You can talk about Cryptokitties anything, but this game is already doing something today, which none of the commercial blockchains can still do: namely, it exchanges one valuable item, a crypto kitten, on the other – an Ethereum token. Cryptokotenok – this is probably a pretty stupid value, but it is enough for the people who understand it.
More importantly, the contract and all the details of the transaction, including the very process of exchanging the product, are located on the blockchain of the Ethereum. The hypothesis of my colleagues from the company EY – is that in fact, such a transaction with a minimal presence of regulators and the presence of feedback is the ultimate goal of many corporate blockchains. And for this purpose, we are still very far away.
Now, corporate blockchain is still mostly working as distributed databases with the ability to confirm these data. Often they solve very specific tasks, such as tracing the origin of the product. This is a good start, but if we are not careful, it can lead us to a dead end – we will create a fantastic, protected from hackers database, and its owners as financial intermediaries around the world will replace central banks.
We believe that for the full disclosure of the potential of the detachment, enterprises must use the full power of tokenization, and, ultimately, the attractiveness of public networks. 2018 should be the year when the future of this technology will be spoken in this way.
The basis of this not cheap future will be the concept of tokenization: the representation of the company’s products and services as digital tokens on the blockchain, not just as information bytes but as value carriers.
Digital tokens can replace anything from pharmaceuticals to phones and music. Regardless of their specific purpose, they should be subject to property rights, they must be assigned a certain value. If you have a wholesale lot on 1000 mobile phones, each of which costs 1000 US dollars, and this lot is currently being brought to you by sea from abroad, then the blockchain should reflect this picture: there you have 1000 tokens total worth $ 1 million.
When a product is manufactured, delivered or sold, the tokens on the blockchain can change the owner: 1,000 phone tokens are exchanged for 1 million US dollar tokens. Not just bitcoin or Ethereum, namely the dollar. Well, or the euro against the yen, for that matter.
Postpone for a later discussion about the value of a cryptocurrency in comparison with traditional money. The simple truth is that financial directors of enterprises will want to receive in exchange for their products the same currency in which they pay costs and keep long-term assets. And this means that the paper money will have to be tokenized and written down for the same blockchain that all the products and services.
Exactly the same: the presence of two types of tokens on one blockchain is critically important – it allows you to conduct convenient and secure transactions without the involvement of unnecessary intermediaries. The transfer of data between the blockchain is also a great idea, but it can not beat the simplicity and power of direct transactions.
Central banks are already experimenting with the tokenization of their currencies, but they are doing it in closed or proprietary blockchain run by themselves. Not a bad start, but the next logical step is to create a regulatory framework that would allow replacing traditional money with tokens in any public or commercial detachment.
As soon as a commercial blockchain that is capable of uniting tokens appears, many of the distinctive features of specialized blockchain will only be additional functions of this genuinely universal blockchain. It will be easy to finance the trade because if you trust that there are actually phones somewhere, whose tokens are on a $ 1000 blockbuster, you can lend money on the security of tokens.
Similarly, customs declarations, tax calculations and the history of the origin of goods will be easily obtained by examining the transaction history of the tokens of this blockchain. Do not have to establish separate systems for trade finance, payment systems, and product tracking.
The movement towards this type of future will begin in 2018, and it will have two distinct stages.
The first will be the development of what we call the economic blockchain of the full cycle, where products and services are labeled and exchanged by digital smart contracts for currency tokens. Such an organization is likely to start its way from the field of sales, procurement, and logistics, and then it will grow by providing additional services, for example, trade finance.
The second stage of this will be the gradual separation of public detachments as the preferred ecosystem for such transactions. We believe that decentralized public blockchain is the only way that companies can truly digitize their goods and services while preserving their full interoperability. No company wants a single mediator to become the foundation on which to build a trillion-dollar trade: this entity will have too much power, it will become a natural monopoly, protected by powerful network effects.
The second stage will depend on how fast the tools for ensuring transaction confidentiality, for example, zero-knowledge proof algorithms (and associated zk-snarks and zk-starks), will evolve. For now, transaction scalability and data confidentiality will not allow competing enterprises to place their strategic transactions on the blockchain, in the belief that they will be all right. But such risks will begin to disappear in 2018.
In addition to confidentiality, there are still a lot of problems associated with how to make public blockchain an acceptable tool for the commercial industry. The problems, in particular, concern how to ensure compliance with anti-money laundering laws and associated rules “know your customer”.
But we believe that these are solvable problems, moreover, they can be solved without the need for centralization. We are already testing various ideas on how to audit phage money tokens on a detached unit so that the company, for example, can comply with laws against financial fraud.
In the end, the temptation to move to blockchain will win. This is the only environment where companies can be sure that they will treat fairly, transparently, and openly the game field. In 2018, the foundation of this future will be laid, and we will see pilot versions of such concepts on public blockchain around the world.