Dad: (inquisitive look): Dilpreet, is #Blockchain the same as #Bitcoin? And what is this #DLT that you put on your FB updates?
Mom: (eureka moment): Oh yes, Bikky, I know about this. #Blockchain is a new transformative #technology while #Bitcoin is a #DigitalCurrency which uses this technology. It has been around for almost a decade. Earlier they bought pizza and coffee with Bitcoin, next year people will buy a car with it. Later on, homes! Right, Dilpreet?
Me: Wow Mommy! You nailed it! Blockchain is a #DLT which means “Distributed Ledger Technology”. Earlier, your Bank and #Central Clearing Systems verified your financials transactions and provided the entire Financial #Infrastructure including bank accounts, cheque book, debit cards, mobile banking, etc. But we are slowly moving to #Peer to Peer transactions which may not require any such centralised authorities. Just like you use PayPal or PayTM, but what is revolutionary is that you may not need a bank account at all.
Dad: (confused): So who will verify transactions?
Me: Computers all across the world! These will act as distributed nodes across the world which go by the nomenclature of #Miners. Dad, Nodes are powerful computers, running with #ASICs which are “Application Specific Integrated Chips” to verify transactions. In fact, #Bitcoins are the reward for these Miners so that they are incentivised to verify billions of transactions going ahead. Nobody can fool the system! You can become a Miner too, Dad. Anyone can!
Dad: (not quite convinced): What is so revolutionary about all this? They say it’s a speculative #bubble. I read that some Twins, aged 36 are the first #BitcoinBillionaires. In fact, I also read that Bitcoins total value or #MarketCap is greater than the economy of #New Zealand, #Qatar, #Kuwait and #Hungary. In fact, it is bigger than #GoldmanSachs and #UBS put together. Bigger than #Boeing or #Airbus. #PWC and #E&Y are taking payments in Bitcoin. #CME, #CBOE and #Nasdaq will be listing Futures contracts for Bitcoin. Am I missing a point? I still don’t understand what is so revolutionary??
Mom: (eureka sentiment): Bikky, we trust #Governments, #Central Banks, big institutions with our money. They regulate the entire system’s money supply. Inflation is a direct impact of policy decisions. There has never been a true #Market based on pure demand supply dynamics. Decisions are a sum total of national goals, policy objectives and sometimes just greed. Global financial crisis (#GFC) is an example of this complex web. The world will change forever once any two persons or entities can transact without any biases purely based on demand and supply. I think this Blockchain technology is solution for the concept of #Trust but in a #decentralised extremely advanced technological way. It uses the concepts of #Cryptography for network security. Dilpreet, surely there are risks in this nascent stage?
Me: Wow! Mom Dad, just amazing!! Mom, there are far too many risks today, the biggest being the lack of consensus among the #Technocrats who are developing all of this. Other risks are #regulatory hurdles, #hacking attempts to fool novices, great risks to #environment due to exhaustive energy consumption of running the mining network. We don’t know the #tax implications, #inheritance laws, #legal recourse for disputes or implications of #MoneyLaundering attempts. Dad, in fact, it could well be a #bubble, if the very underlying technology does not find #commercial real-world applications to make our lives better - happier, more convenient, more productive and evolved. However, Dad, on second thoughts, we might be at the cusp of a technological #revolution without realising it.
Dad: (matter of fact look): Hmm, they say it could be #DigitalGold. Lot of easy money from the QE (Quantitative Easing) program might be flowing into this through #Venture Capitalists. I wonder if it will be a currency for transactions or just a store of value. However, it seems to me that #Institutional investors are adopting it in a big way and this might lead to a #consensual delusion to see Cryptocurrency as #hedges against Fiat or paper currency failures. Venezuela and Zimbabwe, with their hyper-inflation problems, might be the early adopters. Today we say it is a bubble, tomorrow we might say it is #SafeHaven if the #Futures exchanges help with a balance of #Bulls and #Bears to reduce #Volatility. I figured that the total supply of Bitcoin will have an upper cap forever. That is the only revolutionary thing for me! Well, probably, if we can exponentially reduce transaction costs, we might realise the goal of making Micropayments, International remittances seamlessly and Micro-donations for any cause that touches our heart! What’s next Dilpreet?
Me: (overwhelmed with desire to sound credible): It will all come together, Mom Dad, Bitcoin or Ether, which is Rank 2, might become #WorldCurrency. It decentralises the concept of #power, provides #pseudo-anonymity, solves problem of #counterfeiting and digital imitation. The entire concept of #money and #wealth will evolve. There might be exponential growth in the non-financial domain with #SmartContracts using #Blockchain, say business partnerships, employment contracts, endorsements, etc. It will combine with #IoT (Internet of Things), #VR (Virtual Reality), #AI (Artificial Intelligence) and #Quantum Computing. #Voting, #polling and #market surveys will use #Blockchain technology.
Now let’s eat Navratan Korma!
p.s. Dear Reader, hope this was helpful for you, thank you!