republished from MobilePaymentsToday
Proximity messenger applications nowadays are being used for all types of social science experiences from dating (e.g. Tinder) to networking (e.g. Spiral). These apps have all the buzzwords that investors look at for being social, mobile and local. As a result, valuations are becoming loftier as customers sign up and more features are put into place. With all the interest in this new form of technology, cryptocurrencies may have actually found a great use case in location-based payments.
Payment technology channels such as PayPal have enabled consumers to conduct commerce worldwide for a long time. Proximity applications now can start allowing channels to be built to exchange money among people within close vicinity of each other. Indeed, the promise of close proximity payment is what credit cards offered and NFC payments (Apple Pay included). However, the fact that both these technologies are quite new makes it unlikely that that we will see this technology in use every day. What is more likely, however unfortunate, is catastrophe or political upheaval that happens where normal payment channels are blocked. Individually and collectively, these types of events may be the best use case for cryptocurrencies and mesh networks.
Cryptocurrencies, such as bitcoin, is a very divisive subject for those interested in technology. However, underneath the currency is a powerful technology (the blockchain) that is potentially useful in many arenas.
To put it simply, cryptocurrencies are digital currencies that can be verified and operated independently of a centralized bank. It sounds geeky and techy, similar to how Google was initially viewed, but that’s exactly why so much investment is pouring into bitcoin companies. I’m not suggesting that fiat money will be replaced any time soon, but cryptocurrencies will become increasingly valuable to anyone who is looking to engage in commerce on a global scale.
The biggest users to date of this technology are people such as the Chinese who want to avoid government regulation and get assets out of the country. However, what will offer the biggest sign of acceptance will be when a country such as Argentina defaults and the currency subsequently crashes. In this case, what cryptocurrencies can offer is an alternative to those who want to buy and sell on the open market because no one will accept Lira anymore. Yes, it will be a tragic event but one that can create a global shift in mindset to a currency that extends beyond national borders.
Mesh networks are small, standalone communications exchanges that rely on phones (or other devices) talking directly to each other, with their range sometimes amplified through routers or other extenders. These networks allow each device to connect directly to others nearby using Bluetooth, peer-to-peer Wi-Fi, or traditional Wi-Fi networks. Because you’re connecting directly with other users, you don’t actually need to be connected over Wi-Fi or a cellular network. The aim of these networks is to create hyper-local communications. Not simple enough? It’s what the Internet was back in the day: a decentralized, anonymous, citizen-based, secure communication.
Each connection in a mesh network is not important to the overall strength of the community. This is not the case in a centralized network that offers a hub to form relationships. There is no authority in a mesh network. The fact that there is no authority opens up the possibilities of hundreds of new forms of technology, especially with the Internet of Things becoming a reality.
Since mesh network devices can hand off signals, they have an ability to connect thousands of sensors over a wide area, such as a city, and operate in concert. These networks have the added ability of working around the failure of any individual device. In theory, mesh networks will allow actions to be truly democratized as well as giving users of the network the ability to see every other user within the network.
To date, mesh networks have found the most value in times of crisis. For example, the Serval project in Australia was launched after the devastating 2010 earthquake in Haiti to provide emergency communications even when larger cellular and Wi-Fi networks are down. The Serval app allowed people to communicate directly with each other using Wi-Fi over a distance of over 100 meters.
Mesh Networks + Cryptocurrencies
The combination of mesh networks and cryptocurrencies may be a natural progression in the story of location-based payments. Barring Mark Zuckerberg’s grand plan of bringing global connectivity, this theoretical idea can become a real product. Payments can be transacted without waiting for the authority of a central clearinghouse, which essentially is a technology-driven network that can replace the bureaucratically driven financial hierarchy.
There’s been a constant drone of probable or improbable uses of bitcoin. Unfortunately, mesh networks and cryptocurrencies may not find a solid use case until a major disaster happens that requires people to not only communicate but also transact with each other. In the case of Hurricane Katrina, imagine if the folks who went through the disaster were able to pay for goods and services through their phones. The obvious impediment is battery power, but that’s for another discussion. In another vein, think of paying someone on a plane, the Burning Man event or in remote villages. I’m not here to argue the long-term viability of bitcoin, but the long-term value in the underlying technology. Its value may be in the ability to make and receive payments where there is little or no Internet connectivity but a need to transact where currency and stability is an issue.