Rise of Blockchain technology

The 2local community is developing a new payment system that brings sustainability and prosperity hand-in-hand to the world by making local and sustainable purchases accessible to everyone using blockchain technology. In this Blog I will concentrate on blockchain technology that is one of the pillars of the 2local community.

A blockchain in essence is a distributed ledger of decentralised information collected through a network. Whilst traditionally data is saved in central servers, controlled by a single organisation, in a distributed ledger electronic records enable independent entities to establish a consensus around a shared ‘ledger’. There is no central coordinator to authorize the records. The ‘Center for Blockchain Technologies’ presents the following overview of a blockchain.

 

Overview of Blockchain:

A network of computers connected through the internet, in which participants can either receive or send value to another

Data can be written and read by certain participants

Entries are transparent and permanent

Digital signatures and cryptography ensures security of the transaction

It facilitates P2P transfer of value without the need of a central intermediary such as a bank

Transactions are recorded in chronological order and added into a database that grows continually

Data is replicated across a P2P network

 

The Blockchain securely records information in cryptographically sealed blocks replicated across a peer-to-peer (P2P) network. Any party is able to both review previous entries and record new ones. The ledger of transactions is distributed on different nodes or computer devices, each of which individually participates in the network by replicating, validating and saving a copy of the ledger. Blocks are continuously added to the chain and are closed by the cryptographic hash, which will reconcile with the hash of the next block. Data within the blocks can no longer be modified or deleted.

 

The validity of the data in the blockchain and thus its security is based on a robust and reliable consensus mechanism. Blockchain’s strength is in low-trust environments, where participants have no way tot consult directly or through an intermediary. Blockchain can verify (in an energy-intensive verification process) all transactions and data contained on a blockchain, but cannot access whether an external input is accurate. Blockchain is not tamperproof. However, each block reinforces the previous block and protects the entire blockchain because during time more and more blocks have to be changed if someone wants to mess with information.

 

Blockchain technology is transparent and auditable. All transactions are visible to authorized participants and are traceable within the ledger. All accounts are identifiable. Blockchain technology is reliable, difficult to attack and corrupt. Blockchain can reduce cost of networking and it has an efficient settlement process that reduces the cost of verification.

 

The blockchain technology can be used to develop various applications, such as financial transactions usage, social networks, messengers, games, exchanges, smart contracts, storage platforms, voting systems, prediction markets, online shops and much more. In this Blog I only mention Bitcoin as the first application, the rise of cryptocurrencies and the use of blockchain technology in the emerging circular economy.

 

The first application of blockchain was Bitcoin, introduced in 2008 as a peer-to-peer electronic cash system based on a cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party. Bitcoins are cryptocurrencies that are created digitally through a ‘mining’ process that requires powerful computers to solve complex algorithms. Bitcoin currently has about 17 million coins in circulation in over 20 countries. They are currently created at the rate of 25 Bitcoins every 10 minutes and will be capped at 21 million, a level that is expected to be reached in 2140. At its peak Bitcoin had a market value of over $2 billion. We should keep in mind that Bitcoin has no support mechanisms as fiat money has through supervision by a nation’s central bank and government support. The - volatile - value of a Bitcoin is wholly dependent on what investors are willing to pay for it.

Bitcoin’s success has resulted in a number of companies that showed up alternative cryptocurrencies. Many people have found these to be a promising payment alternative. Today there are over 2000 digital currencies in circulation. Transaction time has increased exponentially. Cryptocurrencies rely on people’s willingness to accept it, use it and think it has some value. The advantages of cryptocurrencies include no intermediation, voluntary processing fee, no monetary policy manipulation, peer-to-peer money transfers, a way out for unbanked and underbanked people in developing countries. The number of merchants who accept cryptocurrencies has steadily increased. Deschepper and Rafaqat in their 2017-2018 research: ‘The influence of adding cryptocurrency to traditional investment portfolios’ conclude that, though investing in cryptocurrencies is not suitable for risk averse investors, cryptocurrencies deserve a place in a traditional investment portfolio. This provides added value for the investor. The decentralization and transaction anonymity of bitcoin and other cryptocurrencies have been accompanied by negative trade practices, illegal activities as money laundering. However, alertness and caution for these activities is getting better. Regulatory and other government agencies are busy defining rules and measures to prevent illegal activities. Cryptocurrency systems are undoubtedly maturing and the era of scam companies looking to make quick money is declining. The next step to use cryptocurrencies on a larger scale is that they are generally accepted by consumers.

Applications of blockchain are expected to become a vital element in realizing a circular economy. The linear economy is reaching its physical limits. Consumers and citizens become aware of the urgency for reducing material requirements and waste, reusing products and recycling materials. The pressure to innovate and adapt to the circular economy is increasing. The data structure of blockchain effectively means that all participants in a network have the same data to work with. This is a major step forward for business operators managing physical streams from source to product, reuse and recycle. This can help to get better information systems, digitize, improve efficiency, improve features for customers, create new business models as product tracking, and monetising the circular economy. Note that blockchain technology cannot guarantee the accuracy of external data. Especially in long global chains this causes a problem.

 

The 2local community attaches great value to the sustainable use of natural resources and is devoid of inequality, injustice and malnutrition. The focus is on local sustainability and global prosperity. To achieve these goals 2local uses a digital money system based on blockchain technology, with a cash back facility. The digital money, L2L, refunds local and sustainable purchases as a mode of basic income backed by blockchain technology.

 

In July 2019 the website https://2local.io/ was launched, including the Whitepaper. The Initial Coin Offering (ICO) of L2L tokens started on October 17, 2019, with a pre-sale period from October 17th until November 1st. At this moment we are in the midst of the Main sale that started November 1st and runs until December 31st 2019. From February 1st 2020 the IEO (Initial Exchange Offering) starts and the L2L tokens will be listed on the Exchanges.

 

I am convinced that use of blockchain technology will lead to a beautiful revolutionary development of the 2local community, which everyone can benefit from.