How will the world’s gradual economic migration into Bitcoin take place? As the Bitcoin platform allows for boundless new technology applications, and as technology can solve innumerable problems for mankind, there will be an infinite number of applications eventually created by Bitcoin. Just as the Internet continues to evolve through the introduction of email, the world wide web, instant messaging, social media, peer-to-peer file sharing (and now peer-to-peer money), Bitcoin itself will iterate and evolve to encompass more possible avenues of value than its initial design allowed. New applications will be layered over the blockchain to securely create digital escrow, digital stock issuance, digital land registry, and more. These are the macroscopic trends; it is equally interesting to see what could happen on the microscopic level.
The Business of Bitcoin
Let’s take a look at how Bitcoin will change the shape of business operations. As the technology and protocol improves and hyperbitcoinization comes to take place, business accounting will migrate to the data center. The cost savings associated with conducting finance in Bitcoin will compel businesses to adopt such practices. These cost savings include savings on labor, whereas before a whole department was needed to conduct finance, now there will only require one or two employees; it includes savings in business-to-business settlement in the form of faster payment methods, international currency conversion, simpler tax preparation, etc. Furthermore, new applications will emerge utterly unbeknownst to us today from the smart contracting capability that Bitcoin and other blockchain technologies provide. There will emerge entire industries related to protecting Bitcoin funds, obfuscating/proving balances and identities, and supporting entirely novel business-to-business applications such as a financial management tool that allows for recurring payments, autonomic departmental chargebacks, independent and joint purchasing powers via multi-signature wallets, and more.
The emergence of such technologies as virtualization and cloud computing, for instance, proves that “untrustworthy” or unrealistic technological feats become industry-norms all the time. It’s not uncommon now to hear large companies are almost fully virtualized – or, indeed, that they’ve migrated their whole data center to the cloud. While the proper and optimal degree of utilization for some companies will certainly differ with respect to their needs, companies like VMWare and Windstream are definitely main players in the IT landscape. The technologies they earn billions of dollars supporting only became popular in the last decade or so. It would not be surprising if some large, established security company like Kaspersky or Sophos or Symantec or Trend Micro started researching, building, and marketing hardware and software products to protect end user Bitcoin balances. Perhaps SatoshiLabs (the makers of Trezor) will grow to join the ranks of these companies as a security giant.
Survival of the Fittest
As companies begin adopting cryptocurrency for their financing and accounting functions, a few consequences follow: one, that the CFOs and finance directors will become more technologically savvy and/or that current CIOs and IT directors will assume the roles of financial management; two, that “financial matters” become functionally and hierarchically subordinate to IT management in that the control of money, payments, credits, etc. are now under the most literal purview of the technology department and its administrative staff; three, firms, as extensions of human action, will become far more independent in their decision making as decades of pent-up financial innovation enriches professional business life with such technology as multi-signature wallets, hierarchical deterministic (HD) wallets, sidechains, colored coins, and more; and four, firms will become less reliant on their relationships with banking, payment processing, and governmental networks and they will become more connected than ever to the Internet, and to partner firms, suppliers, and individuals.
Thus, the players in competitive markets will hurriedly advance the growth of Bitcoin and blockchain-based technology, as every business stands to gain from successful implementation. As businesses compete and strive with each other, business practices will be emulated and improved. With the exciting advent of 802.11ax WiFi standard and next-gen SSDs, the Internet of Things (IoT) is becoming painted more and more into reality. Devices will be able to communicate with each other regarding energy use, uptime, instruction sets, and more. Wireless access points from Aruba can already operate in a decentralized, controller-less manner, where every access point retains a full set of independently-deployable instructions regarding channel selection, radio frequency, SSID and subnet configurations, etc. and shares them with other nodes to route network traffic efficiently.
With Bitcoin technology, it is not implausible to imagine a world where these devices and others can automatically sign transactions to each other in order to distribute costs for energy usage, or to rent out capacity in dynamic, high-volume situations. The game-theoretic implications are, like with most technology, that rational actors will desire to maintain a comparative advantage over their competitors, and they will employ more and more advanced technology as a means to 1) reduce costs and thereby reduce prices, and 2) introduce new, formerly uneconomical, features as an entrepreneurial gambit to gain market share. Bitcoin satisfies these reasons in spades
Oh, The Options
Bitcoin wallets can take any number of forms. They can be backed-up physically in paper wallets and guarded with conventional physical security measures. They can remain software on a server, should a company decide to use a wallet like Armory to secure their funds. Lightweight wallets might be offered as a subscription basis in a cloud solution. They could even be browser wallets, where the web browser retains the private key and transaction details client-side, as with KryptoKit. This flexibility allows for a host of devices to be equipped with Bitcoin wallet features, including phone systems, printers, mobile devices, switches, servers, routers, desktop computers, storage devices, etc.
Beyond this, even the identity and wealth of a firm could be represented using blockchain technology. Shares of company stock could be represented as colored coins on the Bitcoin network (or by releasing a new coin on an alternate blockchain) and could be traded effortlessly between individuals and institutions. Crypto-equity is the name given to the parallel emergence of an immutable stock market, represented by cryptographically protected and authenticated digital assets. Patrick Byrne of Overstock, in fact, has partnered with developers from Counterparty to build a digital, decentralized stock exchange called Medici, which he hopes will compete and succeed over physical stock exchanges such as the NYSE. Finally, blockchain entries can serve as authentication tokens for employees with security clearance. By control of certain Bitcoin keypairs, one could demonstrate their identity without reference to a legal environment.
Wait, Another Thing for Network Admins to Maintain?
In all these ways and more, the gradual materialization of Bitcoin technology in the IT environments of small and large companies will change the face of business forever. Just as double-entry bookkeeping gave firms a better understanding of their accounting and enabled the rise of Renaissance banking, so too will the adoption of Bitcoin technology enable the rise of mass crowdfunding capabilities, micropayments, “as a service” cloud offerings, and the creation of decentralized, autonomous organizations. Bitcoin-capable vending machines will be able to purchase supplies and order repairs on their own; servers and personal computers will be able to purchase bandwidth from the routers and access points. This will lead to greater device efficiency and ultimately a massive reduction in human effort needed to maintain business operations and continuity. Blockchains allow for devices to spend and receive money autonomously and delegating such tasks “to the edge” frees human involvement, which can be used in any number of higher-priority projects. Combined with an advanced network monitoring tool like Paessler’s PRTG where data is collected from hundreds of sensors all throughout the technology environment, even entry-level network administrators could reliably watch over the given financial programming. Rules could be established where certain classes of devices spend X amount of bitcoin hourly, and only in such and such cases, do these other classes outspend them to the tune of Y, which might represent a signal to the administrative team to investigate the error. Whether it is a bandwidth clog, temperature differential, power outage, compression delay, or a backed-up printer, metrics gathered by resource use (bitcoin spend) would immediately give administrators information needed to resolve the issue.
A Win-Win Situation
The use cases for Bitcoin and other blockchain technology are limitless. For consumers, they offer decentralized marketplaces, free remittances, and a secure e-commerce option. For businesses, they offer a secure, programmable backbone for all company accounting and purchasing needs, greatly enhancing the efficiency of one’s devices and driving greater productivity. The shared incentives that businesses have in adopting Bitcoin technology ensures that “first to market” advantages will be as strong as they have ever been in the Bitcoin space. Simply returning a few percentage points of profit to the business by eliminating credit card fees would be wildly emulated. Marginal and submarginal producers could re-enter the market and consumers as a whole would benefit from the reduced costs of doing business.