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What’s all the crypto hype about?

cryptocurrency - IMM Blog Image

Cryptocurrency has taken the world by storm. In South Africa alone, many have been scouring the internet, trying to understand what this “bitcoin-crypto” thing is and a quick analysis of Google trends shows this quite well. People are excited. They are intrigued. But, are there any good reasons for this reaction and is it worth all the hype surrounding it? See for yourself…

What is cryptocurrency

What is cryptocurrency?

The world of cryptocurrency, and its community by association, are notorious for its jargon, and this poses a barrier for people who are interested in getting to understand it but are relatively new to the space and idea of crypto. Key definitions (as defined by Luno.com) to keep in mind are cryptocurrency, cryptography and blockchain.

  • Cryptocurrency: A digital currency that relies on cryptography to verify its transactions.

A digital currency - IMM Blog Image

  • Cryptography: The practice and study of techniques for secure communication in the presence of third parties called adversaries. In the context of cryptocurrency, cryptography validates and secures transaction information.
  • Blockchain: A decentralised network that records transactions, much like a traditional ledger. These transactions can be any movement of currency, goods or secure data.

What is the Blockchain and how does it work?

The blockchain is thus the “collective” ledger of which every computer connected to the network has a copy of, and which processes, encrypts and stores all the data transactions simultaneously across every connected node (read more about that here). According to Forbes, Blockchain experts and enthusiasts, this prevents any tampering with the system and prevents cheating or stealing as the ledger is decentralised, which makes for more user oversight and transparency.

Blockchain - IMM BLog Image

  • Distributed Ledger: A large database that is consensually shared and synchronised across multiple sites, institutions or geographies. It allows transactions to have public “witnesses”, thereby making a cyberattack more difficult.

Distributed Ledger - IMM Blog Image

Where does crypto come from?

Satoshi Nakamoto

According to Investopedia, Bitcoin is the first cryptocurrency. The first recorded cryptocurrency transaction was for a pizza purchase on the 22nd of May, 2010. However, long before this, on the 3rd of January 2009, the infamous Satoshi Nakomoto “mined” the genesis block on the Bitcoin Blockchain and the rest, as they say, is history.

Where does crypto come from

How do you trade crypto and how does it work?

Globally, the most famous and used cryptocurrency exchange has to be Binance, it being a noticed benchmark for other exchanges to emulate. A lot, if not most crypto trade goes through Binance. In South Africa, since Binance doesn’t have a straight ZAR to crypto function, companies like Luno have sprung up in order to close that gap in the market, creating a spade for new and experienced traders and enthusiasts to trade and buy cryptocurrency.

trade crypto

What has been the response?

The technology is influencing and its popularity has spread like wildfire, some comparing it to the dot com bubble of the late ’80s and 90’s, where almost everyone had some investment on the then-new internet. According to Fortune.com, countries like Cuba and El Salvador have accepted it as a legal form of trade, giving it more legitimacy, while other countries like China have cracked down on everything to do with it, not trusting it at all,  giving it some illegitimacy too.

Conclusion

Crypto was developed as a means to an end to the financial crash in 2008. Nakomoto, whether one person or a group under a pseudonym, published a paper outlining a new form of monetary exchange which, he hoped, would cut out the banks and the state entirely, and which was run and protected by the best cryptography technology available at the time. Thus, out of the ashes of one of the biggest global financial innovations in history, a new sun was about to rise, which would revolutionise the imagination of how a monetary system could work.

Whether or not crypto is worth the hype is still up for debate but what is not debatable is the numbers that are trading on the exchange – investing in crypto whether you’re in the first or second camp is highly rewarding at this point in time and it is not going anywhere anytime soon.

Crypto Conclusion 2

Using Blockchain to secure the weak link in supply chain management

Using Blockchain to secure the weak link in supply chain management

If you find that Blockchain is a difficult subject to wrap your head around, you’re not alone. A Google search will produce hundreds of results trying to give a simple explanation of blockchain, but you could still end up being confused. We did the legwork for you and consolidated our findings into a simple and clear explanation.

Where does blockchain come from

Blockchain technology was created by a pseudonymous person named Satoshi Nakamoto in 2008 but only became popular in 2009 when bitcoin was released. No one knows who Satoshi Nakamoto really is, even though people often come forward claiming to have created blockchain technology, no one has been able to prove it.

 

How does it work

Using Blockchain to secure the weak link in supply chain management bSource:  Zignuts

Fundera explains it best – “Blockchain is a technology that allows individuals and companies to make instantaneous transactions on a network without any middlemen (like banks). Transactions made on blockchain are completely secure, and, by function of blockchain technology, are kept as a record of what happened.”

Think of blockchain as a ‘chain of blocks’ linked together in a specific order and each block contains data that is secured with software code. It’s often referred to as a ledger or record of transactions that allows for information to be copied but not distributed meaning that each piece of data can only have one owner.

Usually, when a transaction is completed, a third-party entity such as a bank verifies the transaction. With blockchain technology, however, all transactions are encrypted using cryptography (a way of encrypting and decrypting information using complex maths). This information is stored in multiple locations and updated constantly.

Blockchain – What it is and isn’t

Blockchain is:

  •           The technology behind bitcoin.
  •           A method of trading with anyone from anywhere.
  •           A network of computers, all with access to the same transaction history.
  •           Technology that stores information indefinitely.
  •           Immune to hacking and counterfeiting.

Blockchain isn’t:

  •           A cryptocurrency.
  •           A programming language.
  •           Cryptographic codification.
  •           Artificial Intelligence or machine learning technology.

Blockchain in Supply Chain Management

Many current supply chain management systems are outdated and unable to keep up with industry requirements, they are slow and prone to fraud and hacking, are expensive, and unreliable. This is where blockchain technology becomes useful.

While Blockchain technology is usually associated with Bitcoin transactions it can be used to record any transactional data securely. Blockchain can therefore be used to improve supply chain processes in numerous ways, for example:

  • Tracking and changing purchase orders, receipts, and shipment documents.
  • Documenting the quantity and transfer of goods as they move from one point to another.
  • Verifying product certifications.
  • Linking physical products with serial numbers or digital tags.
  • Sharing manufacturing data with suppliers and vendors.

Blockchain technology is already being used in various industries. Here are two examples of blockchain in use:

Blockchain in the diamond supply

The diamond industry is currently facing a major problem when it comes to the extraction methods used and the miners working conditions. Diamonds are sometimes mined under extremely violent and unstable conditions – especially in Africa. The sale of these diamonds often funds conflicts in the area and lead to further violence among miners.

De Beers, the world’s largest diamond producer has already started using blockchain for this exact reason. Their program, Tracr, has already tracked 100 diamonds successfully from the mine all the way to the jeweller. Those involved in the process constantly upload photos and information on each jewel as it’s moved from point A to point B. Since each diamond is closely tracked and monitored, illegal activities can be put to an end.

Blockchain and wine supply

Forbes estimated that a whopping 30 000 bottles of counterfeit wine are sold in China per hour. These wines often contain additives and are considered too dangerous for consumption. To solve this problem, companies Origintrail and Tagitsmart have started making use of blockchain.

By using the pilot version of their program, more than 15 000 unique bottles of wine were tracked from production to sale. The goal is to use QR codes to stop the production of illegitimate wine as well as allow the consumer to scan the code and read all the information on their purchase.

Blockchain technology is still being tested which means that, as we learn more about it, more industries will start making use of it to secure their business processes.

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