Cardano is Designing a Chip for Having Cash Like Experience with Cryptocurrency
Charles Hoskinson detailed on the cryptocurrency focused chip that IOHK is designing at its blockchain laboratory in the University of Wyoming.
Hoskinson believes that the creation of such a chip would result in several path breaking use cases, including cash like experience while dealing with cryptocurrency.
The idea came up when IOHK, the firm tasked with the creation of Cardano (ADA), started studying supply chain use cases and understood that there were not chips that could match the criteria such as embedding feature, capability to hold cryptographic keys, and cost effective:
“Really what we noticed is that there’s unfortunately no market standard right now for open-source trusted hardware that’s sufficiently powerful that it could be used with cryptocurrency, but also could be used in the supply chain.”
Hoskinson emphasized that all the job done for the creation of the chip will be available freely online (open source) and will benefit both Cardano and the entire cryptocommunity.
The chip could be utilized fo a number of supply chain uses, including the validation and administration of luxury products.
As an example, it could be utilized to confirm authenticity of Louis Vuitton handbags or for handling access of limited series Lambo purchases.
“And the only people who are allowed to buy those [limited edition models] are verified Lamborghini customers. And so you see a lot of these things. And so what ends up happening is people who are a verified customer, there’s a lottery system and if they win, they have the right to buy it. But almost always they actually sell that right to somebody else and they make a profit. So it’s like free money that Lamborghini gives their customers.”
Nevertheless, the chip does not cater to only premium goods. Real world uses cases include even agriculture and can be applied in emerging economies.
One of the use cases that would have far reaching implications is the conversion from digital currency to physical currency:
“You know, the whole point of Bitcoin was to go from cash to something that’s like cash online. But what if you want to go in the opposite direction? What if you wanted to go from a native cryptocurrency to something that has a cache like user experience? It’s very difficult to do without a hardware component.”
Cardano trusts that the emerging economies will act as a catalyst for the success of cryptocurrency in the years ahead.
For example, they found that smart phones are owned by only 2% of the six million farmers in Africa.
“So when you look at that, you say, well, OK, 98 percent are mostly offline and not banked or digital. So if I was building a money system for them, it would probably be a bad idea to say, ‘oh, you have to use an always online, purely digital currency.’ You need some other thing. And so how do I replicate the cash money experience but still have a blockchain backend? Well, what you do is you create a hierarchy where those two percent basically become like micro banks and then they can manage the issuance of these tokens to people and then their local phones or infrastructure can verify.”
The manner in which it would function is that the private key from one chip would be shifted to another. It would also offer the proof of deleting, ensuring that the key exists in only one gadget.
The chip could be incorporated in a mobile case and there won’t be any need for the internet connectivity to transfer cryptographic keys:
“So if you can do that, you can basically just tap phones locally with no Internet connection to each other and move value. Like you would a twenty dollar bill from one actor to another actor, and you’ve replicated the cash experience. Now, what’s nice about the solution is it’s infinitely scalable because these transactions actually don’t occur on the blockchain. So from the blockchain perspective, nothing has happened.”
As it can be understood, it is not a short-term project. In this regard, Hoskinson is concerned that the heightened trade war between China and the US could impact supply chain.
Furthermore, cryptography is regarded as a weapon and government has restricted its commercial use and export.