Breaching the bounds of cryptography

It is not what your blockchain can do for you; it is how your blockchain can interface with other ecosystems

While proof of work limitations and scalability issues may be at the precipice of becoming mainstream knowledge, blockchain based smart contracts are gaining widespread knowledge and increasing adoption. I would like to write on what I see as the next wave of knowledge coming to the blockchain space; the interplay between the mathematically secure space and the real world. Let me explain with a few examples momentarily.

Blockchains are secure based on mathematics and decentralization. Value propositions such as the decentralized cryptocurrency etherdelta exchange are relatively simple to implement as you can use cryptography to trade  one cryptocurrency for another; there is no need to ‘reach outside’ of the mathematically safe space and are therefore less risky.  What I find interesting to understand is how various projects create value, while having arms and making an impact outside of the crypto space. Let us first consider Factom.

Factom, aside from it’s second coin to solve the token volatility issue, has a simple use case. Factom can prove a file existed at on or before the date that it’s hash was stored on a blockchain. Factom takes unverified data and wraps it within the mathematical certainty of the blockchain in perpetuity.

Siacoin, is similar to factom however it takes a slightly different spin by storing the entire data instead of merely proving the data’s existence. Both of these coins create value by wrapping “wild data” in the security and certainty offered within a blockchain.

Waltonchain is another interesting implementation. It’s real value proposition comes from how a physical object, in this case an RFID tag can be verified and uniquely identified from within the security of blockchain tech. This has tremendous implications because it means that to duplicate an RFID tag, you need to hack math – from this it follows that tags essential can’t be hacked. An unhackable tag combined with the permanence of blockchain technology definitely extends the security of the technology.

XRP, the coin behind the Ripple payment protocol has been criticized for not being needed by banks for transactions. One way to look at the value proposition of XRP is that it removed some of the requirements of trust. Lets say I want to trade AUD for CAD. Inevitably, I will have to trust the trust-line on the ripple network. The real value proposition of XRP is safe, if I hold, my value has not extended into the real world, it does not need an interface with anything other than math and is therefore secure.

Chainlink is particularly exciting as it is attempting to create generic bridges from real world into the security of the blockchain. Giving smart contracts standardized links into the world could accelerate the entire cryptocurrency ecosystem. The implications on the entire world are staggering if math gets solid arms into our current centralized systems, and the changes could be fast. But I think the question of scalability ultimately remains at the forefront of blockchain concerns.