Blockchain marches on with or without coins

25 August, 2019

Every cryptocurrency on the market, including Bitcoin, owes its existence to blockchain. In fact, it was the original Bitcoin project that birthed blockchain. The two are so inexorably intertwined that it is reasonable to say cryptocurrency would not exist without blockchain.

You could say that cryptocurrency needs blockchain. The opposite is not true. Blockchain does not need cryptocurrency; it doesn't need coins of any kind. Thanks to a groundbreaking project known as Ethereum, blockchain was able to move beyond the cryptocurrency space when the project launched in 2015.

Today, there is evidence all around us that blockchain marches on with or without coins. There are tons of projects now underway utilizing blockchain for purposes other than financial transactions. There are even some projects that integrate blockchain with financial operations yet still do not utilize a cryptocurrency token. It is all very fascinating.

This post will discuss three ways in which blockchain is marching on without the need for coins. Two of the three projects will undoubtedly incorporate coins at some point, but any digital currencies they eventually spawn will be the result of developing the projects, not the reason for those projects.

Credit history in Sierra Leone

Sierra Leone is a West African nation with a population of just over 7 million. Thanks to decades of civil war prior to the turn-of-the-century, Sierra Leone's economy is not doing well. The country is considered rather poor compared to Western standards. A major component in changing the country's economic fortunes is giving people access to credit.

Unfortunately, as much as 75% of the general population is completely unbanked. When people do need to borrow money, they go to small, local banks that do business only within that local area. Banks across the country do not share information or resources. As such, proving one's credit history in hopes of borrowing is nearly impossible.

In the hope of changing that, a San Francisco nonprofit has launched a brand-new program in conjunction with Sierra Leone's government to implement a blockchain platform for tracking credit history. The platform will rely on data collected by the government to create credit records that can then be accessed by both consumers and banks. Biometric information - think fingerprints, etc. - will be used to link information to the right consumers and provide access.

Integrating with banks

A fully operational system will allow banks to integrate the platform as well. This should create a nationwide credit history network that would make it easier for people to borrow no matter where they live at any particular time. Like we do in the West, people could move from one city to the next and still have access to credit.

Consumers looking to access credit would obtain a digital wallet. Any money borrowed would be transferred to that wallet and then spent from there. Repayments would be made via the wallet as well. The system will create a blockchain ledger with a complete history of the individual's credit activity. Over years of borrowing, a consumer will be steadily building a digital record that can be tracked and accessed anywhere in the country.

As great as the plan is, there is one big problem that could potentially derail the entire project: lack of internet access. Very few people in Sierra Leone can access the internet at the current time. In fact, some estimates suggest that fewer than 15% of the population can get online. The infrastructure is just not there.

To solve that problem, the project includes plans to build a series of wi-fi hotspots throughout the country. The hotspots will be designed around mobile access and smartphones.

Sierra Leone's government says they expect the blockchain platform to be up and running before the end of 2019. Whether or not the wi-fi network will be operational remains to be seen. But if all goes as planned, consumers in Sierra Leone will have better access to credit by the time 2020 arrives.

Swiss bank takes cryptocurrency plunge

Next up is a private Swiss bank that first dipped its toe in the blockchain pool a few years ago. Like a lot of other financial institutions in Europe, the bank saw enough potential in blockchain to get involved but not enough to radically transform its business model. That was then. This is now.

Maerki Baumann now says they want to be the premier banking institution for blockchain companies in Switzerland. Bank officials claim they have more than 400 new clients clamoring for blockchain and cryptocurrency services, and they intend to provide those services.

Motivating Maerki Baumann is an erosion of its margins in a highly competitive industry. Zurich is known for its large number of financial institutions catering to individuals and businesses looking for a less restrictive banking environment. So even with $8.2 billion in assets under management, the bank needs new ways of attracting business to keep its margins on par. Bank officials believe blockchain is the way to go.

Clients coming to them

Maerki Baumann CEO Stephen Zwahlen explained in a recent media interview why the bank is suddenly interested in going all-in on blockchain and cryptocurrency. He explained that the traditional model in Zurich requires banks to chase after each and every client. But when it comes to blockchain and crypto, clients are coming to the bank on their own.

Any business with more than 400 people requesting a particular product or service would be crazy not to respond. Maerki Baumann executives know that, and they are not crazy. They have put a plan in place to transform the bank's business model so that it has a greater focus on, and the resources to handle, all sorts of blockchain and crypto services.

The bank hopes to have working relationships established with cryptocurrency specialists by early 2020. With those relationships in place, they expect to begin rolling out storage services, trading platforms, advisory and asset management services, and clearing and settlement capabilities.

The bank will not actually take digital assets onto its own books. Instead, it will use its vast resources to help facilitate transactions between cryptocurrency users. They will also help investors with digital asset management and planning.

Securing elections in the U.S.

The third item on our list is more of a concept than actual working project. It comes from blockchain advocate and fringe U.S. presidential candidate Andrew Yang. He promises that, if elected, he will implement a blockchain voting platform across the entire United States. Yang says that such a platform would guarantee open access voting with complete security.

His idea is included in this post only because Yang is not the first one to have thought of this. In fact, a blockchain voting system of sorts is already in place in Moscow. There, city government has set up an experimental platform that allows residents to voice their opinions on all sorts of public matters. Moscow intends to use the platform to facilitate local elections later in 2019.

Yang's idea is similar in some respects but different in others. He proposes a nationwide blockchain voting system that will allow U.S. voters to participate in elections using their smartphones. Blockchain technology would be implemented for the purposes of maintaining election system integrity.

Possible with current technology

Yang insists that the technology needed to implement his idea already exists. He feels it is possible to get a blockchain voting system up and running very quickly. That may be true from a technical standpoint, but not from a political one. A U.S. president simply does not have the power to unilaterally do what Yang proposes.

Elections in the U.S. are controlled at the state level. That is true even of federal elections. So implementing a nationwide voting system - whether you use blockchain are not - would require a complete overhaul of state and federal law. Even if Yang won two terms as president, the legislative overhaul would probably not be complete before he left office.

At any rate, the blockchain voting idea did not originate with Yang. It has already been thought about in numerous places. Moreover, it is being implemented slowly but surely. It is very possible that a number of Eastern European countries will implement blockchain voting long before the U.S. even begins entertaining the idea.

Technology with vast potential

The three items discussed in this post provide clear evidence that blockchain is a technology with vast potential. What began as a way to facilitate a digital monetary system has become a platform for what seems like limitless applications. Any software application or platform that can be implemented using smart contracts and a blockchain ledger is ripe for the technology.

Today it is consumer credit histories and online voting. Tomorrow it might be a system for combating human trafficking. Who knows what blockchain will be used to facilitate 20, 30, or even 50 years from now? One thing we know for sure is that blockchain does not need coins.

Bitcoin might need blockchain to survive, but blockchain does not need Bitcoin. That is neither good nor bad. It just is. Blockchain has taken on a life of its own; one that is already heads and shoulders above mere monetary transactions. Where it goes from here is anyone's guess.