The ability to write software is already a game changer today, but is going to be one of the most defining skills in the future. As the president and co-founder of a software development company, of course, I live and breathe it every day. My very existence revolves around the ability to write software programs; I might seem biased. But think about how many times you interface with someone else’s software. Heck, you’re probably reading this very article on a website written in someone’s software. I wrote this article using a software platform written by a well-known software developer. It is everywhere.
Perhaps less conspicuously present is a fast-growing and highly disruptive software technology called cryptocurrency (registration required), the most notable of which among consumers is bitcoin. I liken the adoption of cryptocurrency today to the early users of the internet back when you had to connect to it using AOL and a dial-up modem. Both parties knew, deep down, that what they were participating in had the potential to be life-changing tech, but few knew that it would have the potential to change the world over.
As a software development agency working with clients operating with cryptocurrency, my company has seen this surge in interest and market gain. Software development can enhance the use of cryptocurrency. These are some ways these two incredible technologies can work together and the real world implications.
Blockchain Contracts
The blockchain is a record of all cryptocurrency transactions that have occurred on the network and serves as a way to publicly validate and verify the integrity of a transaction. Because the blockchain and all of its transactions are publicly accessible, the incidence of fraudulent transactions is significantly reduced and thus the reliability of transactions are generally higher than traditional forms of payment such as credit card.
This same principle can apply to other transactions that are performed on the blockchain as well. Enter blockchain contracts. A blockchain or digital contract is simply a software program that acts as an agreement where pre-programmed terms can be written to self-execute and self-enforce. This allows parties to do business together without the need for a middleman such as an attorney and provides a way to vastly reduce the cost of the transaction as well as provide significant savings in time that might normally be spent in the contract negotiation process.
The real world implications are being studied by the largest immediate benefactors of this disruptive technology, the banking industry. According to an article by the Deloitte University Press, "the Depository Trust & Clearing Corp. (DTCC) processed over $1.5 quadrillion worth of securities, representing 345 million transactions. Santander Bank’s innovation fund, Santander Innoventures, expects blockchain technology to lead to $15–20 billion in annual savings in infrastructure costs by 2022." That figure is hard to ignore, even though it doesn’t necessarily place the bet on any single existing cryptocurrency, but rather the blockchain contract tech as a whole.
Automated Trading Bots
One of my favorite topics around leveraging computer programming in the crypto space is in the use of it in automated exchange trading bots. Having spent the better half of my early career as an investment advisor representative and former FINRA-licensed individual, I naturally have a passion centered around where software meets finance and how this applies to the world of cryptocurrency trading.
Trading bots are simply computer programs that determine when to buy and sell cryptocurrency on an exchange. They are very similar to the high-frequency trading algorithms that are employed by institutional investors trading on a traditional stock exchange. However, obtaining access to the feed and bandwidth on a regulated stock exchange to make HFT programs profitable are prohibitively expensive for the average person. Cryptocurrency exchanges, however, were born out of the very essence of decentralization. Most have well-published APIs that are publicly accessible. A software developer with a computer and internet connection can essentially open an account and interface with this API to perform a number of functions including buying and selling. A more advanced trading program could even analyze patterns across a wide range of cryptocurrencies and employ complex trading strategies such as statistical arbitrage or resolve pricing inefficiencies by utilizing APIs across multiple exchanges.
What we are talking about is essentially giving a software developer the ability to perform the exact same market trading strategies that the large institutions employ on traditional exchanges. Giving this much power and access to the public is one of the things I love about today’s cryptocurrency markets. In addition to this, regular users have access to high powered charting tools with information into the order spread, market depth, order book and trade history. To get this level of information from a traditional financial institution requires having a high account level with specialized access and very high fees.
Conclusion
Continued advancements in software technology are completely disrupting the very world we live in. Nearly everything around us is powered by it, from the computers and smartphones we use to read this article, to the $100 billion dollar cryptocurrency market that is still largely tucked away and out of sight to the general public. Having a core skill set in computer programming is not a trivial thing. It can open up the possibilities of exploration into many growing technologies and at least in the context of this conversation, serve to democratize the massive global currency transaction market.
