Highly controversial elections are a bad omen for any society, both culturally and economically. With the solution in the form of a blockchain that looks us in the face, blockchain payment platforms can exert a pressure wave to adopt the innovative technology during voting.
Exhausted blockchain exuberance?
Those who keep a close eye on the crypto space may remember a time when blockchain was the star of public conversation. Hundreds of articles had been written on blockchain as a revolutionary technology that was just about to permeate every area of human endeavor. From government agencies and military logistics to payment and voting systems, blockchain has been hailed as the next big thing after the internet itself.
Just take a look at the following Google Trends chart, which illustrates the interest in the term “blockchain” over the past five years:
Source: Google Trends
After this initial exuberance, however, a phase of disillusion set in. This doesn’t mean that blockchain technology isn’t as important as it has been portrayed, but it does mean that the practical challenges it faces have somewhat dampened expectations for mainstream acceptance of blockchain. To understand why this is so and where the blockchain is going, let’s briefly review the key features.
The subject of trust has always come up when two parties dealt with each other. Forms of trust based on identity and security:
- Ability to verify one’s identity so that feedback and reputation can emerge, be it positive or negative.
- Ability to secure a trade while having the lowest cost of that security.
From the Bronze Age to the Digital Age, people have done their best to maximize these two pillars of trade. Blockchain rightly entered the scene as the holy grail of transactions:
- Each block in the linked chain records the type (amount) of the transaction, the identification of the participants (although pseudonymous for real identities) and the time stamp of the transaction.
- This data set is insensitive to manipulation, since each block with all chains is distributed over a publicly accessible network. In other words, this record – a distributed ledger – is automatically checked on all network nodes with every transaction.
- The distributed data set then becomes a permanent block in the chain that is easily accessible at any time without the possibility of change.
Old accountants would have been amazed at such a financial innovation. Honest individuals may even have referred to it as perfection incarnated, while dishonesty would have been dismayed when the possibility that financial books could be “fixed” was completely eliminated.
Blockchain as the guardian of democracy?
Understanding blockchain makes it easy to grasp its many groundbreaking applications. Not only in payment transactions, but also in important areas of society such as voting. Voting has always been a hot topic around the world. Indeed, governments tend to use voting irregularities in other countries as a lever to delegitimize these governments.
Belarus, Venezuela, Russia, Iran … any country that in any way opposes the interests of the United States can be delegitimized without evidence. On the other hand, other governments cannot use the same leverage to achieve the same effect on allegations of election fraud in the US.
Thanks to its immutability, decentralized security and transparency, blockchain has all the essential ingredients to purify the air by both removing the dishonest leverage of competing nations and using an unprecedented power of legitimation. Given that the last two presidential elections in the United States have been highly controversial at the other end of the political spectrum, there is clearly an urgent need for blockchain voting. That is, if social cohesion is to be maintained.
Fortunately, blockchain voting platforms are within our reach if only we have the will to take advantage of them. By linking already established KYC (Know-Your-Customer) protocols for identity verification with private keys, through blockchain coordination, reconciliation calculation errors, calculation speed, corruption, high costs, accessibility and a lack of ID verification can be avoided.
Ready-to-go voting apps with blockchain are already available:
For example, Voatz had already been used for foreign voters in the 2018 election in West Virginia. Likewise in 2019 for Colorado, Denver and Utah Counties. Needless to say, blockchain voting is a serious barrier for political parties to abuse the voting system. It is therefore difficult to say whether such a system will ever be implemented as a standard voting solution.
Given that over 80% of Americans own a smartphone, given the 66% turnout in the 2020 election, the only remaining obstacle to a potentially vastly superior blockchain vote is political will.
Blockchain speed and fees
Compared to blockchain voting, blockchain as a payment infrastructure seems to be a minor problem. After all, increased social instability due to a lack of transparent voting ultimately has a negative effect on the entire economy. However, there is no better way to develop blockchain technology and help people trust it than to use it in the payments space. The people could, in turn, demand its application in politics.
According to PwC’s 2020 report, there is certainly interest in moving to blockchain. Unfortunately, this transition marks a departure from existing legacy systems, which requires a lot of development time and training. Based on PwC’s survey, more than half of those surveyed – 57% – reported uncertainty about how to take full advantage of blockchain technology despite being aware of its benefits:
“It could be blockchain systems far cheaper than existing platforms as they remove an entire layer of overhead devoted to validating authenticity. In a distributed ledger system, the confirmation is effectively done by everyone on the network at the same time. This so-called “consensus” process reduces the Need for existing intermediaries who touch the transaction and charge a fee. “
This is one of the most pressing technical problems plaguing the early stage of the blockchain Transaction Speed Per Second (TPS). For example, the dominant cryptocurrency blockchain, with a market cap that surpasses even Visa and MasterCard – Bitcoin (BTC) – can only process 7 TPS. On the other hand, Visa can reach TPS 24,000. Such a huge difference in capacity results in a difference in seconds versus hours or even days.
Still, Bitcoin was conceived as a conservative deflationary currency that takes on the role of digital gold. Hence, people are not prioritizing Bitcoin’s blockchain speed. Other blockchains have been developed for transactions that can compete with Visa and SWIFT:
- Ethereum – a programmable blockchain that is responsible for creating smart contracts. Essentially, this means that code is executed whenever predefined conditions are met. The transition to Ethereum 2.0 should ultimately result in 4,000 TPS.
- Ripple (XRP) – specially designed to rival the SWIFT infrastructure, it can handle 1,500 TPS with a theoretical cap of 50,000.
- Stellar (XLM) – a ripple fork that can handle 1,000 TPS.
As you can see, these blockchain alternatives are still a long way from VISA’s 24,000 TPS. Note, however, that PayPal, the largest payment processor, can only process 193 TPS. When we cross the 1,000 TPS threshold, we speak of a matter of seconds, which is perfect for the vast majority of use cases. In addition, intelligent automated payment platforms like Wave do not report any problems with their customers being served quickly.
In the end, people may prefer slower TPS to higher transaction processing fee. Cumulatively, average credit card processing fees of 1.3 to 3.3% can result in high costs. According to the 2019 Federal Reserve Payments Study, the average American family has to leave on around $ 1,800 for transaction fees alone. In contrast, the minimum fee offered by Ripple is 0.00001 XRP (~ $ 0.31), which allows for both fast and fast limitless transactions.
Can blockchain support the existing payment systems?
The current obstacle to the adoption of blockchain as a payment system is its maturation. There are multiple blockchain ecosystems in the game, which means that one blockchain cannot be provided for all purposes. This makes it difficult for financial institutions and developers to focus on a single blockchain solution. As we’ve seen with the success of eToro, people don’t like closed ecosystems, largely thanks to the CopyTrader feature. Instead, they prefer to reach across the aisle to maximize their trading performance.
If they develop a proprietary blockchain, they will likely end up in a closed ecosystem, with a high probability that another alternative with even lower fees will emerge at higher speeds. The most obvious solution to this problem is this Open source blockchain interoperability – Facilitating payments across blockchains. Interledger Protocol STREAM seems to be the future for this model.
In addition, the incentive to use such blockchain interoperability has never been stronger. After the decision of the OCC to give US banks access to public blockchains and to serve as the main book node, an increased penetration of the blockchain in payment platforms can be expected. As this dynamic builds up, people will demand that the pinning property of the blockchain be applied to other areas of human congress – voting.
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