Cryptocurrency All-in-One For Dummies. Peter Kent
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system, keeping your operations in sync. You still need a good development team to do this, but you can easily mock up your business logic.
Building Asset Tracking with Hyperledger Composer
You can try the Hyperledger Composer in your browser without needing to download any special software. The Composer also has a download option that works great if you need to work offline or need to use the Composer’s full application development capabilities.
For this quick tutorial, you need a web browser and an Internet connection. In the following sections, we show you how to deploy your own network, set up a tracking demo, and move assets from one location to another. It’s mostly a point-and-click demo, but you also need to copy and paste a few snippets of code.
You’ll use the Animal Tracking Business Network framework. It was built as a use case for the U.K. government and farmers. In this demo, a farmer can move animals between fields, and the U.K. regulator can track the locations of the cows. The assets in this demo happen to be animals, but they could represent any type of object that needs to have its location tracked by a third party, such as a regulator or insurance provider.
Working with Smart Contracts on Hyperledger
A smart contract is computer code that is written inside a blockchain protocol. Smart contracts are created to facilitate, verify, or enforce the prenegotiated terms between two or more parties. The blockchain protocol takes the place of enforcement of contracts. Smart contracts, in effect, allow two or more parties to work together without trust or the need to have authoritative judgment or settlement if things go wrong. At least that’s how they work in theory. Many different platforms enable smart contracts. On Hyperledger, they’re called chaincode.
Chaincode is conveniently written in Go, node.js, and Java and runs in a secured Docker container. Unlike other smart contract platforms that must expose your contract to a public network to enforce them, chaincode is isolated from the endorsing peer process of public blockchains. This allows you to keep your business logic private.
Another feature that distinguishes chaincode from many other platforms is that each chaincode contract is isolated. Other organizations using Hyperledger can’t access your chaincode directly unless permissioned. This feature may reduce attack vectors on your contracts by keeping third parties from accessing them.
A smart auction is a type of smart contract. Its function is to transfer ownership of an item after predetermined parameters of the agreement are met.
Chapter 7
Financial Technology
IN THIS CHAPTER
The first institutions to adopt blockchain technology were banks, governments, and other financial organizations — and they’re the fastest-growing blockchain users, too. The powerful tools that are being built to manage and move money will reshape our world in new and unexpected ways, so it makes sense that financial technology (fintech) would jump onboard.
This chapter gives you the inside scoop on what governments are currently doing with blockchain technology and how it will affect you. Fintech touches your life every day, whether you’re aware of it or not.
This chapter introduces you to future banking trends, new regulations, and the new tools that can help you move money faster and more cheaply. You discover new types of investment vehicles and other blockchain innovations. And finally, we warn you about potential risks of investments involving virtual currency and new blockchain-technology-enabled financial products. To read more about how blockchain technology may affect the economy of the future, head to Book 5, Chapter 1, and check out the rest of Book 5 to learn about cryptocurrency investing.
Hauling Out Your Crystal Ball: Future Banking Trends
Banking was the first industry to recognize the threat of Bitcoin and then the potential of blockchain to transform the industry. The banking sector is highly regulated, and the fees to organize and operate as a bank are expensive. These heavy regulations have been an insulating and protective shield for the whole industry, as well as a burden. The application of fast, efficient, digital money that doesn’t carry the cost of handling cash and that is traceable as it moves through the financial system was an intoxicating and threatening proposal. The idea that value can be held outside the control of central authorities also piqued the interest of financial institutions and governments that back currencies.
Initially, these financial institutions and governments tried to squelch blockchain with regulation. Today, they’re embracing blockchain through investment across the board.
In 2013 and 2014, the U.S. Securities and Exchange Commission (SEC) issued a warning to investors about the potential risks of investments involving virtual currency. The warning was that investors might be enticed with the promise of high returns and would not be skeptical enough of the new investment space that was so novel and cutting edge. According to the SEC, digital currency was one of the top ten threats to investors. Today, the SEC stands ready to engage with companies and investors as cryptocurrency gains traction within all industries.
Not even two years later, countries around the world — including the U.K., Canada, Australia, Japan, and China — began investigating into how they could create their own digital currencies, seize cryptocurrency for themselves, and put money on the blockchain. History was made in 2021 by Purpose Investments, a Canadian asset management company that launched the world’s first Bitcoin ETF (exchange-traded fund). The Purpose Bitcoin ETF further shocked the investment world by crossing the $1 billion-in-assets mark within 30 days!
Blockchain’s promise of an uncompromisable ledger has made it an appealing system for governments that are seeking to reduce fraud and improve trust. Innovations in blockchain technology promise to increase its ability to handle the billions of transactions needed to support economies, making a cryptocurrency feasible at scale.
Blockchains are in themselves permanent and unalterable records of every transaction that is inputted. Putting a country’s money supply on a blockchain controlled by a central bank would be utterly transformative because there would be a permanent record of every financial transaction, existing at some level within their blockchain records, even if the records weren’t viewable by the public. Blockchain technology and digital currencies would reduce risk and fraud and give central banks ultimate control in executing monetary policy and taxation. It would not be anonymous in the way that Bitcoin initially was. In fact, it would be quite the opposite, giving central banks a full and auditable trail of every digital transaction made by individuals and companies. This system might even allow central banks to replace commercial banks’ role in circulating money.
The question of what the future for banking will look like can