It's the little things that matter with blockchain and crypto
Choose any seismic shift in national or global culture. Then think about its origins - where it started; how it started; what fueled its growth. With a little research and some reflective thinking, you will discover that your chosen seismic shift probably happened gradually. That is the way it works.
Very few cultural shifts happen quickly. They take years and years. And when the culture finally reaches the stage of understanding the shift has occurred, the consequences of that shift are already fully entrenched. That is the way things are going with cryptocurrency and blockchain right now.
The news media tends to focus on the big things relating to blockchain and crypto. Facebook releasing its Libra and Calibra white papers is a perfect example. The media was all but breathless in the hours and days immediately following the release, with everyone and his uncle predicting what will happen when Facebook finally gets into the cryptocurrency business.
If Facebook ever does launch Libra - and that now appears to be in question - the results will most certainly be felt throughout the cryptocurrency space. But Libra is not going to turn cryptocurrency completely on its head overnight. Libra will become just another touch point on a timeline of little things that all add up to creating a long-term cultural shift.
The internet shows the way
If you are not really clear on the idea of a lot of little things adding up to a big seismic shift, there are plenty of examples to look to. The internet is one of them. Those of us old enough to remember daily life in the 1970s and 80s also remember a time when the public internet did not exist. Today we would not even think of going about our business without access to it.
Before there was a public internet, people communicated by making phone calls, sending letters, and actually talking face-to-face. Consumers went shopping at brick-and-mortar stores and used telephone books to find local businesses. Restaurant and movie reviews were in the newspaper; television was broadcast over the air.
How did we get from the no-internet 1980s to where we are today? Gradually. The internet itself began as a U.S. defense initiative in the 1950s. By the time it became a public thing in the early 1990s, the internet consisted mainly of local bulletin boards that people accessed with dial-up modems.
Dial-up internet access eventually gave way to DSL and cable access. They eventually gave way to the high-speed options we are familiar with today. Along the way, bulletin boards were replaced by websites. Personal websites gave way to business websites, which eventually led to cloud computing and social media.
The point is that the internet did not suddenly appear over night with all of the capabilities it possesses today. What we now know as the internet has been in development for 30+ years.
Both blockchain and cryptocurrency are developing the same way. The two technologies are barely a decade old at this point. Yes, they have come a long way in that time. Yet blockchain and crypto still have a long way to go. We haven't even begun to tap into their full potential.
Examples of the little things
We speak often of worldwide cryptocurrency adoption. The crypto purists among us envision a day when there is no such thing as fiat. They look to a future when economics are dominated by digital tokens and assets capable of leveling the playing field between the haves and have-nots.
Will the world ever reach such a point? No one knows. But if it does, mass adoption will likely be the result of a lot of little things that gradually introduce more and more people to the crypto concept. We are already seeing some examples.
Social change in South Korea
Cryptocurrency in South Korea is a mixed bag. Crypto itself is not illegal, but certain kinds of activities related to it are. For example, you cannot launch a new ICO in South Korea without encountering stiff regulatory resistance. Yet at the same time, the South Korean government encourages local municipalities to issue their own stablecoins to promote local commerce.
In Seoul, Busan and Incheon, local leaders think they have come up with a way to combine stablecoin distribution with social justice initiatives in order to make their cities better. They are thinking about handing out localized tokens to citizens who use their fledgling bike-sharing programs.
All three cities want to encourage bike sharing as a means of taking more cars off the street. It doesn't hurt that South Korea has one of the lowest cycling rates in the world. Just 2% of South Korea's urban residents use bicycles as a daily form of commuting.
Leaders believe they can boost those numbers by offering some sort of incentive. If that is the case, why not give South Koreans something they are already enthusiastic about? Give them digital tokens they can use with local merchants and you have a way to incentivize them to use bike-sharing programs.
Seoul is considering issuing what they call the S-Coin token to encourage bike riders. That token could be used to pay for limited things like local taxes and road tax bills. The tokens could be redeemed for routine health check-ups as well.
Tackling fraud in the fashion world
Handing out tokens to bike riders in South Korea is a little thing that could eventually contribute to something pretty big. Meanwhile, MasterCard recently announced a new initiative to help combat fraud in the fashion world. They have joined forces with a company specializing in blockchain tracking in order to keep an eye on garments as they make their way through the supply chain.
By utilizing a blockchain tracking system, MasterCard and its partners will be able to tell consumers the origins of the clothing they buy. Consumers will allegedly be able to see the entire history of a chosen garment simply by following its blockchain trail.
MasterCard is marketing this initiative as a way to give consumers more information about product origin. Yet industry insiders say it is really about fraud prevention. The fashion world is rife with knockoffs that undermine the reputation and value of genuine designer products. It is believed that the blockchain program is designed to expose fraud where it occurs, thus reducing the total volume of knockoffs in the marketplace.
According to CoinDesk, counterfeit goods cost the fashion industry more than $320 billion in 2017. That is a lot of money to be recouped using a system that allows every participant in the supply chain to track the origin of suspect goods. A distributor can check manufacturing origin. The wholesaler can check distribution channels while the retailer can find out where the wholesaler got the goods. The consumer can ultimately see the entire history.
More fair taxation in the U.S.
Little things in cryptocurrency and blockchain are not necessarily limited to the production. Sometimes they deal with taxation, as is the case with a new bill just introduced to the U.S. Congress. The bill seeks to put cryptocurrencies on the same plane as foreign currencies when it comes to de minimis tax exemptions.
As things currently stand, U.S. consumers can exchange one cryptocurrency for another at will. But those exchanges must all be reported for tax purposes. If any profit is made in an exchange, it is taxed as capital gains.
Exchanges between multiple foreign currencies are different. As long as currency trades are below a certain value, traders do not have to report them. That means they also do not pay taxes on the profits derived from those transactions. The law allows this because traders are exchanging assets of like kind and similar value.
If the bill passes it would effectively end double taxation on crypto assets. Cryptocurrency traders would only be taxed on their total profits in a single year, and only if those profits reached a certain threshold. The new tax plan would put cryptocurrency in the same general neighborhood as Forex trading and traditional securities like stocks, bonds, etc.
It all adds up
None of the little things mentioned in this post are earth-shattering. They are all important developments for sure, but not one of them would individually cause a major shift in the blockchain or cryptocurrency sectors. All three combined will have made a contribution to how cryptocurrency and blockchain move forward.
The point of this is to say that all of these little things add up. We can see it already. Cryptocurrency was nothing like it is today when Bitcoin first launched in 2009. Back then, people were selling coins by the thousands just to buy pizza. Today, a single bitcoin could buy you 1,000 pizzas.
The future of blockchain and cryptocurrency will be determined not by big announcements like Facebook's Libra project. It will be determined by all of the little things that add up to shape how the world views technology and economics.
If you would like to stay abreast of where the future is headed, become a consumer of blockchain and cryptocurrency news. Pay attention to all the little developments that seem insignificant. That is where the real change is happening.