starkmonster wrote: ↑Thu Apr 16, 2020 12:31 pm
[TLTR I know, I know] But it will only take a few minutes of your life, and by the end of it you will understand why the tech propeller heads that have really studied this stuff believe its impact on our lives will be even more far reaching than that of the introduction of the internet.
Still here? Well done, let's go!
I think that to understand this tech everyone needs to stop thinking about the current financial system and trying to map projects in the blockchain space to existing parts of the financial ecosystem.
This technology will supersede that system rather than compete against it, much like the internet did to the media industry. It's like going back to 1995 and asking, who will be the BBC or MTV of the internet? It's not going to work like that, what will emerge will be something that we will all have trouble imagining right now (if we could imagine it, then we will likely be the new Mark Zuckerburg or Larry Page ten years from now).
To understand this future and the coming wave of innovation you have to understand three key concepts, and how they will change in a post blockchain world.
You only need to understand this on a macro level and don't need to understand how this technology works under the hood, in the same way you don't need to understand HTTP/HTML/CSS/JavaScript to use the web, or an internal combustion engine to drive a car.
For the time being, just humour me and pretend that you believe me when I tell you it does work. Okay so here we go:
Pre-Blockchain world
1. Existing electronic payment systems don't scale down (anything below around $1 isn't financially viable at scale).
2. All electronic payments between two non-trusting parties require an intermediate legal entity (middleman) trusted by both parties.
3. On all but the most high value trades (houses, cars, leases etc) the contract between buyer and seller is implicit (verbal/expected) rather than explicit (binding contract).
Post-Blockchain world
1. Electronic payments can be made for any value, however small, even a tiny fraction of a cent e.g. ($0.000001)
2. All electronic payments are direct between two non-trusting parties without the need for a trusted intermediary (middleman)
3. All electronic transactions will be explicit and contain a contract (contracts could be simple A->B or immensely complicated)
For the time being, don't concern yourself with the details of how this technology is made possible. All you need to know is that it is possible and it is secure.
Side note: If you are interested in how this is possible, go on YouTube and look for "the double spend problem" and "byzantine general problem", these are mathematical problems that for a very long time remained unsolved. Bitcoin (borrowing established concepts from cryptography and Game Theory) was the first ever proposed solution to that mathematical problem that was proven to work at scale and with significant incentive for bad actors to locate vulnerabilities.
Okay, so we now have a proposal about some new properties of electronic payments that will emerge in a "post-blockchain" world. So what? What impact will those properties have?
In know, I know, this is a long post, hang in there, it will be worth it!
The main impacts it will have are:
1.
Most businesses that take the role of trusted intermediaries will become surplus to requirements
2.
Most businesses that hold monopolies will become commoditised
3. Consumers will become accustomed to the idea of "micro payment streams" rather than paying fixed amounts
Okay those are quite abstract concepts, how about a concrete example???
As I'm posting this on the internet, I can assume you are all internet users so let's use this as an example and look at how the delivery of internet data could be revolutionised.
Most of you reading this post will be accessing the internet in one of the following ways:
1. Your fixed line home/office connection
2. Via a mobile data plan
3. Via the Wi-Fi network of a third party to which you have access
Now imagine this scenario in a post-blockchain world:
Your internet enabled device has a settings panel where you can choose what type of internet you want, this could be infinitely configurable, but lets keep it simple, it has these options:
1. Get me the best connection I can get that costs less than $0.02 per minute
2. Get me the fastest connection available with the price capped at $0.10 per MB
3. Get me the cheapest connection available
4. Get me a connection that is above "security level 3"
Then behind the scenes, your internet enabled device will scan all available networks, find the best deal that matches your requirements and connect to that.
Before the connection, both parties, your device and the network will sign an electronic contract that states the terms of the connection (price, speed, latency, security etc).
Your device has an electronic wallet, and while you are using the chosen network it will be making a continuous series of micro payments to the network provider (could be by the minute, MB or second).
If the network doesn't deliver the connection it promised at any point (speed/price/latency), it has broken the contract and the micro-payment for those packets of data won't be released.
If a better deal becomes available from another network your device will silently switch to that network, without you knowing anything, you won't know which network is providing your internet, neither will you care.
All you need to know is that your device is always getting you the best deal based on your requirements at all times.
But it doesn't stop there
With this system, if you wish you can also become a provider as well as a consumer in the same way that in some places homes with solar power can sell surplus supply back to the grid.
You could have extra settings on your internet enabled device (or home/office computer network) that allow you to offer surplus bandwidth for sale on the network, and for credit to flow back into your wallet. E.g.
1. Place bandwidth on the network market place between 7pm and 7am for $0.10 per MB (outside of office hours)
2. Place my phone on the network anytime it's not active
3. Place my home connection on the network anytime it's consuming less than 3Mbps
You see these payment streams in many cases will flow both ways, it will create two way economies with very little waste. ISP's and internet providers become nothing more than commodities bidding for work in an open market place, the brand will no longer mean anything.
That's an interesting example, but it's only ISP's
I was in a brainstorming session at a blockchain conference in London last year, and the challenge was to go through the list of the 10 largest industries in the UK and propose how there would be the potential for massive disruption provided the following were true:
1. Fast, frequent and free micro-payments were possible
2. Payments were direct and didn't require a trusted intermediary
3. All payments contained a contract that was trusted by both parties
Long story short, there wasn't a single industry where this technology wouldn't be hugely disruptive.
Yes but couldn't we do that now without blockchain?
Yes, technically we could. Economically we couldn't, as soon as the payment size increases or trusted intermediaries need to be involved or off network agreements (terms of service, contracts etc) need to be present the level of friction and increase in transaction cost makes unfeasible.
In more complex blockchain "smart contracts" third parties can be used, especially where it needs to be independently verified that a specific event has indeed taken place or specific set of conditions are arisen, we call these "oracles" and in reality they will most often be external API's that are effectively commoditised and get a small commission as part of the contract.
They could answer questions like:
1. Is today's date 16/4/2020
2. Is the current GBP->USD exchange rate above $1.2533
3. Is this vehicle travelling less than 60 mph
In the future the internet as we know it today, won't be known as
the internet, it will be known as
the internet of information and what we have looked at above will be known as the
internet of value. There will also be
other internets, but let's save that for another day....