The launch of various blockchain platforms often provokes an expected reaction. The cryptocurrency community notes that this is “one more step toward the mass adoption of cryptocurrencies”; everyone else shrugs, believing that this is “just some kind of fad.” Meanwhile, the fate of Russian oil and gas will be decided in this way, as the “unshakable” axiom that Russian gas is cheaper than American LNG, and a similar thesis about the acceptable price of oil from Russia may cease to be a reality.
Oil Is Increasingly “Moving” to the Blockchain
What is the trend? If in November 2018, the Vakt blockchain platform united only a few players who extracted oil in the North Sea, now almost everyone who works in this area and this region is working in test mode. Why? The transfer of all commercial operations, logistics, and accounting to the blockchain has already allowed talking about savings on costs of up to at least 40%. This means that oil and natural gas will be much cheaper. The Vakt platform intends to step into other regions in the near future, in particular in the United States, and occupy at least half of the global oil production market. Moreover, the platform is in a situation where there is competition between various similar sites, which means it will be possible to see that those who offer the maximum possible cost reductions to business will benefit the most. It is possible that in the future, the world will move to one big blockchain.
France Will Reduce Food Prices
In a situation of competition with Russia, this will mean a decrease in selling prices, which means that petroleum products, in particular, gasoline, will become cheaper, and this is something that is critically necessary, for example, to ensure the political stability of France, the second-largest economy in 19 countries of the eurozone, which accounts for every fifth euro of goods and services produced by the union of these states. Curiously, on February 24, French President Emmanuel Macron essentially gave himself an ultimatum. The economy either migrates to the blockchain or “sinks.” He cited the example of agriculture in France, which, according to him, is “under pressure” from more competitive imports from Russia, Ukraine, the United States, and China. The main thing is costs, and Macron intends to reduce the cost of French food using the blockchain. Smart contracts will eliminate the need for written contracts, and the distributed ledger will allow taking into account all the costs and see the entire value chain in real time. Reducing the cost of fuel by using the blockchain will also be another contribution to this process, and it is not by chance that French Total has also joined Vakt.
Cost Reduction Can Be Achieved in All Industries, but Not Everyone Knows about It
Blockchain reduces costs in various sectors of the economy. Thus, the People’s Bank of China is introducing a blockchain solution that will reduce the costs of processing real estate transactions by up to 60%. Global Bank HSBC with headquarters in London reported that it had processed FX trades worth $250 billion since February last year, using the “blockchain-based system.” The result is cost savings, which amounted to 25%.
As we see, we are not talking about some small amounts of savings, but about a drastic decrease in the cost of services. Does global business understand this? So far, we are talking only about the beginning of the bloom of the use of the blockchain on an “industrial scale.” Such was the consensus between the experts who spoke at the CIO Network conference on February 26 organized by the Wall Street Journal. Indeed, a study conducted by KPMG showed that only 9% of top managers of companies responsible for the “technical innards” of business know that the introduction of blockchain can reduce the cost of products or services provided. This result only means a huge competitive advantage for those companies that are already moving to the blockchain.
Cryptocurrencies Return Billions of Dollars
Blockchain and cryptocurrencies are closely related things at present. Cryptocurrencies play a similar role in reducing costs. The fact that 250 million people in the world can immediately begin to live better thanks to the implementation of remittances using cryptocurrencies was noticed by the World Bank. Savings on commissions for these people, who are labor migrants, can be up to one monthly salary per year, and as for the total amount, here we are talking about billions of dollars.
Digital assets are “picking up” the blockchain flag, which has helped HSBC reduce costs when working in the forex market. Crypto coins are capable of providing all types of financial services, including banking and insurance. And, of course, this is due to the fact that such services will end up being more affordable in terms of price and quality than those offered by modern providers. All this is because in the field of payments, cryptocurrencies save participants’ funds due to the lack of a need to turn to intermediaries, and in other areas of the financial market, intermediary links can be reduced to zero. Hence, switching to a decentralized format of business communications will ensure the growth of human welfare. And all this is seen as the only way to solve the accumulated problems of the world economy the uncontrolled growth of the debt burden, the “holes” in pensions (crypto retirement as an alternative), and the reduction of jobs due to the introduction of robotization and artificial intelligence.
Transitional Stage: Trading Networks Are “Winning over” the Consumer until Blockchain Arrives
And while fiat and cryptocurrencies will coexist in the transitional phase, society will face the fact that big data and artificial intelligence will beat them, and this will start hitting consumers’ wallets. For example, the introduction of these new technologies in the pricing policy of supermarkets will lead to the fact that even if the consumer is looking for a “better price,” they will still lose. “Computer brains” beat the brains of any consumer because they know exactly up to a minute when they can sell goods at an inflated price. As a result, commodity prices change upward not only on weekends, when the middle class is purchased for a week, but also during one trading day, several times, and changes can be several hundred percent for the same product.
The consumer is defenseless, just like any chess master who decided to play a game with “computer brains” and found himself in a knowingly losing situation as such games lost all meaning when it became clear that there was a machine that would beat even the best player in chess on earth.
Blockchain Will Change the Format of Trading Networks
Cryptocurrencies are able to return to the consumer a sense of control over their own expenses, and the transfer to the blockchain of activities of all trading networks will make it meaningless to manipulate prices, playing on the ignorance of the situation in other outlets by consumers. No price aggregator in this regard can compare with the blockchain since the blockchain not only accumulates information but also reduces costs. The use of cryptocurrencies allows eliminating the need for commercial networks, at least in their modern form. They will then become more a place of demonstration as well as the tasting of goods rather than points where consumer choice in terms of price will be determined.
Niche Tokens Provide the Same Goods and Services at Lower Costs
Currently, the effectiveness of work (if we do not take into account failed projects) in this direction is demonstrated by niche tokens oriented for work in certain industries, such as, for example, in the market for farm products or dental services. By working directly, companies get the opportunity to save on intermediaries, as well as on the financial transactions themselves with the result that they are ready to offer customers substantial discounts to their products if payment is made by digital assets. At the same time, the ones in benefit are consumers, who can buy more than using the fiat equivalent, and companies that, despite the discounts, get greater profitability of the business. Such a mechanism for working with niche tokens stimulates their use, and this will sooner or later happen with Bitcoin. The struggle for the customer will increasingly lead to lower prices for goods and services if the consumer pays for them with digital assets.
Other New Technologies Are “Blind” without Blockchain
The key innovations of our time, such as big data, artificial intelligence, augmented reality, and 3D printing can be truly effective only when gaining the foundation in the form of a blockchain and transferring financial transactions to cryptocurrencies. German Gref, the head of Sberbank, the largest bank in Russia, announced on February 26 that the organization sustained “billion losses” due to artificial intelligence. This once again confirms that such a technology is “blind” without blockchain.
We should not think that blockchain and cryptocurrencies are the main drivers of employment reduction in a number of traditional sectors of the economy. Such drivers are all the other technologies listed above. For example, robotization can reduce the auto insurance market to almost nothing. Blockchain and cryptocurrencies, on the contrary, showed that they began to create jobs, and the demand for specialists in this area shows exponential growth. Moreover, wages in this area are one of the highest among IT specialists. All this together suggests that the digital economy of the future, which is already occurring today, will be able to absorb the jobs created by various technologies while having the effect of increasing wellbeing for each and every one of us.