By: Robert Rohloff*
Bitcoin is and has been the entry point for many to enter the decentralized ecosystem. While Bitcoin is understood as a digital currency, Ethereum, smart contracts, and blockchains are more difficult to fully comprehend. Because of the complexity of this new technology, a formidable gate to the decentralized community has begun to grow. Ironically, of course, Bitcoin was born out of the idea that there would be no gates in a decentralized economy. As a wise Jedi Master once said, “[y]ou have become the very thing you swore to destroy.”[1]
Discussing the future of a decentralized economy often leads to exciting conversations. A combination of philosophy, economics, technology, and the human urge to push our current boundaries of reality combine to create a chaotic and fascinating subject. For decades, technology has been improving at an unprecedented rate.[2] The sharing economy has already allowed for significant change in many aspects of the traditional economy, including governance and service providers.[3]
However, for the blockchain community to change the status quo for the masses, it must focus even more on promoting practical and daily uses of this technology. Analytical conversations between professionals with multiple letters behind their names will only get a system so far. For mass adoption to occur, there must be a reason for everyday people to learn about cryptocurrencies and blockchains. For this technology to penetrate currently unreached groups, I believe there must be decentralized changes to (1) the banking system and (2) personal identity solutions.
Mass Adoption Idea #1 – Banking
For nearly all of human existence, those who control the financial industry have had unmatched power.[4] Because of this, mass adoption through finances could occur quickly by allowing everyday users to control their own money around the world. “Banking the unbanked” has become a calling card of the blockchain community. Cryptocurrencies can change the financial industry by making it work for both the unbanked and the overbanked.
The unbanked often lack access to financial institutions. Cryptocurrencies could change this through peer-to-peer loans — where blockchain borrowers can connect with users who are willing to loan money to others for significantly lower transaction fees and rates than large institutions because of their overhead and regulation costs.[5] This increase in access to technology could allow for local economies to have unprecedented access to finances and trade.
The overbanked have similar issues: legacy banking institutions are expensive and slow to adapt. Blockchain technology can fix this problem by lowering intermediary fees, often referred to as friction, and by returning financial control to consumers.[6] Smart contracts (automated if/then code) can optimize investment options and lower costs that traditional banks charge their consumers.[7] In an economy experiencing significant inflation, returning money to consumers’ pockets can change everything.[8]
Mass Adoption Idea #2 – Identity
Today, our identities correlate closely with our data and lay bare many details of our lives. When we order something online, apply for a loan, or even go to school, each detail is tracked by companies that make millions of dollars off our data and, ultimately, who we are as people. The digitization of our identities has made it cheaper for companies to track and manipulate our decisions through advanced algorithms.[9] However, if we could instead place our identities and data on the blockchain, it would give us the power to determine what companies have access to our personal information.[10] Third-party companies would need to request to use any identifying information for marketing or sales purposes before accessing this information.[11] This could quickly lead to mass adoption across most developed countries, as any user with a digital presence would likely take advantage of this level of control.
Having blockchain identities would solve several common identity problems, such as inaccessibility, identity fraud, and stolen data.[12] Your identity could be accessible through your phone, similar to the way dual-authentication apps work now. If expanded, blockchain identities could act like a government-issued card, passport, or credit card.[13] This level of security and control is severely lacking in our current economy.
An important aspect of this type of technology is its ability to allow everyday users to create income by selling their data.[14] Forcing companies like Apple, Amazon, and Google, who already use our data, to pay for such access to information is key to this idea.[15] Knowing our demographics and interests should come at a cost. That money could and should go back to the consumers.[16]
In developing countries, this type of technology can also make a significant impact by allowing students to track their grades and achievements on the blockchain.[17] Later, when students are applying for jobs, their employers can quickly verify their grades and achievements.[18] This technology is completely transparent and works with a Salesforce or Canvas type interface.[19]
This technology strives to allow equal access to resources and opportunities no matter your genetics or location.[20] Mass adoption of blockchain technology must not be exclusively for the upper class of developed countries, but it instead should be used to free people across the world from hierarchical, rigid, and corrupt systems.
Prediction
Banking and identity solutions are just two examples of a multitude of possibilities that could change our economy. Some newcomers are hesitant — and rightfully so. It is a confusing space.[21] Thus, many are still untouched by blockchain technology. But it is my hope that the blockchain community will prioritize what is best in the long run for this technology and our world. More “crypto bros” are not enough for the market to become mainstream. Instead, it is key to address real-life problems with practical solutions by making blockchain technology accessible to all.
* Robert Rohloff, J.D. Candidate, University of St. Thomas School of Law Class of 2023, Managing Editor of the St. Thomas Law Journal. Tortured Minnesota sports fan, avid fantasy football player, and pig showing expert.
[1] Star Wars: Episode III — Revenge of the Sith (Lucasfilm, Ltd. May 19, 2005).
[2] Craig James Calcaterra & Wulf Alexander Kaal, Decentralization: Technology’s Impact on Organizational and Societal Structure 228 (2021).
[3] Mark Fenwick, Wulf A. Kaal, & Erik P.M. Vermeulen, Legal Education in the Blockchain Revolution, 20 Vand. J. Ent. & Tech. L. 351, 354 (2017).
[4] Jaromir Tesar & Lukas Barta, Cardano Will Allow Us to Be Bankless, Medium: Cardanians.io (CRDNS pool) (Oct. 21, 2020), https://cardanians-io.medium.com/cardano-will-allow-us-to-be-bankless-d9a10a8c8491.
[5] Joseph Kangethe, Cardano’s Vision to Revolutionize Banking, Lands and Education in Africa, Exchange (Feb. 18, 2022), https://theexchange.africa/banking/cardanos-vision-to-revolutionalize-banking-loans-and-education-in-africa/.
[6] Julian Mouton, Regulating Smart Contracts in the Domain of Financial Trading, 57 Cal. W. L. Rev. 441, 446 (2021).
[7] Id. at 444.
[8] Jeff Cox, Inflation Barreled Ahead at 8.3% in April from a Year Ago, Remaining Near 40-Year Highs, CNBC (May 11, 2022, 8:30 AM), https://www.cnbc.com/2022/05/11/cpi-april-2022.html.
[9] Wulf A. Kaal, Decentralization — Why We Need Technology Infrastructure Upgrades, SSRN (Mar. 20, 2021), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3808859.
[10] Blockchain in Digital Identity, Consensys, https://consensys.net/blockchain-use-cases/digital-identity/ (last visited Nov. 7, 2022).
[11] Akash Takyar, Blockchain Identity Management: Enabling Control Over Identity, LeewayHertz, https://www.leewayhertz.com/blockchain-identity-management/ (last visited Nov. 7, 2022).
[12] Blockchain in Digital Identity, supra note 10.
[13] Takyar, supra note 11.
[14] Blockchain in Digital Identity, supra note 10.
[15] Blockchain in Digital Identity, supra note 10.
[16] Blockchain in Digital Identity, supra note 10.
[17] Anna Baydakova, Cardano in Africa: Inside IOHK’s Ethiopia Blockchain Deal, CoinDesk (Apr. 30, 2021, 1:02 PM), https://www.coindesk.com/markets/2021/04/30/cardano-in-africa-inside-iohks-ethiopia-blockchain-deal/.
[18] Id.
[19] Id.
[20] Id.
[21] Why Don’t People Trust Crypto?: Crypto Critics Explained, CoinBundle (Sept. 20, 2018), https://medium.com/coinbundle/why-dont-people-trust-crypto-cb9e9b84934c.
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