The next time I am buying an oil refinery in Saudi Arabia or even just dabbling in selling a half million tonnes of wheat to China I am definitely doing it through a blockchain. I’m not trusting the Canadian Imperial Bank of Commerce with this level of business.
Why blockchain, you ask? Well for us crypto currency-types who have long left the tedious and bulky business of bundling up a few million paper dollars,(from the feel of it, I don’t think it is even paper anymore)… but for us who can’t be bothered to stuff $10 bills in a packsack, protecting my transaction through a blockchain is the only way to go.
I would write more on this but my 3D printer just finished creating my artificial intelligence head set and I have to go explore an alternate universe. (I don’t really use artificial intelligence. I have artificial hips, but beyond that I get by with a meagre allotment of God-given smarts.)
If you haven’t guessed it already, I confess I am beyond being mildly lost in much of this new technology. I get stumped at the first two questions that come to mind: 1. What is it that we are talking about? and 2. Even if I faintly understand it, how would this improve my life?
Such was the case in late January when I attended the annual Farmtech Conference in Edmonton and my editor made me go to the session on New Frontiers in Grain Trading — Blockchain. Let’s be honest I haven’t completely got my head around all the nuances of the old grain trading frontier. I don’t think I was ready for this.
First, I was a few minutes late getting to the session and all the 125 chairs were already taken by young and older farmers. I had to stand. But it confirmed in my mind that this was obviously important as all these farmers were there to learn how to more effectively use blockchains as they grow crops and livestock. I’d better get with it.
The presenter was Elaine Kub, a U.S. expert in grain marketing who is still involved with the family grain and livestock farm in South Dakota. She is a grassroots person, with an engineering degree as well as a masters in business administration and very knowledgeable in all aspects of grain trading. And she did an excellent job of explaining a blockchain in fairly down-to-earth terms.
So this is what I learned. If you are a person using crypto currency (digital currency) to buy rice from or sell wheat to China, for example, you can conduct the transaction through a very secure internet website mechanism known as a blockchain. It is a multi-layered, tamper-proof website that is so secure that it makes Fort Knox look like a free-stall barn with turkey curtains. Once the transaction is on blockchain there is no messing around, or reneging — the deal is cast. And that is good to know.
I still have trouble with some of the fundamentals. I don’t really understand why crypto currency is something I need in my life. It is digital currency, which as Elaine Kub explained anyone can create. As long as I can convince you, for example, that I have a secure million dollars in my bank you can buy shares in Lee’s crypto currency and then if you need $50,000 to buy a new truck, you can transfer that digital currency to the seller — through a blockchain, of course. There is a certain amount of faith involved — you have to have faith that I do have the money in the bank like I say I do.
Kub says there are between one and two thousand different crypto currencies out there. Bitcoin — created 10 years ago — was the first, and is the largest, but there are hundreds more. These digital currencies had a heyday a couple years ago as people rushed to invest and buy shares in them. But the bubble burst or at least started leaking. A share or value of a Bitcoin started out at less than a penny, over the years eventually peaked at nearly $20,000 in late 2017 now it is worth about $3,400. Bitcoin company was worth about $30 billion in early 2018 and now it is worth about $2 billion — still a fair bit of value. All crypto currencies have followed a similar value trend. If you look at a graph tracking crypto currency values and pretend it is an electrocardiogram you might say the patient had flatlined.
My basic question is why do I need digital currency? I suppose if I wanted to launder drug money it would be good to avoid the chartered banks. But my kids look after all that sordid business for me (and I don’t ask questions) so again why do I need crypto currency?
I guess if I did need to use crypto currency then a blockchain would be a good way to protect my transaction. Although, interestingly, as I heard from Elaine Kub the computer capacity needed to “mine” crypto currency and operate a blockchain, with this enormous security system, requires a huge demand on electricity, so companies establishing blockchains do it in countries where electrical rates are low like Indonesia or Venezuela. But with the issues in Venezuela right now, who wants to do their shopping there? Kub says sometimes the electrical cost to use the crypto currency/blockchain transaction could be greater than the value commodity being traded.
Do I understand this, and how would this all improve my life? I still haven’t connected the dots on that. In the meantime I am pleased to say I finally have a pretty good handle on doing on-line banking, so I am sticking with that. Besides if I use my Scotiabank debit card enough, eventually I earn enough points to get a free movie pass. So far I haven’t heard any crypto currency or blockchain group dangling that carrot in from of my eyes.