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Beyond bitcoin: 7 ways to capitalize on blockchains

Peter Wayner | Sept. 1, 2015
Bitcoin’s widely trusted ledger offers intriguing possibilities for business use beyond cryptocurrency.

Because the blockchain provides an unimpeachable record of transactions between two or more parties and evolves collaboratively among vested (and often competing) entities, there is significant potential for organizations to leverage blockchains to seal sophisticated business relationships in a way that reduces fraud and abuse.

Contracts

Most transactions in the blockchain are prosaic, transferring a certain number of bitcoins from one person to another. But the technology also includes a novel limited language for describing the transaction. This description can include more complex logic that can be used for much more than paying off a debt. It can check for agreement between multiple people and provide some kind of escrow.

In the simplest form, this technology can bind a digital signature of a text document into the blockchain. This freezes an indisputable record of what people agree to do and when they made the agreement. If there's an argument in the future, the blockchain can be used to settle disputes. The solution isn't perfect because it won't settle debates about the way to interpret the language in the contracts, but it will eliminate questions about what bytes are in the contract document.

Working with an arbitrary text document is only the beginning. Some developers have created escrow contracts with thresholds that lock up money until everyone agrees the terms have been met. These can be used in more complex group deals like the crowdsourcing projects from Indiegogo or Kickstarter. When people commit the money, it can only be unlocked if the project raises more than a preset threshold.

The next generation of blockchains can use even more elaborate and complex logic. Some might imagine contracts with checkpoints and audits than check completion. Others may want boilerplate contracts that can be deployed quickly and understood by everyone. These will unlock even more opportunities to work together while using the blockchain to ensure that everyone is protected.

Digital collectables

Money gains much of its value because there's a limited amount of it in circulation. No one can simply mint another dollar. One of bitcoin's greatest features is the algorithm it uses to keep the supply of bitcoins tightly controlled.

This doesn't need to be limited to protecting the world of currency. A number of popular objects like baseball cards or art prints are also issued in limited quantities. Scarcity, no matter how artificial, is often a desirable feature for collectors who are interested in investing.

There are other more prosaic needs. Some marketing teams want to limit how many times a coupon can be redeemed. While some want their coupons to be used by any and all customers, others want to offer special deals that must limit how many coupons circulate. Perhaps the inventory is limited; perhaps they want to build demand by making the coupons exclusive. In any case, ensuring that there is a fixed number of some digital good is right in the blockchain’s wheelhouse.

 

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