In my lifetime I can remember calling friends on a rotary telephone; starting all over if you mis-dialed a digit. Waiting for each swipe of the dialer to return back to its resting spot before you could dial the next digit. I remember a lot of technological first. The first home video game,first home computer, first and second style floppy disk, first home fax machines,first copy machines, first cellular phones: cable television, video recorders, VCRs, DVD, Flash drives, and the list goes on.
In a way, the face and pace of new technology has become,….,”no big deal.” We’ve come to expect and even irritated if technology doesn’t keep up with what we demand. Having to use your first generation smart-phone because of a broken new iPhone X or Galaxy S9 feels like being forced to use a desktop computer with a dial up 56k modem.
Enter cryptocurrency and blockchain technology. Invented way back in 2009 by someone who knew better than to use their own name and risk being a target. The mysterious Satoshi Nakamoto figured out that the INTERNET could be used as a giant cash register.
a machine used in places of business for regulating money transactions with customers. It typically has a compartmental drawer for cash, and it totals, displays, and records the amount of each sale.
(I would add in addition to the definition above:(a store of value) Technically, cash registers store cash.)
Basically,cryptocurrency is a giant cash register. Take Bitcoin for example. There are thousands of computers around the world running the Bitcoin software today. Each verifying encrypted transactions written as blocks of text,numbered and known as blockchain to a one and only copy of the ledger. Even if you turned off the power to half of the world, the computers on the other half will continue to run and verify transactions. In essence, that’s it!
Idiosyncrasies of function such as maximum supply of coins or cost of transactions are but a few different attributes sparking the fires that are new and different types of cryptocurrency and blockchain projects. New applications are forcing developers to tweak existing cryptocurrencies into mutants of there parent blockchains. This continues to drive innovation, drawing billions of dollars in speculative investments. One of those idiosyncrasies is that some cryptocurrencies have evolved to allow custom sets of rules to determine if transactions succeed or not. These are called “smart-contracts”.
So how will it change the world? A hypothetical example will demonstrate. Let’s say a company manufactures a circuit board for a new cell phone. Each circuit board requires 300 different electrical components from three different suppliers, one located in China,one in Korea and one in Hong Kong. Lets assume we manage our supply inventory with software. When parts for our circuit board run low, manual orders are initiated. These new orders require that employees interact with suppliers with some form of communication and documentation. The ensuing order to re-stock components may require employees that speak each language and payments be conveyed with international bank transfers subject to currency exchange rates and further documentation. These services are costly and slow. Errors with,communication, ordering,shipping and payment discrepancy are but a few things that can go wrong and add both complexity to re-stocking including but not limited to additional delay and cost.
A Cryptocurrency Blockchain Solution (CBS) could work as follows in a supply chain management scenario:
A hired software developer creates a smart contract on the EOS network to interact with both the manufacturer’s and supplier’s current inventory and production management softwares. Now, an inventory of 500 microchips will trigger an instant deposit, of any agreed upon cryptocurrency, for the full amount of the calculated transaction held in escrow by the smart-contract on the EOS blockchain. The price per Microchip either fixed or variable as agreed upon by buy and seller and programmed into the smart-contract. The smart-contract releases the deposit of 10% to the supplier and a work release is generated to start production inside the suppliers production environment. The quantity of replacement microchips is programmed as a variable based on the circuit board manufacturer’s production requirements, so the number of microchips being ordered and replaced may be different every time. The corresponding smart-contract and affiliated transactions are recorded on the blockchain and serve as a proof of: order, deposit,proof of ability to pay in full and proof of final payment once the contract is satisfied. The new microchips are produced under strict guidelines with data of production process and quality assurances linked to the smart contract as small payments and or affiliated smart contract transactions. The hypothetical smart contract described here has also been programmed to trigger an automated process to generate customs forms and initiate shipping pickup and delivery by a third party. The scanned pick up of microchips fulfills a key hurdle of the contract and and releases a larger agreed upon percentage of escrowed funds to the supplier automatically. Shipping is tracked from point A to point B and a successful delivery updates the state of the contract and releases final payment.
The one instance of a smart-contract and transactions were proof of order,quality of manufacturing,production and delivery monitoring and payment. Payments were immediate and inexpensive. Middle men such as banks and extra persons to manually track the process were eliminated. Data is searchable and readily available to assess expenditures and further analyze supply chain management.
This is only an example scratching the surface of blockchain and cryptocurrencies. Radio Frequency Identification (RFID) tags are now being incorporated into blockchain as yet another variant of this technology for a supply chain management application. The idea that cryptocurrencies and blockchain technology are just a fad is no longer valid. Blockchain and cryptocurrencies are already posturing to disrupt and change the way we bank, secure personal information,shop,vote and act.
Blockchain, the power to ensure freedom and enslave.