Serhan Calba
@serhancalba
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Ekim 2017 tarihinde katıldı
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The programmable scarcity came from the fact that there was only ever going to be 21 million Bitcoin produced. Each Bitcoin is divisible by 100 million so that’s 21 million multiplied by 100 million Satoshis (a Satoshi is to Bitcoin what pence is to the pound or cents are to the Euro). But it’s still a fixed amount of Bitcoin. Bitcoin was also coming into the system at a very specific pace based on a predefined formula, so there was no massive influx of Bitcoin into the system for any reason, unlike fiat currency via QE. It wasn’t owned by anyone or by any government. Bitcoin was mined and recorded on the network and, once the transaction was verified, all the nodes in the network were updated, making it very hard to hack. It wasn’t possible to undo a transaction or reverse a transaction; everything was recorded on the Bitcoin blockchain permanently.
The GFC did a huge amount of damage to the global economy but it also decimated that trust both in Central Banks who issue fiat currency and the governments who authorise it.
Bitcoin, the first cryptocurrency, stepped into the void left by these events. Bitcoin was impervious to inflation because scarcity was programmable through software, leaving price growth to become a function of adoption. While supply follows specific rules, demand is always a function of adoption.
Bitcoin was impervious to inflation because scarcity was programmable through software.
The flexibility and programmability of the Ethereum blockchain (and others like it) are creating an ecosystem where developers can build decentralised applications (DApps) and financial products such as flash loans, utilising smart contracts to execute code on the Ethereum blockchain. Unlike traditional apps, DApps run on a peer-to-peer network of computers (nodes) rather than on centralised servers. This decentralised nature brings several of the advantages previously mentioned. As a technology, DApps have been a game-changer in fintech but we are still just scratching the surface of possible applications.
From a technology standpoint, as posited by the Innovator’s Dilemma, blockchain, DLTs, smart contracts and DApps may appear to take a technological step back in that they offer capabilities that are already delivered off-chain.
Blockchain solutions: One of the main risks of this capability is an invoice being sold twice to two different funders. Of course, the debtor will only pay the invoice once, leaving the other funder out of pocket. In a future where invoices will be issued on a blockchain, each one of them will be a unique item (a NFT that can’t be tampered with). Hence, it will only be possible for James to sell an invoice once. An entire ecosystem of companies in a specific sector or supply chain may decide to join forces and have all their invoices issued on a blockchain with mechanisms to incentivise participation and discourage bad behaviour. Entire countries could mandate a full switch to blockchain to issue and record invoices and the benefit could be huge. In Europe the invoice financing market is approximately 2 trillion Euros*. Even a 1 per cent improvement in interest rates due to this form of risk mitigation could yield a benefit worth 20 billion Euros!
it’s only the innovators or early adopters that can be bothered with new tech or capabilities. Only when it’s ‘crossed the chasm’ and has become either much more functional or accessible does the mass market get involved and it becomes ubiquitous*.
It’s all about friction and removing as much friction as possible from the experience of accessing a product, service or capability. The same is true for receivable financing and how it has collided with fintech to create a far better, faster product with far less friction or hassle when trying to use it as a solution.