“Around the world, many people, Europeans in particular, were outraged by the Edward Snowden revelations that showed the extent to which the US government had access to the world’s electronic stream of communication.”
Banker is a supply chain and logistics analyst who writes for the ARC Advisory Group. The group “works closely with leading manufacturers, retailers, logistics service providers, and technology companies” to “assist them with strategic decisions, [and] guide them with industry best practices and latest technology solutions.”
He wrote in the blog on February 2:
“Privacy ... is not something that matters just to drug dealers.”
Privacy also matters to people who run companies; in this case, European ones. He says they “could see value” in their financial transactions not only being cheaper, but also “being kept far more private and secure than is possible under current processes.”
In a January 23 Wall Street Journal article, Michael J. Casey and Paul Vigna—the authors of the new book “The Age of Cryptocurrency”—explain these current processes. In Banker’s industry jargon, they demonstrate the “order-to-cash supply chain.”
Casey and Vigna describe what happens when a customer uses a credit card to buy a cup of coffee:
“Before the store actually gets paid and your bank balance falls, more than a half dozen institutions—such as a billing processor, the card association (Visa , MasterCard , etc.), your bank, the coffee shop’s bank, a payment processor, the clearinghouse network managed by the regional Federal Reserve Banks—will have shared part of your account information or otherwise intervened in the flow of money.
“If all goes well, your bank will confirm your identity and good credit and send payment to the coffee shop’s bank two or three days later.”
They compare this process to the same transaction in Bitcoin. Banker’s description:
“The Bitcoin transaction has fewer intermediaries and consequently far lower fees, it takes from 10 minutes to an hour for the Bitcoin network to confirm a financial transaction (in contrast with the two or three days common to the current process), and the personal information of users or companies isn’t divulged.”
The second scenario not only “slashes trillions in financial fees,” it also requires the transfer of far less information, slashing the risk of data falling into the wrong hands.
The traditional credit card process increasingly happens “in the cloud.” Banker forecasts that such applications “will account for 50 to 60 percent of the total enterprise application market within 5 to 6 years because of advantages related to speed of development of new functionality, easier implementations and much, much easier upgrades.”
Cloud services may save time, but they can increase the risk of stolen data. Bitcoin, however, could save time while securing data. Startup companies in the crypto space are working to build upon these benefits.
Mike Lorrey, president and chairman of Galactic Systems, Inc., says many companies “go beyond payments privacy to embedding contracts, including copyright or DRM [digital rights management], into blockchain technology.”
Rik Willard, in charge of branding and marketing at MintCombine, says his company “has been studying blockchain DRM with a former CEO of Virgin Records for the past year. ... It makes perfect sense that companies everywhere will begin to look into this more as time goes on. ... It’s going to be global.”
Bitcoin and blockchain technologies are global, but after the Snowden revelations, Banker says that—“while not publicly discussed”—large European companies are expressing a desire to protect themselves against data sniffing by the U.S. Specifically:
“Prospective and existing clients [of cloud solutions] desire to know where their datacenters [reside]; and they don’t want those datacenters to be located in the U.S.”
The biggest block to such companies seeking safety in Bitcoin, of course, is the fluctuation in the cryptocurrency’s price. If the swings lessen, Banker predicts, companies may begin to see the value of Bitcoin technology to their privacy.
Did you enjoy this article? You may also be interested in reading these ones: