Blockchain – How Entrepreneurs Can Use It To Grow Their Business
DILBERT © 2017 Scott Adams. Used By permission of ANDREWS MCMEEL SYNDICATION. All rights reserved.
With a rapidly expanding number of applications there has never been a better time to get involved with Blockchain.
The ways Blockchain can impact business seem endless!
But of course, no discussion of Blockchain is complete without discussing the No 1 application:
Begun in 2009 with Bitcoin and already a $200+ billion dollar industry, the blockchain wave of disruption and disintermediation is only getting started – think the Internet in the mid 90’s. Like the net back then, blockchain has broken free from the technical experts and is now rapidly and radically transforming the financial and business scene. With the CME Group recently announcing the launch of a Bitcoin Futures Market, raising the tantalizing prospect of a Bitcoin ETF for mainstream investors (and doubtless adding substantially to the Group’s $1 quadrillion in annual trading volumes), blockchain technology is unquestionably poised for greatness.
What is the difference between Bitcoin and blockchain?
Blockchain can be thought of as the operating system with Bitcoin being an application that runs on the Blockchain Operating System.
Bitcoin is a cryptocurrency, created and held electronically on your PC or in a virtual wallet. No one controls it or sees it – it is decentralized so no person, institution (Goverment) or bank controls the currency.
This 2 min 42 seconds video is one of the most succinct explanations of the difference between Bitcoin and blockchain?
Making Money by Fixing Money
For an element so central to our daily lives, few people take the time to truly understand the nature of fiat money. If you’re not quite sure what “fiat” means, thanks for proving my point (and it means: any currency declared as legal tender by the state and, in almost all cases, issued without defined limit by a central bank).
Satoshi Nakamoto (the pseudonymous creator of Bitcoin) in discussing fiat money explains the predicament perfectly: “The root problem with conventional currency is all the trust that’s required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust.”
Bitcoin, the first and foremost cryptocurrency, was devised as an entirely new form of money; liberated from the controls of the state and issued by its own users (up to a defined maximum amount).
Replacing the World’s Most Powerful Industry… with 3000 Lines of Code
Previously alternative e-currencies have been attempted, but all had an Achilles heel – a central point of control vulnerable to attack. Like the BitTorrent protocol which replaced the centralized Napster service, Bitcoin is a decentralized network with no single points of failure. Instead of albums and movies, Bitcoin enables users to (more or less) directly exchange value, in a permissionless and censorship-resistant manner.
While Satoshi’s invention took a couple of years to be appreciated outside of cypherpunk circles, its subsequent spread has proven far more rapid than that of the internet. Net adoption was in turn greatly accelerated by (and dependent upon) the printing press – and so on, going back to clay tablets and cave paintings. Better communication technology greatly accelerates the proliferation of new technology.
The internet of money…
In Bitcoin, the underlying digital communications technology and payment network are so close as to be nearly indistinguishable. Bitcoin is money designed for the information age; money as information, with no central authorities and no real-world infrastructure required, besides computer networks and equipment. For this reason, Andreas Antonopoulos, a fellow in high demand on the conference circuit for his ability to explain blockchain in a clear and compelling fashion, has famously termed Bitcoin “the internet of money.” This apt analogy implies that blockchain technology a natural fit for anyone whose livelihood depends upon the net, such as bloggers, online entrepreneurs and… you?
Personally I feel some form of cryptocurrency will eventually be mainstream – but with a new currency being launched it seems every day, not all of them can expect to survive. (Just like the dot-com bubble burst circ 2001)
Blockchain without Bitcoin?
A blockchain is essentially a shared database.
Historical entries within this database are permanent and inalterable. New data is entered by encapsulating it within a fresh block, a data structure with set parameters. Each new block must contain its own unique proof of content, plus the proof derived from the previous block. In this way, blocks are linked together in an inviolable chain. This chain is freely shared among network participants.
As for Bitcoin, it’s the record of financial transactions contained within this continually-updating ledger. While one could use a blockchain for other types of information – cat pictures or medical records, say – generally speaking a traditional database controlled by a company is a far cheaper and faster solution.
So why use a blockchain for money then? This goes back to Bitcoin’s decentralized nature. As no one controls Bitcoin, nobody can alter or freeze your account, or block you from sending transactions. In an era where trust in governments and central banking is steadily eroding, this gives Bitcoin the unique status of digital gold; a secure and trustless store of value which can be transmitted around the world in minutes.
Simply put, money is the best known use for blockchains right now.
However, this doesn’t mean that blockchain can’t be extended to a variety of other applications, much as the internet was initially designed for military purposes but has since extended into most other areas of human endeavor.
Quick examples of other applications for Blockchain include:
=> Land title / ownership records
=> Voting ID’s
=> Birth certificates
=> Health / Safety Inspections
=> Court records
How are People Earning Money from Blockchain Technology Today
If Bitcoin and blockchain sounds complex and confusing, that’s because it is! A great deal of study is required to understand it. However, as with driving a car, it’s not necessary to understand all the underlying systems in depth to achieve a useful, practical result. It’s quite possible to gain a good working knowledge of this technology, enough to greatly assist almost any type of online business, without having to study the technical intricacies.
Here are some examples of how you can leverage blockchain technology to your maximum advantage:
Blockchain – Blogging and Writing
If you write a blog then adding a Bitcoin (or other cryptocurrency) address is a simple enough way to attract donations. However, as only a tiny percentage of the world population is currently using cryptocurrency, this is unlikely to generate much revenue. The exception is if you cater to an audience of crypto enthusiasts. For the record, the core crypto demographic is composed of young to middle-aged men, interested in finance and technology. Generally speaking, you’ll have to provide useful technical information and analysis to build a supportive audience. Content which speaks to business, political and cultural issues within the space may also do well. If this industry interests you, one of the best ways to learn more about it while earning crypto is to write for many of the crypto news sites; they’re hiring!
A far more accessible way for those new to crypto monetize their writing is to host it on a blockchain-based social media platform, such as Steem. Steem is an altcoin (in other words; a coin not based on the more familiar Bitcoin blockchain) specifically designed as a platform for content creators to interact with their audience. Steem presents several interesting opportunities for content creators.
If your posts prove popular with the Steem community – travel diaries and Steem or blockchain-related content seems to perform reliably well – you’ll be receive a number of STEEM tokens proportional to community upvotes. These tokens may then be converted to the (crypto)currency of your choice. Steem is user-friendly, trendy and requires hardly any specialized knowledge to use effectively – your ability to create popular content is the key element.
Keep in mind that payments are delayed by a week, divided equally between STEEM and Steem Power (essentially a voting multiplier) and subject to as much as a 25% cut… To get a taste for how Steem works, check out the trending posts on Steem.com – remember to mentally adjust the expected payouts for a more accurate estimate of the immediate monetary rewards.
“Money never sleeps” is a well-known quote among traders but, in the case of stocks, bonds and even Forex markets, it’s less than literally true. Cryptocurrency is truly an insomniac’s dream however; available 24/7/365. Nor is crypto inhibited by geographic boundaries; trading can be conducted from any location with an internet connection. Particularly for those trading in addition to working or studying, this unmatched availability makes cryptocurrency the perfect trading instrument.
Although converting fiat currency into Bitcoin via an exchange generally requires a verification process which takes days to weeks, it’s possible to buy Bitcoin directly from other users to get into the market very quickly. From there it becomes possible to trade between Bitcoin and the hundreds of altcoins and ICO tokens on all-crypto exchanges, which generally require no verification beyond an email. This means that anyone with the financial means can get started in crypto trading without much effort.
A final factor which makes crypto trading so attractive; these markets are renowned for volatility. While Bitcoin’s volatility has been falling with time, its price remains very changeable. While this raises certain difficulties for merchants, it’s exactly what traders need to make big profits (and big losses!) in a short time.
The phenomenal growth of the cryptocurrency industry has resulted in demand for experienced blockchain programmers far outstripping supply. It was estimated by William Mougayar, author of “The Business Blockchain,” that in mid-2016 there were only roughly 5,000 blockchain-proficient developers. While the figure is likely somewhat higher by late-2017, it pales into insignificance compared to the nearly 20 million worldwide software developers. Given the expanding value of the crypto sector – fast approaching a quarter trillion dollars – and the explosion of competing projects, skilled blockchain developers will get to pick and choose among generous job offers.
Well-known Bitcoin developer and industry pundit, Jimmy Song, aims to address this skills shortage with his Programming Blockchain course. Naturally, it’s quite possible to learn all the essentials through diligent self-study, as all necessary learning resources are freely available online (a good starting point might be Andreas’ free book, Mastering Bitcoin). Interaction and consultation with other developers will accelerate the learning process. Many developers are open to sharing their knowledge as they enjoy discussing the technical aspects of their projects.
Although blockchain developers are in the greatest demand, there’s plenty of demand in the space for other talents, such as graphic design, website development, marketing experts, content creators, legal professionals, etc.
Blockchain – The Future
For a taste of the rapidly-approaching blockchain singularity and how it may change the face of internet revenue generation check out Yalls.org. Although a little way off from fully operational (pending a forthcoming major upgrade to the Bitcoin blockchain), it offers a glimpse of how Lightning Network (LN) micropayments will enable instant access to content. Instead of the manual payment option which arises when you click “continue reading,” imagine a wallet-integrated browser which automatically and instantly handles payment for content access.
Note that this model, once fully implemented, is highly flexible and can be applied to any kind of time or event-based payments.
Fancy getting instant, reliable payments with each hit on your site?
How about being paid by the second instead of monthly?
Soon this and more will be possible…
The Lightning Network is a secondary layer specialized for small, fast payments, with additional privacy benefits. Although LN transactions occur in a separate layer, they’re inextricably linked to the underlying blockchain in order for security purposes… While this subject is technically dense, the phenomenal opportunities LNs presents for entrepreneurs (including real world applications, such as Point of Sales) make it a worthy subject of study.
Cryptocurrency – How Do I get Started?
I get asked this a lot.
Several people even thought you had to but a whole Bitcoin in order to use Bitcoin.
You don’t need to buy a whole coin.
Most exchanges will allow you to specify a value in Fiat Currency (USD / BDP / EURO) that you wish to buy.
When getting started an exchange such as Coinbase is a good place to start
(Using the above link, once you buy or sell $100 (£74) of digital currency or more, both of us will get $10 (£7) of free bitcoin)
More than anyone else COINBASE have made it easy to buy Bitcoin, Ethereum and Litecoin.
I don’t want to complicate the subject right now, but please remember Coinbase are an exchange and they control your Private Key – so if you plan to own a lot of cryptocurrency I would recomend you store your currency in your own hardware wallet. My recomendation for that is: Trezor Hardware Wallet
There is a little bit of a learning curve with these options, but no more complicated that it was way back in say 1995 trying to set up an email account.
Further Blockchain / Bitcoin Resources
1) A curated list of educational resources on developer Jameson Lopp’s excellent Bitcoin Resources page.
2) Add Bitcoin to your payment options with Stripe. Stripe charges just 0.8% per successful Bitcoin transaction, capped at $5. There are no other fees. Add digital cryptocurrency payment options for your business with just a few lines of code.
The Future For Blockchain and Cryptocurrency.
I have been following the Blockchain and Cryptocurrency debate for sometime and if anything some of the estimates of the impact are understated. For example Deutsche Bank’s chief investment officer recently siad: Blockchain Opportunities Are ‘Huge’ and that roughly 10% of the global gross domestic product (GDP) would be tracked or otherwise “regulated” by a blockchain by 2027. I think that is an underestimate.
As for Cryptocurrency I’m sure it’s use will become more widespread.
That is not to say all cryptocurrencies will survive – my hunch is that most will not. No matter what the hype and get rich schemes say – don’t invest more than you can afford to lose!
The biggest issue with Bitcoin!
It has been fun learning and understanding how Bitcoin works.
However, I am not entirely convinced of its long term sustainability.
Many will disagree, but as someone said recently, Google was not the first search engine – so don’t rule out a better and improved cryptocurrency taking over from Bitcoin.
To highlight just a few issues:
a) Most people are holding Bitcoin as an investment – rather than using it as a currency. I am one of the exceptions, I have actually used Bitcoin to pay writers for writing articles and doing research.
b) Confirmation of transactions is not instantaneous and there is a limit to the number of tranactions possible per second.
c) Additionally, there is a very good chance that some Goverments will issue a cryptocurrency. It will be interesting to see how this plays out in relation to FIAT currencies.
The best thing you can do is keep yourselve informed and not get too carried away.
When we see the value of our cryptocurrency ‘assets’ rising it is easy to think we are clever, but the truth is that for most of us, it has more to do with luck than being clever.
To that end here are just a few links that I recommend you check out.
Bitcoin Nuclear Winter (a must read)
The real creator of Bitcoin (Talk about a Contrarian View!)
And for another contrarian view – check this article