If your holiday was anything like mine, the topic of bitcoin came up a lot. The mysteriously founded digital currency sounds like something out of a Bourne movie, and its value surged dramatically in the final weeks of 2017. At its peak in mid-December, it reached a value of over $19,000 for a single coin. It seemed like everyone, from highly knowledgeable tech wonks to first-time investors, wanted to get in on the action.
Since then, the mania has calmed down a bit. The currency’s surge in value has largely abated at the same time that key names in the industry have begun to urge caution to overzealous investors.
If bitcoin really is the future, as true believers continue to insist, then perhaps the financial world is not quite ready for it.
Some investors have responded to bitcoin’s volatile market position and high price by exploring the benefits of other cryptocurrencies. Others, however, have taken a broader outlook on the recent success of such currencies. A growing number of companies and entrepreneurs are focusing on other possible uses of bitcoin’s underlying technology — blockchain, as it is known.
Blockchain involves enough algorithms and acronyms to give me a headache, but at its core is a pretty simple idea. Participants in a blockchain, sometimes known as “miners,” verify transactions by completing a math problem of variable difficulty. Once the transaction has been verified it is added as a “block” to the “chain,” creating a public, decentralized ledger that is permanent and unalterable. In this way, once a bitcoin has been added to the chain, it can never be used again. The blockchain has so far proven a secure way to limit a currency to a single use without mediation from a bank or other central authority.
Blockchain was invented for use with cryptocurrency, but it has already proven to have other applications. The idea of a transparent ledger of activity that can be viewed and added to by anyone is appealing to a lot of industries, from transportation to local government.
Some of the most exciting applications, especially to a company like X-Mode, are in the location field.
One location-centric application that is already being implemented is the way blockchain can help companies track assets while shipping. Traditionally, verification is required between multiple parties during the shipping process, leading to mountains of paperwork and logistical headaches. Using blockchain, a single, public ledger can be automatically updated as an asset makes its journey. Danish company Maersk, which handles over 15% of the world’s shipping traffic, completed a successful trial run of this application in early 2017 and have announced plans to further explore its uses within the industry.
Another even more exciting application is the idea of smart contracts. Like other applications of the technology, smart contracts take something that has traditionally required a centralized mediator and gives it a peer-to-peer facelift. In the case of smart contracts, the algorithms that are used to verify transactions in bitcoin are replaced with conditions that have to be met in order for a contract to be executed. If both parties meet these conditions, for example being in a specific location at a specific time, the contract will automatically be executed and assets will be transferred. The result? Both parties are happy, and no attorneys are necessary.
Before you get too excited about our lawyer-free future, it’s important to know that actual proof of location is trickier than it sounds. For one thing, the time it takes for miners to verify a block is highly impractical to a public that are used to getting GPS verification in less than a second. In addition, the problem of geospatial spoofing — a person or device claiming to be somewhere they aren’t — is difficult to eliminate. There are a lot of very smart people in the industry working on solving these problems, but until they do we may have to wait to see the full potential of blockchain for location verification.
In the wake of this winter’s bitcoin craze, it’s understandable to approach blockchain with a certain amount of skepticism. As more and more companies jump on the bandwagon, it is starting to look suspiciously like yet another tech bubble. The Long Island Iced Tea Company, who used to sell, you guessed it, tea, saw their stock soar 400% when they announced in late December that they were changing their name to Long Blockchain and pivoting to focus on the technology. In a similar move, UK gaming company Veltyco announced vague plans to pursue blockchain and saw their stock shoot up 20%. It seems that all a company has to do is say the words “blockchain” or “cryptocurrency” and investors will flock.
Despite this early hype, however, the possibilities offered by more fully-developed location technology on the blockchain are too tantalizing to ignore. Imagine a future in which self driving cars automatically start their journey once they have verified you are inside, subsequently triggering a transfer of bitcoins from your personal account. The early, utopian promise of the internet — a truly democratic, decentralized platform that makes life easier and safer — may very well be possible with the rise of blockchain.