Bitcoin: Evolution of Money and Beyond

Concept of Money

Barter system was provably inefficient in terms of portability, divisibility and mainly accountability. Money has its roots as an abstract form of accounting (Subjective Ledger Technology) used to facilitate a closed community trade goods and services inside their system.

Growing population and impractical methods to maintain subjective ledgers beyond a community lead to objective ledgers underpinning value to physical objects such as sea shells.

With time, we have seen emergence of standardised attributions of money especially to rare metals (universal ledgers) which comply physical limitations around the globe and made it easy for accountability, portability and divisibility.

However, with massive industrialisation driving humongous amounts of trade and commerce worldwide gave birth to a more powerful technology of fiat currency which is more portable, divisible and fungible aiding the problem of accounting. Further, 21st Century has seen the dawn of digital money as an abstract representation of physical fiat currency for online transactions.

Problems of Money (Need for Bitcoin)

Decoupled abstraction of fiat currency with the introduction of cash reserve ratios brought new financial troubles of fraud (counterfeiting, digital hacking) and unpredictability to the economy giving rise to inflationary economics.

Apart from these, some notable flaws in the current underlying economic frameworks are:

  • Delayed transaction settlements
  • Totalitarian accounting and Unpredictable money supply
  • Higher cost per transaction
  • Transaction reversibility and the origin of fraud
  • Double spending and digital security vulnerabilities
  • Fragmented currency networks

Bitcoin has been the definitive answer to these problems by building an alternate currency system which is more evolved and robust adopting a decentralised model with no central vulnerabilities to trust upon.

Solution Behind (Blockchain Technology)

While Bitcoin is the end solution, blockchain technology powering Bitcoin is the fascinating invention that made it possible with a combination of technical tools such as

  • P2P networking – for an efficient and open system
  • Proof-of-Work algorithm – to make the system more robust and secure with open competition
  • Cryptographical ownership – financial inclusion and impractical to break privacy
  • Transaction based ledger (UTXOs) – introducing immutability and solving double spending problem
  • Scripting capability – helping nodes to validate pseudonymous transactions and build complex transactions
  • Merkle Root mechanism – utilise the power of blockchain without hosting a full node (complete blockchain)

Beyond Money (Evolution of DApps Frameworks)

Blockchain has caught a serious attention lately by industry leaders impressed with the power to facilitate autonomous trade and smart contracts between two unknown parties without trust.

Continuous iteration and development of blockchain is very evident with four major evolutionary steps it took:

Iteration One (On Bitcoin blockchain)

Borrowing the advantages of immutability and data redundancy backed with network security, we have seen adoption of Bitcoin blockchain for storing critical data points of an application/ use case such as tracking real world assets.

Iteration Two (Forking Bitcoin blockchain)

While Bitcoin blockchain offers limited scope for building only complex financial transactions, a different iteration/fork of this blockchain has shown the possibility of building a completely turing complete scripting possibility on top of blockchain making it possible to write completely open decentralised server code for the first time.

Iteration Three (Codebase to bootstrap blockchains)

There have been multiple instances and specific requirements from enterprise communities for a more specialised advantage of blockchain with added privacy and accessibility management leading to a multiple open source code repositories which can help you kickstart your own public/private blockchains suitable for your applications.

Iteration Four (Blockchain as a Service model)

More rapid adoption and emergence of blockchain as a critical technology for open and secure systems for applications shared between multiple parties arises a definite learning curve for adoption. We are already seeing popular cloud services already embracing this technology stack labelled as ‘BaaS’ (Blockchain as a Service) offering a plug and play model for developing more personalised blockchains.

While Bitcoin is the first practically famous application of blockchain technology, we are yet to unleash a world with the core communication and accounting infrastructure built on blockchain.

Bitcoin replacing gold to be the new ‘Gold Standard’ of currency system

As a natural evolution of the technology for money, we are seeing the emergence of new breed of currencies backed by cryptography taking the place of fundamental units of economics. Bitcoin has been the pioneer of cryptocurrencies set to replace gold to be the new ‘Gold Standard’ of currency system.

Bitcoin has its own advantages differentiating it from all the present payment networks and monetary instruments. Talking about one such property, Bitcoin unlike gold is infinitely divisible with up to eight decimal places currently in use.

While breaking down the units to such a miniscule level may sound idiotic, unmanageable and hard to comprehend at a first glance, it is an important trait that enables the future of a extremely deflationary economics.

Matter starts to exhibit new behaviour at Nanoscale. Similarly, radically different businesses models spring up when you open up sub-micro payments with the flexibility to innovate without permission.

What difference will the divisibility of bitcoin bring? Let us explore:

Diversity of scale

Bitcoin network allows a wide spectrum of transaction sizes ranging from sub-micro payment streams (in satoshis) to super-macro monetary settlements (in millions of bitcoins). While there exists infinite variety of transactional use cases, the image below helps to familiarise with some of the examples to understand the scale of payments on bitcoin network.

Granular payments

With such an extended flexibility, it opens up the possibility of indulging in granular payments which could happen at a very high frequency with motivating new variety of transactions such as ‘performance-oriented-payments’, ‘pay-for-what-you-use’, ‘supply-chain-reimbursements’, ‘creative-royalties’ etc amongst others.

Easy Division (Precision)

Infinite divisibility enables us to make payments with infinite precision. Each individual participant of a production channel can be directly included in the payment transaction holding precise amounts unlike bulk settlements delaying payments and abused distributed margins.

Are we entering into finance without identity this 2017? – #bitcoin

Apparently, 2016 has been a very bright year for the #bitcoin ecosystem as the price started marketing the ideology more than the community.

The global economic environment has further fueled the topic giving a good stance on opening up the public mindset to the core financial policies that central banking has been built upon.

Meanwhile there have been multiple cybersecurity breaches floating in the news showcasing the compromising security architectures leading to privacy failures often. Adding to the vulnerabilities of the present systems, these corporate profiles have been churning big money out of data monetisation reducing the value of the content and identities around the world.

Read more about the recent investigation on Facebook by ProPublica.

On the other hand, we are able to observe a much robust and secure financial implementation of #bitcoin blockchain dealing with all these issues in a more sophisticated fashion.

While this is the case, we can portray an important underlying trend evolving among the corporate systems defining the future industries.

There has been an evolving trend visible in the businesses models clearly giving hope for a more robust and scalable systems for the future.

We can see the famous example of evolution in taxi services emerging out of enterprise models to open information sharing techo-corporate models (Uber/Ola) and now to a more decentralised autonomous solutions such as Arcade City. Imagine the next wave of self driving autonomous ride sharing vehicles.

To put E-commerce in this perspective, we have seen the DNA shift from a more centralised commerce hub (Amazon) to much decentral and distributed commerce (Ebay) and now entering into a much powerful open market systems such as OpenBazaar. How would an autonomous drone delivery system would look like?

Similar is the case of other industries.

What made this transition faster and much practically achievable now is the contribution of the missing piece of the framework (a trust machine – believed to be ‘blockchain’). Now that we have got the weapon to dissolve the corporate authority to code, we will witness see a much faster growth in this direction which could be easily adopted globally.

Growing industry for machine computing such as robotics, cognitive computing and sensor devices are pushing the adoption and dependency of humans on technology and project a much greater requirement for robust trustless frameworks and machine inclusion.

Blockchain technology has been able to provide answers to this growing requirement and been showcasing some promising solutions with the powerful smart contract mechanisms recently.

Interesting live example showcasing how technological solutions can eradicate bureaucratic systems is Tala (previously known as ‘Mkopo Rahisi’) the brainchild of Shivani Siroya, is a Kenyan mobile credit facilitating application providing a micro-finance opportunities and visibility to the aspiring micro-entrepreneurs with the system built on top of big data and behavioural psychology driving credit eligibility decisions and further credit issuance at an unfathomable speeds rather than traditional credit rating system on top of financial accounting procedures and identity regulations taking humongous time with limited coverage.

To give some taste of how the upcoming financial systems are going to look like, we already have some brilliant startups working in this spectrum.

These are some of the examples amongst others.

While 2016 was the year the blockchain technology achieved general acceptance, we hope 2017 will be the year of “Trust Leap” as suggested by Rachel Botsman in her TED-Talk bringing more practical applications of the technology.

Unocoin turns 3 with #bitcoin!

Yes. It has been three years since the inception of Unocoin and yet, it is still a baby set to establish a holistic platform for #bitcoin economy in the country.

Unocoin has turned 3 successfully this december accomplishing over 1,00,000 user signups and wishfully extends these celebrations to the users with 0% transaction fee lasting till the end of the year 2016. You can now avoid market volatility and risk associated with #bitcoin prices using Unocoin’s unique SIP module as per your capacity & appetite.

Also start downloading the brand new Android and iOS applications from the stores to buy, use & accept #bitcoin on the go now.

Onboarding about 1500 merchant services to accept #bitcoin as a payment method, Unocoin looks forward for a much steeper adoption curve in India along the coming year with a much stronger ecosystem for #bitcoin users. Over the counter merchants can immediately start accepting #bitcoin payments via the #UnocoinMerchant POS application released on both Android and iOS platforms.

Special thank you to all those who made this journey possible!

#bitcoin, the new digital Gold

There is a high concentration of Indian government on digital transformation lately. Indian Ministry is set to launch digital currency campaigns focused to increase general awareness upon digital payment mechanisms amongst youth. Trying to invert the ratio of cash transactions (currently 78% transactions are perceived to be happening via paper cash) into digital payments, it is poised to bring a high pressure on cyber security systems and cross platform currency transactions feasibility.

While digital payments are a transactional layer (communication) on top of fiat, #bitcoin on the other hand is the new digital gold with its own intrinsic value along with it’s own communication network with price discovery backed by the persistent global free market trade. Multiple developers and technocrats from different geographic establishments are currently working hard to develop cross platform digital payment networks on top of #bitcoin network. We see a whole new avenue of digital payment systems that can not only process payments but can take care of legal obligations and automated escrow services, further more complicated transaction designs yet unfathomable.

For sure #bitcoin is the logical next step in the evolution of money as suggested by some of the economists to fill gaps in regional connectivity of financial infrastructure. Great minds have already been interestingly directing household investments along with business portfolios into #bitcoin and major technology giants are noticed actively looking into building platforms on top or around this digital token mechanisms which does not fit into regular corporate structures.

Following the news recently, apart from great intolerance, the bold #DeMonetisation step by Modi government has given a big push to the general public awareness on the Indian monetary system, uncovering the essence of true intrinsic value of paper currency or fiat money. This has led to a more conscious decision making patterns for investments among the public and eventually resulted in a growing volumes of fiat conversions into #bitcoin in the month of November followed by December (Unocoin has notified about Rs 250M worth trade volumes on their platform alone). Resonating with the demand, we are again seeing growing number of merchant adoption for the #cryptocurrency in India (Unocoin has reportedly served for 1500 merchant account activations).

With such a huge potential for investments and trading, #bitcoin has been less volatile for the past two quarters. For about six months, the price of #bitcoin stands atop of $500 globally trying to end the year on a positive note.

In the midst of legal obscurities and tax confusions pertaining to #bitcoin, Unocoin has been the strong player in the Indian market dealing with the ambiguities and providing a clarity by building a strong alternative ecosystem for the next generation currency & payment systems.

Start downloading Unocoin iOS or Android application on your smartphones to buy, use and accept #bitcoin in India or head to (Unocoin YouTube channel provides tutorials to use the platform).

Find Sathvik Vishwanath, CEO & Co-Founder of Unocoin, India’s leading #bitcoin company talk about “Why #bitcoin is transformative?” from an Indian context on YouTube.