Bitcoin and Blockchain Article Review

https://www.cnbc.com/2019/02/13/jp-morgan-is-rolling-out-the-first-us-bank-backed-cryptocurrency-to-transform-payments--.html

Use of JPM Cryptocurrency represents one of the first real-world applications of Cryptocurrency backed by the Blockchain technology implemented by a major financial institution. One of the main benefits of the JMP Cryptocurrency described by the article in an immediate settlement of the funds between JPM customers as opposed to relying on the traditional “Wire Transfer” process that might take days and sometimes weeks to settle.

There are couple of questions to ask here is the “Wire Transfer” process a real problem and is the JPM Cryptocurrency a real solution. The answer to both questions is quite nuanced. “Wire Transfer” settlement between parties is certainly a real problem in the international trade. Having said that it is largely due to the antiquated systems used by the Banks. The reason this system has not changed in a long while is due to the fact that “Wire Transfer” is a standard process between most of the banks that are part of the SWIFT banking system.

Changing SWIFT system to use Cryptocurrency would be extremely complex. As such JPM Cryptocurrency is used only to settle transactions between JPM customers. Under those conditions “Wire Transfer” protocol is simply superfluous since money is transferred in the confines of a single bank. Since, “Wire Transfer” is superfluous between clients of the same bank so is Cryptocurrency. In this particular case use of Cryptocurrency is largely “hype”. It also contradicts the spirit of the Cryptocurrency since a single entity controls it.

Also, JMP description of the Bitcoin as “silly” and “fraud” appear to be driven by competitive nature of the unified Cryptocurrency to the traditional banking system

https://www.investopedia.com/terms/b/bitcoin.asp

Investopedia article is the review of the Bitcoin history, process and risks. It is still fairly complex for a lay person to understand. However, there is a specific portion of the article explaining how Bitcoin can be used by the regular stores in lieu of regular currency. Having said that it is unlikely to give enough confidence to a non-tech savvy business owner to give it a try.

The article also covers Coinbase Exchange where various Cryptocurrencies can be bought and sold. Coinbase Exchange is similar to the Commodities Market where after executing buying and selling transactions Cryptocurrencies can be converted to the traditional currency.

One of the most interesting portions of the article is the discussion of the identity of the Satoshi Nakamoto. It speculates that Satoshi Nakamoto is not a single person but rather a group of individuals covering many different disciplines such as Finance, Mathematics, Software Development, etc. It posits that invention of Bitcoin is a complex understanding and as it is the case with most inventions it is unlikely a work of a solitary genius, but rather decadelong trial and error process that usually builds on the work of others.

https://hbr.org/podcast/2017/06/blockchain-what-you-need-to-know

“Blockchain What You Need to Know” article follows an interview of the Karim Lakhani, Harvard Business School professor and the co-founder of the HBS Digital Initiative. In the article Karim first explains the nature of the blockchain technology, its components and the main actors. He explains the difference between public and private blockchain networks as well as specific applicability of each network to a particular use case.

Karim spent considerable time talking about a specific expect of the blockchain technology that is not often discussed. Most technologies in the broadest sense of the word can be divided between enabling and replacive. Blockchain can be classified as both. In the enabling portion of the blockchain applicability it guarantees trust and authenticity between widely distributed parties, either on the public or a private network. Replacive portion of the blockchain technology almost never discussed, but often implied. Karim names several industries whose sole purpose for being is to verify authenticity and confirming occurrence. In particular, Accounting industry in audit Audit component might find itself superfluous and replaced entirely by the private or a public leger that undergirds blockchain technology.

Another component of the blockchain technology value chain is an ability to tie the programmable logic to the specific events. Karim describes a use case where funds for goods and services are released based on the delivery truck reaching a defined destination. Under normal circumstances distrusted between parties would require additional manual verification, where blockchain enabled verification eliminates this manual step entirely.