In an increasingly convenient world, frictionless economies are becoming more and more prevalent, powered by emerging technologies.
Since transitioning from an industrial age to an information age, those companies that have succeeded in creating frictionless commerce are those who have reaped the benefits.
Most recently, we’ve seen UBER and Airbnb create platforms for consumers that eliminates the friction of multiple middlemen.
Calling for a taxi no longer requires you to search for the local taxi number, make the call, agree on meeting time and location, search for your credit card and cash, fumble several coins as you pay your driver and your driver tries to give you back change.
Checking-in at a hotel lobby doesn’t exist when you book a room with Airbnb. The key for your room is in the mailbox, and checking-out is as simple as returning the key back to that same mailbox. Hotel tycoons have recently made checking-out of hotel rooms more convenient, and will no doubt soon transition to a business model where consumers no longer need to “check-in” at the front desk either.
UBER and Airbnb are not only creating frictionless platforms, but also peer-to-peer economies. Which is why I believe cryptocurrencies, along with blockchain (the underlying technology) will be a very present reality as the economy continues to evolve.
At its very core, blockchain is simply a platform used to digitize, track, and securely exchange value. In theory, anything can be digitized and put onto a blockchain. On the blockchain, you can SELECTIVELY reveal specific information, cryptographically confirmed PROOFS, so anything that is “on” the blockchain, in theory, is true and factual. Why this is important in creating peer-to-peer economies is because blockchain provides a shared reality; the databases are available for all (relevant) parties in the transaction to view, validate, (and potentially edit) the information “on” the blockchain (under certain guidelines/proofs outlined in the blockchain platform). Think of it as a shared Google Document with your friends, who are all working on the same project. Everyone can see the changes made by other parties, but only relevant parties who have specific access to the document can view, validate, and edit the document (public blockchains are public for everyone to view). Edits made will not necessarily be permanent until all parties can confirm and accept the new records, while Google itself always stores a historical dataset of past versions. The exchange and recording of information, in theory, is substantially more secure through a blockchain.
Crpyotuccrency is then a digital asset/money that is proofed and exchanged on a blockchain platform.
Cryptocurrencies have the huge potential of creating frictionless commerce. Without the need for a middleman (escrow), a peer-to-peer system of transactions can be created on a blockchain platform because the asset is directly exchanged between the two transactional partners, much like how UBER provides a platform for a driver with a passenger, and how Airbnb provides the platform for homeowners with renters. In the old age, people handed a small business owner physical cash for goods & services. In the modern age, I can send digital cash by contacting a middleman (Visa, Mastercard, Paypal), who then contacts my bank, who transfers a few digits on a computer screen to be transferred to the person X.
In the future age, a frictionless economy will be partially built on peer-to-peer transactions. And so if you truly understand blockchain, you’ll understand why some big institutions, global bankers, and governments want to control and maintain the progress of blockchain innovation in their terms, rather than allow blockchain to further create peer-to-peer economies.
Less than two decades ago, many people did not believe in the internet. Now the internet runs the world. It’s passive. It’s in the background. In a way, I would be disheartened to see blockchain face the same fate—sitting in the background. There is just too much at stake and I think we need to start discussing the opportunities of this technology rather than discussing the implications of Bitcoin and whether or not it was/is a scam. The potential for disruption is so immense that when I hear people talk about how bad of an investment Bitcoin is, I get a little frustrated, and instead discuss blockchain and cryptocurrencies. Whether or not Bitcoin gains traction or is a bubble is almost inconsequential, because the future is still going to be built on a technology that creates frictionless economies by providing security and trust in transactions.