Has blockchain found a use beyond crypto trading?

Issued on: 15/08/2022 – 04:20Changed: 15/08/2022 – 04:18

Blockchain technology underpins crypto and has been hailed as a world-changing innovation, but does it have any use beyond creating speculative financial instruments?

AFP asked crypto critic Stephen Diehl, author of the recently published “Popping the Crypto Bubble,” to rule on some of the most popular claims about blockchain technology.

Safer voting?

As tension and confusion engulfed the United States following the 2020 election, Changpeng Zhao, billionaire founder of crypto firm Binance, had a proposal.

A “blockchain-based mobile voting app,” he tweeted, would mean “we don’t have to wait for results, or have any questions about validity.”

With crypto-billionaire Vitalik Buterin, he replied that there were “significant challenges”, but he thought it was “100 percent correct in terms of direction”.

So far, experiments have been on a very small scale.

For Diehl, blockchain was more likely to introduce problems than solve them.

“From the American perspective, each district runs its own voting program,” said.

“This is seen as a feature because to corrupt an election, you have to corrupt many, many officials.

“To centralize the voting system in one digital place would be quite risky – then all you need to do is corrupt the blockchain and you can corrupt democracy.”

Automated home purchase?

Blockchain at its heart is a ledger, a way of storing transactions that is – according to fans – secure, transparent and permanent.

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These capabilities have led countless enthusiasts to suggest that the technology could actually replace paper contracts for things like house purchases.

Diehl said it was “absurd” that the blockchain “gave back to things that were solved a millennium ago to justify its own existence.”

“This is the system we’ve had since the Middle Ages – you have a government registry of land, a title and deed that is transferred when ownership changes,” he said.

“The blockchain doesn’t solve anything here.”

– Payments without banks? –

The blockchain emerged from a 2008 white paper on bitcoin, which was envisioned as an alternative to fiat currency.

The opening line reads: “A pure peer-to-peer version of electronic cash would allow electronic payments to be sent directly from one party to another without going through a financial institution.”

Bitcoin was the first cryptocurrency. There are now more than 10,000 others sitting on many different blockchains.

Large firms have been desperate to find ways to accept payments in crypto.

Diehl pointed out that cryptoassets are speculative instruments that are not suitable for payments.

“When was the last time you paid for your coffee with Apple stock,” he asked.

“It just doesn’t happen. You want something that’s going to be stable, so the price of your coffee is the price of your coffee next week.”

Supply chain tracking?

Want to know where your mango came from? Some supermarkets believe that the best way for you to find out is to access a blockchain-based system capable of tracing the fruit from the tropics of Central America to your corner store.

Walmart and Carrefour are among the firms trumpeting blockchain systems.

Carrefour told AFP earlier this year that customers would be able to scan a QR code and discover the provenance of a range of products.

The stores hope the blockchain will provide safety, security and transparency.

Diehl pointed out that digital supply chain management has been around for years and is perfectly adequate without blockchain.

“Blockchain doesn’t add any incorruptibility to the system,” he said, pointing out that people in the supply chain could tell lies on the blockchain as easily as on any other platform.

“If I have a carton of apples and report that I’m putting 100 percent of them on the truck, but then skim off 50 percent for myself, the blockchain isn’t going to prevent that.”

© 2022 AFP