is the next grand challenge that blockchains both pose and could help solve,” says Smolenski.

With the dawn of the era of a “Universal New Deal,” cryptocurrencies could redistribute wealth and put money in the hands of those who will spend it.

Advertisements

The future of blockchain mining in B.C.

Blockchain mines look nothing like copper mines. They are banks of computer that toil away at solving complex calculations. Blockchain is the digital ledger used by many cryptocurrencies such as Bitcoin. Because the computers generate heat, they could be used to warm the greenhouses to grow the tonnes of marijuana needed for Canada’s budding legal market.

  image: coindesk.com

Blockchain is a revolutionary way of tracking secure, indelible transactions of any sort not just cryptocurrencies. Experts say it will revolutionize businesses in every field. Manav Gupta, chief technology officer of IBM Cloud Canada, is enthusiastic:

“We view blockchain as having the potential to change all of technological interactions the same way that the internet changed communication in the nineties (Walrus magazine, Jan/Feb, 2018).”

Where the value of Bitcoins is highly speculative, the value of blockchain is solid. Unfortunately, that doesn’t stop blockchain from being caught up in a goldrush mentality. Irrational investors are madly rushing into some dodgy speculations. Convinced that anything with “blockchain” in the title is “the next big thing,” investors threw $2 billion into blockchain startups worldwide. One company saw shares rise 394 per cent by just adding “blockchain” to its name.

Blockchain can be used to secure any vital records such as medical files, business deals, legal agreements, tracing shipping containers, farm-to-market food security; even professional and academic records which are now open to fraud. Walmart and Nestle have already invested in blockchain.

Bitcoin miners loan their computers to solve the complex blockchain calculations required for each transaction. Miners are paid in Bitcoins in return. Drew Taylor has a Bitcoin mining operation in his Montreal house. He earns about $3,000 a month and pays additional costs of $200 for electricity. The computers generate a lot of heat. “But essentially it is free heat for at least one room,” he told CBC Radio’s The Current.

The amount of power used for each Bitcoin transaction is shocking high. Alex de Vries monitors the power used in Bitcoin mining. Just one transaction uses as much energy as the average B.C. household uses in 13 days. That’s 300 kilowatt-hours for each transaction. Researchers are looking for ways to reduce the power consumption.

The best place to locate Bitcoin mines is in places where the electricity is cheap. Montreal has relatively cheap hydroelectricity. Iceland has a large mine because the majority of their energy comes from geothermal and steam. Unfortunately, not all cheap energy is as green. China and India do most of the mining where the electricity is cheap but produced by burning dirty coal.

Once B.C.’s Site C dam is completed we will have lots of cheap, surplus electricity that could be put to use in blockchain mining.

Blockchain mining is comparable to copper mining because both use a lot of electricity. Highland Valley mine near Kamloops uses as much electricity as 60,000 homes, about twice what Kamloops uses.

An advantage of blockchain mining is that a secondary industry could use the waste heat. Marijuana greenhouses could use the computers as heaters so that not one kilowatt hour would be wasted. In addition, blockchain mines could be located near the dam to avoid the cost of transmitting electricity.

The digital mine would employ workers close to home in small towns in B.C. Instead of using our dam power to run LNG compressors, we could put people to work mining digital dollars and growing marijuana for Canadian’s burgeoning market.

Blockchain could improve food security

The future of cryptocurrencies such as the bitcoin might be unclear but the technology behind it is solid. Blockchain is the digital ledger where bitcoin transactions are kept. It’s transparent, secure and open for all to see.

    image: Realty Biz News

The origin of blockchain is mysterious. Some person, or group, with the anonymous name Satoshi Nakamoto is credited with inventing blockchain. Who this person is remains obscure.

Blockchain’s usefulness goes beyond cryptocurrencies. Its property of transparency could improve food security. Sylvain Charlebois, professor in food policy and distribution at Dalhousie University explains:

“Blockchain technology allows for users to look at all transactions simultaneously and in real time. In food, for example, a retailer would know with whom his supplier has dealt. Additionally, since transactions are not stored in any single location, the information is almost impossible to hack (Globe and Mail, December 13, 2017).”

If you are buying pork chops in a grocery store, for example, and wanted to know the complete history the animal before you buy, you could scan the QR code on the label and within seconds know the date of the animal’s birth, use of antibiotics, vaccinations, and where the animal lived. (QR codes are a type of bar code in the shape of a square.)

The Public Health Agency of Canada reported earlier this month that 21 people became sick after eating romaine lettuce. While PAHC knew what caused the illness (E. Coli 0157) they didn’t know where the lettuce came from. Tracing contaminants can be a matter of life and death.

“Every year, more than four million Canadians get food poisoning. In recent years 474 cases of [the deadly disease caused by E. Coli 0157] have been reported annually,” says foodqualitynews.com.

Big Food is considering blockchain as way of tracing contaminates. Wal-Mart sells 20 per cent of all food in the U.S. and tested blockchain compared to standard methods of tracing food. They traced the source of mangoes in one of their stores using the standard method and it took six days, 18 hours, and 26 minutes to trace the fruit back to its original farm. Using blockchain technology, it would take 2.2 seconds for anyone –consumers and suppliers alike- to find out anything they want. And it would prevent good food from being thrown out.

“During an outbreak of a food-related health scare, six days is an eternity,” says Prof Charlebois, “A company can save lives by acting quickly. Blockchain also allows specific products to be traced at any given time, which would help in the reduction of food waste. For instance, contaminated products can be traced easily and quickly, while safe foods would remain on the shelves and not in landfills.”

Blockchain won’t be implemented without the involvement with everyone along the food chain. The record will only be as good as the data entered. Giants like Wal-Mart can force supplier participation.

Governments could also force compliance. With the health of consumers at stake, regulated participation would make the records complete and useful.

Cryptocurrencies may be a fleeting gimmick to have investors part with their money but let’s not throw the blockchain out with the bitcoin.