Today I heard a story about a man trying to buy a lamp. The man in question is Robert Wiecko, the Chief Operating Officer (COO) of Dash.
Dash is a cryptocurrency payments platform. By the end of the fourth quarter of 2018 they had more than:
- 4,800 merchants and services accepting Dash
- 90 exchanges and brokers listing the DASH crypto
- $1.4 billion in payment volume
- 42,500 daily active addresses, and
- a median of 9,300 transaction per day.
That’s a serious, viable business right there. And it’s solely based on the use of their native DASH crypto in the global economy. Wiecko made note that they were seeing a significant uptake in Dash usage in Venezuela, where the economy has collapsed.
Instead of people using truckloads of cash to pay for something like a loaf of bread, instead they can use the Dash crypto with their mobile devices and at the merchants accepting Dash.
It’s digital cash, but better. And we’re seeing this kind of phenomenon in areas where there is major financial and economic instability. Venezuela is one place, but we know regions like Turkey, Ukraine and Uganda are also seeing fast growth in the adoption of crypto as a means for everyday payments.
Of course, you don’t hear about Dash on CNN, MSNBC or Bloomberg, do you? No, they don’t know enough about crypto to really inform people what’s actually happening in this space.
And that’s why when you talk about ‘crypto’ to the uninformed mainstream, many are instantly dismissive of these ‘magic beans’, ‘tulips’ or ‘pretend internet money’. But boy are they wrong, so very, very wrong.
And here’s why.
Why everyone is wrong about crypto
As I said at the top, I heard Wiecko telling his story about a lamp. He was trying to buy a lamp from Australia. For the payment method, he had to use an IBAN number.
IBAN stands for International Bank Account Number. The idea is so that payments can be made across borders with a universally accepted standard. Now Robert ran into some problems with his payment for his lamp.
You see while IBAN is an internationally recognised payment system, it’s not used by everyone. And it’s not used in Australia. Instead Australia typically uses SWIFT/BIC codes for international payments.
A SWIFT code is a code that is recognised by the Society for Worldwide Interbank Financial Telecommunication. The BIC code (Bank Identifier Code) is a code that identifies a bank, and BIC is controlled by SWIFT.
Still with us? Probably not. That’s because the process of sending payments overseas using the ‘traditional’ financial system is bloody hard, complex and convoluted.
As such it seems that Robert’s payment for his lamp ended up somewhere in the complex maze of traditional international payments. And when Robert checked up on his delivery, and the merchant said they were waiting for payment, and Robert said he’d sent it two weeks ago, things got tricky.
Robert ended up calling his bank to ask where his money was. They didn’t know. To add insult to injury they said they could investigate the missing payment, but it would cost him €80 to do so!
This is exactly why crypto exists today. People think the financial system we’re so used to works wonderfully and is to be trusted. But it’s broken. It’s complex, it’s inefficient, and it’s not to be trusted.
Now if the merchant selling lamps accepted Dash for example, things would have been so much easier. Robert could pay using Dash on checkout and the DASH tokens would have instantly cleared into the merchant’s account. The whole process for payment across the world would have taken one second.
You might think that volatile crypto ‘prices’ make this an inefficient method of payment. After all, if that lamp costs $12 (which is about 0.1 DASH) one day and then $12 (maybe 0.08 DASH) the next day, then that’s not a great idea is it?
But try telling that to someone in Venezuela who’s seeing 2,000,000% inflation. Compared to money there, crypto is positively stable!
However, the idea of using crypto for payments and remittance is just one of the many functions that it can achieve. And to pigeonhole all ‘crypto’ into one broad basket is frankly ignorant.
You see different ‘crypto’ have different functions. Some are used to secure and stabilise the very network on which they exist. Some are used as a payment and data transfer network. For example, IOTA is a project that’s working on the ‘machine economy’. That means they’re developing a network (not a blockchain) that will enable ‘internet of things’ devices to talk to each other and make instant micropayments and data transfers.
That’s no easy feat, but their IOTA crypto is a fundamental part of the whole network.
Or then there’s something like ZCash. Now ZCash is a fork of bitcoin, so in one sense it’s similar in that it can be used as a payment method, or a store of value. But ZCash also has a ‘shielding’ function that enables someone to send a payment to someone else and there be no way anyone else can see it.
On their blockchain, Bob could make a payment to Alice of 10 ZEC tokens. In bitcoin, you would see a transaction on the blockchain from wallet B to wallet A and you’d know exactly how much was sent and the public wallet addresses.
With ZCash you would see that a transaction took place on the blockchain. But you wouldn’t know who sent it, who received it or for how much that transaction was worth. The whole thing is shielded away from prying eyes.
Furthermore, ZCash and others like ZCoin are developing what’s known as ‘zero-knowledge proofs’. These get highly technical and they’re by no means a finished development yet. But the aim is that zero-knowledge proofs will enable you to prove an outcome without revealing any identifiable information.
For example, using zero-knowledge proofs I would be able to prove I’m me, with personal identification documents like my passport or drivers licence, but would never actually have to reveal that information to the user who needs to know that information — zero-knowledge proofs prove the outcome, without revealing the information.
Another example would be proving someone is over 18 to enter a nightclub without ever having to reveal their identity documents.
Think about that. Using zero-knowledge proofs to set up a new bank account, or share trading account to satisfy the bank’s ‘know your client’ (KYC) and ‘anti-money laundering’ (AML) requirements, but never having to hand over your sensitive private information.
This is what crypto can deliver in the coming years. That would be a revolution in privacy and data protection for the masses. In fact, zero knowledge proofs could end up being the biggest advancement in crypto since bitcoin’s genesis block.
But of course, you don’t hear about that in the mainstream coverage of crypto, do you?
And this is the point. When you take the time to understand all the developments and potential of crypto you start to see the huge opportunity rise before you. You understand there’s more to it than bitcoin — there’s a whole ecosystem of industry-changing breakthroughs coming. And those that are invested in it now, early stage, are the ones who stand to benefit most from this crypto revolution.