After a banner year for cryptocurrencies, which saw the value of bitcoin skyrocket from around A$1000 to over A$24,000 in just 12 months, cryptocurrencies are proving they are not just a passing fad, as some people thought. In fact, interest in cryptocurrencies is only growing, with some predicting that 1 in every 3 millennials will own cryptocurrencies by the end of 2018.
2018, therefore, promises to be a pivotal year for cryptocurrencies, as business and governments test the bounds of functionality and try to work out how cryptocurrency and blockchain technology, the digital, decentralised ledger or record keeper for all cryptocurrency transactions, can be used in everyday life and unique ways.
As Wired journalist Scott Rosenberg put it in his article ‘2018: The Year of the Cryptocurrency Craze’:
“Every successful new technology undergoes a Cambrian Era-style explosion of growth in which we try to use it for everything. Email, search, social networking—each passed through its ‘this will solve all our problems!’ phase before we figured out what its best applications and limitations were. With the Bitcoin bubble testing astronomical prices every day, cryptocurrencies and the blockchain technology that drives them are now taking their turn in this one-tech-fits-all role.”
This “Cambrian Explosion era” can be a little scary, with fears about currencies and applications failing, and unscrupulous speculators taking advantage of people’s lack of understanding about the technology. Facebook, for example, have just announced they will block any advertising promoting cryptocurrency products and services, due to companies not acting in good faith and selling initial coin offerings (ICOs) only to disappear later, with little recourse for the investor.
But the potential world-changing innovations made possible by the technology are also tremendously exciting, and there are signs that even those who seemed sceptical about it at first are now realising its potential. South Korea, for example, has recently reported that they are not planning to ban cryptocurrency trading, as many investors feared they would, which is good news for cryptocurrency believers.
So what exactly does 2018 hold for cryptocurrencies and blockchain technology? To give you an idea, here’s a look into some of the most interesting and exciting applications that are currently supporting businesses. Could one of these applications help your business succeed this year?
The University of New South Wales (UNSW), in partnership with Sydney startup LoyaltyX, is currently trialling a world-first cryptocurrency-based loyalty program for staff and students. The program, developed with backing from the NSW Government’s Boosting Business Innovation Program, allows customers to earn the cryptocurrency “Ether” in exchange for shopping at retailers, restaurants and cafes on campus, simply by scanning a barcode in their digital wallets.
“Consumers are tiring of big loyalty programs that devalue points balances over time to boost their profits,” said LoyaltyX chief design officer, Phillip Shelper. “Cryptocurrency democratises the program design, with the value of the currency increasing as demand increases. Our project also allows members to own cryptocurrency without having to invest their own money, thus de-risking the experience.”
The trial is so far proving a success, with 83 per cent of participants changing their spending in order to earn more cryptocurrency. This could be the first sign of a huge shake-up in the way traditional loyalty programs are run.
Last year, MIT offered their graduates the option to receive their diplomas on their smartphones via an app called Blockcerts Wallet. Powered by blockchain technology, it gives students a verifiable, secure version of their accreditation that they can have complete autonomy over, yet can easily be shared with employees and schools.
Businesses could take advantage of blockchain-powered digital credentials for a variety of uses, including issuing certificates or memberships, or providing tickets to obtain a service.
Taking the idea of digital credentials one step further is self-sovereign identities.
Several startups, such as uPort, Sovrin and Civic, are using the blockchain technology that underlies cryptocurrencies to try to solve the problem of traditional identities, which are inefficient and insecure, with the creation of private, secure and 100% user owned self-sovereign identities. Civic, for example, describes their Secure Identity Platform as a “digital wallet that bridges physical and cyber credentials”.
The applications of self-sovereign identities are incredibly wide-reaching, from being able to easily access social media accounts without requiring a login, to being able to access government services with a simple flash of the mobile phone. And that is not as far away as you might think – the Swiss city of Zug has just announced they are undergoing the world’s first live implementation of self-sovereign government-issued identities.
This is highly beneficial to businesses, too, allowing them to have secure, trustworthy transactions with their customers, while alleviating them of the burden of storing and managing valuable private information, which these days is so often under attack.
Energy and carbon trading
Cryptocurrencies can even be harnessed to combat climate change, as startups like CarbonX hope to prove. CarbonX is a peer-to-peer personal carbon trading company, which purchases carbon credits or invests in carbon reduction projects, and recasts the offsets as ERC20 tokens on an Ethereum-based blockchain. These tokens are then awarded to users who demonstrate responsible carbon consumption. Users can then trade their tokens for carbon-friendly goods and services.
Energy distribution is another way in which cryptocurrencies can help us to be more energy efficient. Grid+, for example, is an energy retailer who uses the Ethereum blockchain to buy and sell energy for your home in real-time. This has obvious economic benefits – you can buy it when it’s cheap and, if you have a solar panel, you can sell power at market rates. And because the transaction is powered by blockchain, it cuts out the traditional retailers (and the costs associated with dealing with them), while being secure, verifiable, and just about instantaneous.
Expect to see more advancements in this space, as tokenised carbon credits are transacted through smart contracts, and enterprises use blockchain technology to trade carbon emissions throughout their supply chains, in order to achieve carbon neutrality.
Digital publishers and advertisers are starting to use cryptocurrencies to find more effective ways to engage users and increase their relevance. Companies such as Basic Attention Token and SolidOpinion, for example, use cryptocurrencies to incentivise the generation of quality articles on the part of publishers, as well as interesting and respectful comments on the part of readers. Meanwhile, advertisers benefit by buying tokens, which are used to purchase valuable ad real estate on highly relevant content, in a pay-per-article model. This model ensures all participants are rewarded for their contributions, while the traceability of the cryptocurrency supplies advertisers and publishers with insightful audience data. This model has been adopted by several newspapers in the US, including The Los Angeles Times.
This incentivising model is being extended to augmented reality and virtual reality applications too; Fluffr, for example, are using tokens to reward users for engaging in events, marketing and advertising. This is an excellent example of how the functionality of cryptocurrencies can ultimately fuel the system, providing advantages beyond being a unit of value.
This is just a small glimpse into what is possible with cryptocurrencies and blockchain technology.
Want to learn more about how businesses are using cryptocurrencies to help them succeed? Find out what is happening in this space at this year’s CeBIT conference – register now.