#Blockchain heralds a new railway age?

Last week, I suggested that digital currencies might be the new portals. Reflecting further on my work with Brave New Coin*, it also occurs to me that the growth of Blockchain resembles the railway mania of 19th century Britain. Hopefully it won’t end in the same over-investment and asset bubble – but there are some interesting similarities.

“Railway Mania” – Image sourced from Business Pundit

First, the railways displaced the canal system, just as canals overtook roads as the key means of transportation. For these purposes, if we compare roads to the Internet, and canals to the World Wide Web, then Blockchain is the next generation of the “information superhighway”. Blockchain and distributed ledger technology, along with crypto-currencies, digital assets and smart contracts are powering the “new” internet – the Internet of Things, the Internet of Money, the Internet of Value Exchange.

Second, and in a similar vein, the Internet was designed primarily as a means of communication. Then, the web enabled e-commerce, content distribution and on-line interaction. Now, Blockchain technology is supporting a range of new activities – such as tokenizing tangible and intangible assets; securing personal data and financial accounts; decentralizing networks, exchanges and registries; and validating immutable transaction data.

Third, the proliferation of public, private and permissioned Blockchains is prompting the development of technical standards for the design, architecture, security and taxonomy associated with this technology – as railway systems have implemented common safety and operating standards. There is also the need for interoperability between Blockchains, just as railway networks have had to address different track gauges among competing operators.

Of course, on the downside, railway mania led to heightened speculation, failed or over-optimistic prospectuses, and duplication of competing networks as developers sought to secure the most lucrative routes.

And let’s not overlook the issue of forking, which Blockchains are having to address in order to meet the demand for increased processing capacity and/or to iron out potential design weaknesses. In some ways this resembles the creation of railway branch lines – in some cases, these subsidiary routes would become more important than their parent main lines; and may even have outlived them, following the Beeching restructures in the 1960s.

Finally, for all the benefits that Blockchain undoubtedly holds, challenges remain with “on-ramp / off-ramp” access – a bit like disconnected transport interchanges or uncoordinated train timetables.

*Note: the opinions expressed here are my own, and do not represent the views of Brave New Coin or their clients.

Next week: Long live experts….

 

 

 

Digital currencies are the new portals

Once described as “The Internet of Money”, Bitcoin is much, much more: it’s software, it’s a store of value, and increasingly it’s being recognised as a legal form of payment. In its wake have come a multitude of other crypto-currencies, alt. coins, digital tokens and programmable assets. Each of them built on one or other blockchain protocol or using distributed ledger technology (DLT), and each of them seeking to serve a specific use case or to drive disruption in traditional markets and business models.

Based on my work with Brave New Coin (a market data vendor for these new asset classes)*, I was recently asked my opinion on all these “Initial Coin Offerings” (ICOs – although I prefer to call them Token Issuance Programs). My response was that digital currencies are becoming the new portals.

How?

First, they are building dedicated communities of interest. Many of them are designed for a specific audience or for a particular purpose. They are leveraging network effects to drive engagement and participation, such as MobileGo, for the online games community.

Second, they are becoming “destinations” in their own right, such as Steem for publishing, or CalcFlow, a market place for mathematical models. They are acting as repositories and resources for specialist content. They are also curating this content, and enabling users to contribute to the community, and get rewarded for doing so.

Third, they are building platforms that support e-commerce and other online transactions, such as SPHRE’s Air solution, and its XID token. In Air’s case, they are creating a paradigm shift in digital ID management: in contrast to most social media and old-school portals that monetize our personal data, our content and our search behaviour through the sale of advertising, Air is giving individuals more power over the use of their own data.

Finally, token issuance programs are creating new registries and alternative distribution networks for a range of tangible and intangible assets, such as MyBit for energy, and bitNatura, for natural capital.

So, as well as supporting P2P payments, facilitating cross-border remittances and enabling the purchase of electrical goods in Japan, Bitcoin and the like are becoming key tools in the new digital economy, just as AOL, CompuServe, Lycos, Yahoo!, Google and MSN were once the main public gateways to the internet.

*Note: the opinions expressed here are my own, and do not represent the views of Brave New Coin or their clients.

Next week: #Blockchain heralds a new railway age?