What is the ideal economic society created by “blockchain” such as Bitcoin?

Many people think of Bitcoin as a blockchain.

Computer technology called blockchain is used for crypto assets such as Bitcoin, and blockchain has evolved with the birth and growth of Bitcoin. With its evolution, various possibilities have been pointed out.

There are many voices saying, “If you use blockchain, you can do that, you can do this too.” Let’s see how blockchain will change the economy and society in the future.

There is momentum to change the flow of money, not just money

Cryptocurrencies are trying to change the concept of money, but blockchain has the potential to significantly change the flow of money.

Eliminates the need to back up the value of the government and central banks

As a basic knowledge of blockchain, let’s see how crypto assets have changed the concept of money.

Ordinary money is backed by the government and central banks of the countries in which it can be used. The owner of a convenience store receives a 100-yen coin from a customer and then gives the rice ball to the customer because he recognizes that the 100-yen coin is worth 100 yen. It is the Government of Japan and the Bank of Japan that create that value.

Since the government and the Bank of Japan guarantee that 100-yen coins are worth 100 yen, convenience store owners will not hesitate to exchange rice balls and flat metals (100-yen coins) that are worth 100 yen.

However, crypto assets have come to have monetary value without the backing of the value of governments and central banks. The success of cryptocurrency businesses such as Bitcoin has proved that “what plays the role of money” does not require government or central bank backing.

It can be said that this phenomenon has changed the concept of money by blockchain. So how does blockchain change the flow of money?

Lower payment costs

Blockchains that do not use currency do not require the cost of handling currency.

Since ordinary currencies such as yen and dollars use physical objects called currencies, operations such as printing, casting, moving, management, storage, security, and crime prevention are required, which is a handling cost. Fees are incurred for tasks such as payments and transfers because the cost of handling currencies is not cheap.

Cryptocurrency using blockchain does not use currency. Only digital data is used. Since blockchain uses the Internet, it has to be more secure and costly, but it does not require printing, casting, moving, storage, or security costs.

Therefore, if you use blockchain, you can reduce the payment fee, transfer fee and remittance fee to 0 yen or cheaper. If there are no fees for the flow of money, the flow of money will be smooth.If there are no fees for the flow of money, the flow of money will be smooth.

Universal, no concept of borders

In principle, currencies issued by a country can only be used in that country. If a person living in Japan has a lot of dollars, they have to convert the dollars into yen one by one.

However, crypto assets are universal. 1BTC (read as Bitcoin) is 1BTC in Japan, the United States, and other countries. Moreover, since Bitcoin transactions are completed only by exchanging data, there are no “theoretically” borders.

But now there are “legally” borders.

The Japanese Foreign Exchange Law requires the Bank of Japan to send a “report on payment or receipt of payment” when sending crypto assets worth more than 30 million yen overseas(※1).

However, as the law changes with the times, the function of blockchain does not change. Just as the euro, the unified European currency, was born, multiple countries may continue to use one currency(※2). In that case, it may be more rational to use the blockchain.


Business and social systems will change completely with blockchain

As contract automation advances with blockchain smart contracts, business and social systems will change dramatically.

What is a smart contract?

Blockchain also has the power to change the way contracts are made. Blockchain smart contracts are a mechanism to automatically conclude contract details.

By programming the conditions of 1) contract details and 2) “conclude a contract at such times” in the blockchain system, it is possible to guarantee the automatically concluded contract.

Beverage vending machines, for example, serve juice just by inserting coins. This is because the vending machine has a program of 1) “100 yen per bottle” and 2) “juice is served after checking the coins”.

You can think of smart contracts as a digital version of a vending machine.

The contract is guaranteed

Let’s think about buying and selling condominiums.

Condominium sales contracts are not easy to conclude. The reason is that the price of condominiums is high, and a lot of money moves to buy and sell them. Be cautious as large amounts of money can cause great damage in the event of an accident.

In the case of buying and selling condominiums, it is necessary to guarantee each contract by making full use of various methods.

The condominium sales company will not give the buyer the key to the condominium until the buyer has taken out a mortgage and the money has been paid from the mortgage. The buyer will not process the transfer of the mortgage money to the condominium sales company until the condominium is registered and legally owned by the buyer. Banks that lend mortgages will not give the mortgage money to the buyer until they mortgage the condominium.

The reason why a condominium sales contract takes time like this is that an accident will occur if each action associated with the contract is not guaranteed. Smart contracts eliminate this annoyance.

If you can program 1) the contract details of condominium sales and 2) the conditions of “execution of the contract at such times” using blockchain smart contracts, the condominium sales contract should proceed fairly smoothly.

The contract details of the smart contract will be recorded in the transaction record on the blockchain. The data can be viewed by any blockchain user and cannot be “did not”.

This guarantees the contract, so troubles such as “I paid the money but the ownership of the condominium is not transferred” and “I transferred the ownership of the condominium but the money is not paid” do not occur.

Less chance of getting a guarantee from a government agency

So, will the business and social systems change just by making condominium sales smoother with blockchain smart contracts? The answer changes.

This is because the form of business is firmly established by the contract method.

For example, in e-commerce such as online shopping, there is a business of ordering products on the site, paying with a credit card, taking the products out of the warehouse and sending them by courier, but here is a sales contract for the products. , Credit card contracts, warehouse use contracts, courier contracts have occurred.

If these contracts are made smarter by blockchain, transactions should be much simpler.

And if the blockchain guarantee is ensured, the guarantee of government agencies, local governments, and other government agencies will be largely unnecessary. If the condominium sale transaction is guaranteed, the need for a registration system will be diminished.

Of course, registration also has functions such as publicly recognizing the place of ownership, so the registration system cannot be completely eliminated.

Can also be used for the election system

There is also a move to utilize blockchain in the election system(※3).

For example, if the country registers the person himself/herself, the face photo of the person, and the ID number in association with each other, an election application can be created. You can prevent multiple votes and spoofing votes by taking a picture of your face with your smartphone, entering your ID, and allowing you to vote when you can verify your identity.

This method is already practiced in some states in the United States.

This election app requires blockchain because it requires the anonymity of voters. The blockchain has cryptographic capabilities, so you can be sure that someone has voted for someone while hiding who voted for whom.

The My Number Card system has also been introduced in Japan, and the people and ID numbers are linked. Theoretically, blockchain elections can be held by linking this with facial photo data.

Summary-Maybe not in the distant future

When you hear that blockchain creates an ideal economic society and changes business and society, it may seem like a distant future, but technically it may not be “immediately”. It seems that it can be realized “with a little more time”.

Considering the society that has changed due to the spread of the Internet and the society that has changed due to the spread of smartphones, I feel that I am very much looking forward to the society that changes due to blockchain.