In this final post in our blockchain blog series (check out part 1 and 2 of this series if you haven't already), we’d like to continue discussing CounterPath’s plans for blockchain implementation and what our various options are.
Public and Private Blockchain
There are essentially two types of blockchain – public and private. A public blockchain, associated with a particular cryptocurrency such as Bitcoin, would make the most sense for CounterPath as it is mature enough to address the needs identified above, and there are many available mining instances to satisfy the transactional requirements we foresee. A private blockchain would enable tighter control of the content, and we could extend its use to other areas, but the primary underlying concept of mining the transaction blocks to secure them would likely fall on CounterPath, almost exclusively.
Privacy and Anonymity
One final and important aspect of using blockchain within our products addresses an aspect that has become critical today – privacy and anonymity. In the normal case of supply and demand, customers are identified by their names, physical address and contact details. In some regions of the world, use of VoIP and other message sharing services can be difficult for consumers. Some of our customers have also stated they do not wish to give up their identity to servers based in areas such as Europe, North America etc. The blockchain does not identify users in the traditional way. What identifies you is your cryptocurrency address, so in the case of Bitcoin, a typical user identity (address) might be 1BvBMSEYstWetqTFn5Au4m4GFg7xJaNVN2. That is all that is required to make or receive payments. There is no link to you as a person, which provides the privacy and anonymity sought by some users. Correctly implemented, this would have significant benefits for users in some regions who at present are unable to make best use of connected services.
The CounterPath Approach
Essentially, blockchains are just fancy distributed databases unless you couple them with a cryptocurrency. The payment mechanism must be included with the blockchain to make it financially realistic, usable and relevant. Ultimately, CounterPath and our VAR network want to be compensated for the services and products supplied, and retail consumers and our corporate customers need a reliable, recognisable and accessible way to make payment.
There are many cryptocurrencies available, each of which has a set of characteristics for certain applications. Most people will have heard of Bitcoin and Ethereum, but there are many others to choose from. From our perspective we have not yet selected which one to use, but given our leaning towards a public blockchain and the business requirements stated earlier, it makes most sense to select an existing cryptocurrency and its blockchain rather than create our own.
One common criticism of choosing a cryptocurrency (with blockchain) for business use is that the volatility of the currency makes recognising it within a formal corporate environment a significant challenge. CounterPath already faces this with existing global fiat currencies that fluctuate daily. For example, in the 12 months between January 2017 and January 2018, the US dollar has fluctuated over 13 percent against the Euro. Other currencies fluctuate even more. This is a challenge to all companies dealing in multiple countries and trying to maintain consistent margins and prices.
Whilst there are a number of cryptocurrency exchanges that enable conversion into traditional fiat currencies (e.g, changing Bitcoin to and from US dollars) there may not be a need to do this immediately. The cryptocurrency may be viewed as “just another” currency and can be retained in its native form, recognised as such on a balance sheet, and traded or used as required for selected purchase and revenue streams – specifically those described above, but given the spread and success of cryptocurrencies, there is an increasing number of other services and products that may be bought using them.
CounterPath is currently researching the broad range of APIs available for merchants to interact with cryptocurrency wallets in order to facilitate the payment and receipts in a commonly accepted manner. These include services and APIs from blockchain.info, block.io and coinbase.
In summary, we believe the use of blockchain with an associated cryptocurrency is an elegant solution to support the new service rollout and consumption planned this year.
Looking forward, the rest of 2018 should be an exciting, pivotal period for CounterPath!
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