Imperial Cleaning

Understanding the blockchain

But what exactly is it?

The blockchain is the new database — get ready to rewrite everything

ISAAA Brief 44-2012

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It's heavily dependent on technology-just not the technology that comes out of a chemical plant. So could we make do without the chemical plants? Inspired by a field trip to a nearby organic farm where the farmer reported that he raised an amazing 27 tons of vegetables on six-tenths of a hectare in a relatively short growing season, a team of scientists from the University of Michigan tried to estimate how much food could be raised following a global shift to organic farming.

The team combed through the literature for any and all studies comparing crop yields on organic farms with those on nonorganic farms. Based on examples, they came up with a global dataset of yield ratios for the world's major crops for the developed and the developing world. As expected, organic farming yielded less than conventional farming in the developed world for most food categories, while studies from the developing world showed organic farming boosting yields.

The team then ran two models. The first was conservative in the sense that it applied the yield ratio for the developed world to the entire planet, i. The second applied the yield ratio for the developed world to wealthy nations and the yield ratio for the developing world to those countries. The first model yielded 2, kilocalories "calories" per person per day, just under the world's current production of 2, calories but significantly higher than the average caloric requirement for a healthy person of between 2, and 2, The second model yielded 4, calories per person per day, 75 percent greater than current availability-and a quantity that could theoretically sustain a much larger human population than is currently supported on the world's farmland.

It also laid to rest another concern about organic agriculture; see sidebar at left. The team's interest in this subject was partly inspired by the concern that a large-scale shift to organic farming would require clearing additional wild areas to compensate for lower yields-an obvious worry for scientists like Badgley, who studies present and past biodiversity. The only problem with the argument, she said, is that much of the world's biodiversity exists in close proximity to farmland, and that's not likely to change anytime soon.

The idea of those areas being pesticide-drenched fields is just going to be a disaster for biodiversity, especially in the tropics. The world would be able to sustain high levels of biodiversity much better if we could change agriculture on a large scale. Badgley's team went out of the way to make its assumptions as conservative as possible: Skeptics may doubt the team's conclusions-as ecologists, they are likely to be sympathetic to organic farming-but a second recent study of the potential of a global shift to organic farming, led by Niels Halberg of the Danish Institute of Agricultural Sciences, came to very similar conclusions, even though the authors were economists, agronomists, and international development experts.

Like the Michigan team, Halberg's group made an assumption about the differences in yields with organic farming for a range of crops and then plugged those numbers into a model developed by the World Bank's International Food Policy Research Institute IFPRI. This model is considered the definitive algorithm for predicting food output, farm income, and the number of hungry people throughout the world.

Given the growing interest in organic farming among consumers, government officials, and agricultural scientists, the researchers wanted to assess whether a large-scale conversion to organic farming in Europe and North America the world's primary food exporting regions would reduce yields, increase world food prices, or worsen hunger in poorer nations that depend on imports, particularly those people living in the Third World's swelling megacities.

Although the group found that total food production declined in Europe and North America, the model didn't show a substantial impact on world food prices. And because the model assumed, like the Michigan study, that organic farming would boost yields in Africa, Asia, and Latin America, the most optimistic scenario even had hunger-plagued sub-Saharan Africa exporting food surpluses.

In other words, studies from the field show that the yield increases from shifting to organic farming are highest and most consistent in exactly those poor, dry, remote areas where hunger is most severe. That is, if other problems can be overcome. The two sides are simply too far from each other and they ignore the realities of the global food system. These conclusions about yields won't come as a surprise to many organic farmers. They have seen with their own eyes and felt with their own hands how productive they can be.

But some supporters of organic farming shy away from even asking whether it can feed the world, simply because they don't think it's the most useful question. There is good reason to believe that a global conversion to organic farming would not proceed as seamlessly as plugging some yield ratios into a spreadsheet.

To begin with, organic farming isn't as easy as farming with chemicals. Instead of choosing a pesticide to prevent a pest outbreak, for example, a particular organic farmer might consider altering his crop rotation, planting a crop that will repel the pest or one that will attract its predators-decisions that require some experimentation and long-term planning. Moreover, the IFPRI study suggested that a large-scale conversion to organic farming might require that most dairy and beef production eventually "be better integrated in cereal and other cash crop rotations" to optimize use of the manure.

Bringing cows back to one or two farms to build up soil fertility may seem like a no-brainer, but doing it wholesale would be a challenge-and dumping ammonia on depleted soils still makes for a quicker fix. Again, these are just theoretical assumptions, since a global shift to organic farming could take decades. But farmers are ingenious and industrious people and they tend to cope with whatever problems are at hand.

Eliminate nitrogen fertilizer and many farmers will probably graze cows on their fields to compensate. Eliminate fungicides and farmers will look for fungus-resistant crop varieties. As more and more farmers begin to farm organically, everyone will get better at it. Agricultural research centers, universities, and agriculture ministries will throw their resources into this type of farming-in sharp contrast to their current neglect of organic agriculture, which partly stems from the assumption that organic farmers will never play a major role in the global food supply.

So the problems of adopting organic techniques do not seem insurmountable. But those problems may not deserve most of our attention; even if a mass conversion over, say, the next two decades, dramatically increased food production, there's little guarantee it would eradicate hunger. The global food system can be a complex and unpredictable beast. It's hard to anticipate how China's rise as a major importer of soybeans for its feedlots, for instance, might affect food supplies elsewhere.

It's likely to drive up food prices. The graph and table below illustrate these classifications, and I will narrate them, sequentially. The currency -related segment targets money transfers, payments, tips, or funding applications. The end-user typically goes to an exchange or uses their own wallet to conduct such transactions, benefiting from transaction cost reductions, speeds in settlements, and freedom from central intermediaries.

For example, decentralized identity or decentralized ownership is a horizontal blockchain service, but it can be applied to any other vertical segments, such as for videos, music, or photography, just to name a few. Smart contracts are small programs or scripts that run on a blockchain and govern legal or contractual terms on their own. They represent a simple form of decentralization. They will become available in a variety of application areas, such as for wagers, family trusts, escrow, time stamping, proofs of work delivery, etc.

In essence, they are about moving certain assets or value from one owner to another, based on some condition or event, between people or things. The examples given are only a sample. In order to properly evaluate the network effect puzzle, we need to look at the ecosystem along three key dimensions:. The third dimension includes the various players and actors, whether they are based on the bitcoin blockchain or another one, the bitcoin currency or another one, or a fully independent platform.

We could place all of this in a matrix, as depicted below, and if you evaluate your favorite players and actors inside each intersecting box, you will find there are a few holes, plenty of opportunities for improvements, and a lot of works-in-progress.

All what bitcoin or another cryptocurrency player has to do is to overlay itself on the Internet with its own set of services, and to achieve network effects within those services and applications, based on their own merits.

There is a strong case to be made for keeping bitcoin or any other blockchain as a thin platform and to not bloat it excessively — rather, let it enable a multiplicity of use cases on top of all of that.

Imagine that if you used a certain browser, you would only have partial access to the Internet. That would be awful. There are developers who are writing their app services to be blockchain-agnostic in the future.

Rather, we should see it as a multiplicity of innovation and experimentation, and we should celebrate it and support it. The reality is that the crypto-led computer science revolution is giving us concepts that go way beyond a one-currency type of scenario. Yes, bitcoin is programmable money, but the blockchain is also programmable value, programmable governance, programmable contracts, programmable ownership, programmable trust, programmable assets, etc.

And we have barely scratched the surface on these applications. It is too early to tell exactly where the cryptocurrency landscape will end up. Maybe it will be like social media, with four giant platforms, dozens of large players, thousands of other companies as beneficiaries, and of course, millions if not billions of end-users. And that would be a good thing. William Mougayar is a 4x entrepreneur, venture advisor and angel investor, who previously held senior positions at Hewlett-Packard and Cognizant.

He is the founder of Startup Management where he blogs and curates on start-ups and the cryptocurrency economy. Under water in Kona, Hawaii source:

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