An editorial written by the Dentacoin Foundation, Maastricht
The past months have seen nations declare Bitcoin as a legal method of payment – Japan, Russia and other prominent world countries who have previously doubted the reliability of this new monetary system. This indicates that the stock market of nations could be substituting cryptocurrencies for the stock certificate. Several companies have also held their initial coin offerings (ICOs) as an alternative to IPOs for funding. ICO defines a means which cryptocurrency ventures raise funds, by passing the capital-raising process of venture capitalists. These ICOs are not masquerading as companies; they are digital platforms with management rights of the digital asset and venture funds. With cryptocurrencies already hitting the mainstream, blockchain is projected to replicate the action of the internet to media, by disrupting the financial system.
A Changing Financial System
The certainty is high, and like parallels of e-commerce and traditional stores, media and the internet, blockchains will replace the monetary system. Blockchain technology is adopting a limited network of cryptocurrencies, and this is because blockchain is strongest when everyone is using the same system and at the same time enables more people to be on the same platform. The Bitcoin app is the simple description of how the new, decentralized and automated financial system will work – the app’s code satisfies both economic and regulatory demands. It doesn’t require a regulator to monitor financial compliance; the monetary policy is automated and allows the money supply to be without limits. Another instance is Dentacoin an Ethereum-based blockchain platform regulated by smart contracts that supports the dental community by building and creating solutions devoted to improving dental care quality worldwide with cryptocurrency value behind it. There have been arguments over the blockchain inflexibility, and people still trust its economic value because of its resilience to attack and non-compliance to government policies. Complexities in the current financial system create a lot of risks, as there are lots of barriers to engaging in transactions. Bitcoin is simpler, facilitates ease in doing financial operations and opens the system up to everyone having access to the internet.
Can it find Success where Banks have failed?
The banking industry has acknowledged the emergence of blockchain and its threat to their operations. Banks are houses of storage, and they expend much in infrastructure and operations within a centralized system that is constantly at risk and being regulated by the government. Blockchain disrupts the bank’s centralized nature and allows transparency in its transactions without the need of a middle man or a physical operational system. Everex, a blockchain startup is using technology to provide microcredit products and services. The poorest people in the world do not have access to savings, because of rural marginalization or cost of the physical structure. 65% of people across Asia, sub-Saharan Africa do not have a savings system and are therefore at higher risk of spending, and remaining poor. Technology is without boundaries, and more poor Adults in Africa and the poorest places in the world has access to the internet – 6 in every ten adults in Africa has access to the cyberspace. The implication of this is that cryptocurrencies can outdo banks inadequacies. The products and services that the traditional bank offers demand a lot of physical presence and documentation, which the blockchain provides alternatives. Blockchain offers a more efficient and stress-free lending system; by analyzing spending and loan access, in contrast with the traditional bank that pressure in collateral and payback means.
Emergence of ICOs
The amount of money raised from ICOs in 2017, is $1.2 billion and surpasses early stage of venture capitalist funding for start-ups. ICOs are a way for start-ups to raise money from users, which allows them to own equal shares by buying stakes and receipt of digital currency. ICO is a new business model leveraging the blockchain technology, allowing equity ownership in startups. The leverage of ICOs is that supporters of the project are guaranteed of returns from their investment. ICOs permits who ever has a cryptocurrency to join the technology investment initiative, which no longer requires the financial aid of venture capitalist but a validation and trust of the blockchain system.
The current financial system is inefficient because of its paper based processes and its vulnerability to attacks and system failures. The cryptocurrency has the capacity of dealing in all financial operations without an individual presence. Human history is being revolutionized since people can do business based on a network consensus aided by cryptographic codes. Most firms in the financial industry are investing in blockchain solutions. This is because of the potential savings; Capgemini reported $16 billion could be saved up by consumers from blockchain annually. The future of the cryptocurrency is exciting because the current generation places a high value on technology and the digital space.
There’s no denying that blockchain and cryptocurrency are changing the financial landscape, various sectors are starting to think of it not only as an exciting possibility but a revolution.