Blockchain: Blueprint for a New Economy

Crowdfunding is a high-profile topic at

Bitcoin industry conferences, and

experts argue over its legality.

Opponents complain that there is

currently no legal way to do

crowdfunding whereby one actually

owns shares in the underlying

organization, and there may be different

ways in which crowdfunding violates

securities laws. The workaround offered

by crowdfunding platforms like Swarm

and Koinify, as well as one-off

crowdfundings like Ethereum is to sell

nonshare items, such as early access to

software. However, this is somewhat

disingenuous because in many cases the

marketing still looks a lot like selling

shares. The result is that there can be de

facto investors in cryptocurrency

projects who are not getting much more

than early access to open source

software. A better way to crowdfund

cryptocurrency projects in a

decentralized yet legal way, with more

effective checks and balances, is

needed.

Bitcoin Prediction Markets

One example of new tech with old tech

is Bitcoin prediction markets like

Predictious and Fairlay. 50 Bitcoin prediction markets offer a betting venue

for the usual real-world outcomes as

prediction markets always have, such as

elections, political legislation, sports

matches, and technology product

releases, and also serve as a good

source of information about the

developing blockchain industry. Bitcoin

prediction markets are one way to see

what insiders think about Bitcoin’s

future price directions, the success of

different altcoin and protocol 2.0

projects, and industry issues more

generally (e.g., technical development

issues with Bitcoin, such as when there

will be a hard fork—significant change

—of the code, and the level of difficulty

of the mining algorithm).

Smart Property

The blockchain can be used for any form

of asset registry, inventory, and

exchange, including every area of

finance, economics, and money; hard

assets (physical property); and

intangible assets (votes, ideas,

reputation, intention, health data, and

information). Using blockchain

technology this way opens up multiple

classes of application functionality

across all segments of businesses

involved in money, markets, and

financial transactions. Blockchain-

encoded property becomes smart

property that is transactable via smart

contracts.

The general concept of smart property is

the notion of transacting all property in

blockchain-based models. Property

could be physical-world hard assets like

a home, car, bicycle, or computer, or

intangible assets such as stock shares,

reservations, or copyrights (e.g., books,

music, illustrations, and digital fine art).

An example of using the blockchain to

control and transfer limited-run artworks

is Swancoin, where 121 physical-world

artworks, crafted on 30 × 30 cm

varnished plywood, are available for

purchase and transfer via the Bitcoin

blockchain (see Figure 2-1). 51 Any asset can be registered in the blockchain, and

thus its ownership can be controlled by

whoever has the private key. The owner

can then sell the asset by transferring the

private key to another party. Smart

property, then, is property whose

ownership is controlled via the

blockchain, using contracts subject to

existing law. For example, a pre-

established smart contract could

automatically transfer the ownership of a

vehicle title from the financing company

to the individual owner when all the

loan payments have been made (as

automatically confirmed by other

blockchain-based smart contracts).

Similarly, mortgage interest rates could

reset automatically per another

blockchain-based smart contract

checking a prespecified and contract-

encoded website or data element for

obtaining the interest rate on certain

future days.

Figure 2-1. Swancoin: limited-circulation

digital asset artwork (image credit:

http://swancoin.tumblr.com/)

The key idea of smart property is

controlling ownership and access to an

asset by having it registered as a digital

asset on the blockchain and having

access to the private key. In some cases,

physical-world hard assets could quite

literally be controlled with the

blockchain. Smartphones could unlock

upon reaffirming a user’s digital identity

encoded in the blockchain. The doors

of physical property such as vehicles

and homes could be “smartmatter”-

enabled through embedded technology

(e.g., software code, sensors, QR codes,

NFC tags, iBeacons, WiFi access, etc.)

so that access could be controlled in real

time as users seeking entry present their

own hardware or software token to

match that of the asset. Absent

preconfigured access tokens, when the

user submits a real-time access request,

the blockchain smart contract could send

an acknowledgment or token access

mechanism to the physical asset or user

ewallet, such as a one-use QR code to

open a rental car or hotel room.

Blockchain technology offers the ability

to reinvent identity authentication and

secure access in ways that are much

more granular, flexible, and oriented to

real-time demand than are currently

possible, elegantly integrating physical-