This is one of the best read I have had on Blockchain Technology, written by DANIEL JEFFRIES, I thought crypto enthusiasts and steemites could get a thing or two from it.

There’s one incredible feature of cryptocurrencies that almost everyone seems to have missed, including Satoshi himself.But it’s there, hidden away, steadily gathering power like a hurricane far out to sea that’s sweeping towards the shore.It’s a stealth feature, one that hasn’t activated yet.But when it does it will ripple across the entire world, remaking every aspect of society.To understand why, you just have to understand a little about the history of money.

The Ascent of Money

Money is power. Nobody knew this better than the kings of the ancient world. That’s why they gave themselves an absolute monopoly on minting moolah. They turned shiny metal into coins, paid their soldiers and their soldiers bought things at local stores. The king then sent their soldiers to the merchants with a simple message:“Pay your taxes in this coin or we’ll kill you.”That’s almost the entire history of money in one paragraph.

Coercion and control of the supply with violence, aka the “violence hack.” The one hack to rule them all.When power passed from monarchs to nation-states, distributing power from one strongman to a small group of strongmen, the power to print money passed to the state. Anyone who tried to create their own money got crushed.The reason is simple:Centralized enemies are easy to destroy with a “decapitation attack.” Cut off the head of the snake and that’s the end of anyone who would dare challenge the power of the state and its divine right to create coins.That’s what happened to e-gold in 2008, one of the first attempts to create an alternative currency.

Launched in 1996, by 2004 it had over a million accounts and at its peak in 2008 it was processing over $2 billion dollars worth of transactions.The US government attacked the four leaders of the system, bringing charges against them for money laundering and running an “unlicensed money transmitting” business in the case “UNITED STATES of America v. E-GOLD, LTD, et al.” It destroyed the company by bankrupting the founders.

Even with light sentences for the ring leaders, it was game over. Although the government didn’t technically shut down e-gold, practically it was finished. “Unlicensed” is the key word in their attack. The power to grant a license is monopoly power. E-gold was free to apply for interstate money transmitting licenses.It’s just they were never going to get them.And of course that put them out of business. It’s a living, breathing Catch-22. And it works every time.Kings and nation states know the real golden rule:Control the money and you control the world. And so it’s gone for thousands and thousands of years. The very first emperor of China, Qin Shi Huang (260–210 BC), abolished all other forms of local currency and introduced a uniform copper coin. That’s been the blueprint ever since. Eradicate alternative coins, create one coin to rule them all and use brutality and blood to keep that power at all costs.In the end, every system is vulnerable to violence.Well, almost every one.

The Hydra

In decentralized systems, there is no head of the snake. Decentralized systems are a hydra. Cut off one head and two more pop-in to take its place.In 2008, an anonymous programmer, working in secret, figured out the solution to the violence hack once and for all when he wrote: “Governments are good at cutting off the heads of centrally controlled networks like Napster, but pure P2P networks like Gnutella and Tor seem to be holding their own.”And the first decentralized system of money was born:Bitcoin.It was explicitly designed to resist coercion and control by centralized powers.Satoshi wisely remained anonymous for that very reason.

He knew they would come after him because he was the symbolic head of Bitcoin. That’s what’s happened every time someone has come forward claiming to be Satoshi or when someone has been “outed” by the news media as Bitcoin’s mysterious creator. When fake Satoshi Craig Wright came out, Australian authorities immediately raided his house. The official reason is always spurious. The real reason is to cut off the head of the snake. As Bitcoin rises in value, the hunt for Satoshi will only intensify. He controls at least a million coins that have never moved from his original wallets.

If VC Chris Dixon is right and Bitcoin rocket to $100,000 a coin, those million coins will shoot up to $100 billion. If it goes even higher, say a $1 million a coin, that would make him the world’s first trillionaire. And that will only bring the hammer down harder and faster on him. You can be 100% sure that black ops units would be gunning for him around the clock.Wherever he is, my advice to Satoshi is this: Stay anonymous until your death bed.

But resistance to censorship and violence are only one of a number of incredible features of Bitcoin. Many of those key components are already at work in a number of other cryptocurrencies and decentralized app projects, most notably blockchains. Blockchains are distributed ledgers, the third entry in the world’s first triple-entry accounting system. And breakthroughs in accounting have always presaged a massive uptick in human complexity and economic growth, as I laid out in my article Why Everyone Missed the Most Important Invention in the Last 500 Years.But even triple-entry accounting, decentralization and resistance to the violence hack are not the true power of cryptocurrencies.

Those are merely the mechanisms of the system, the way it survives and thrives, bringing new capabilities to the human race.The ultimate feature is one that Bitcoin and current cryptocurrencies have only hinted at so far, a latent feature.The true power of cryptocurrencies is the power to print and distribute money without a central power.Maybe that seems obvious, but I assure you, it’s not. Especially the second part.That power has always rested with the divine right of kings and nation-states.Until now.Now that right returns to its rightful owners: The people.And that will blow open the doors of world commerce, sowing the seeds for Star Trek like abundance economics, leaving the Old World Order of pure scarcity economics in the pages of history books.

There’s just one problem.Nobody has created the cryptocurrency we actually need just yet. You see, Satoshi understood the first part of the maxim, the power to print money. What he missed was the power to distribute that money.

The second part is actually the most crucial part of the puzzle. Missing it created a critical flaw in the Bitcoin ecosystem. Instead of distributing the money far and wide, it traded central bankers for an un-elected group of miners. These miners play havoc with the system, holding back much needed software upgrades like SegWit for years and threatening pointless hard forksin order to drive down the price with FUD and scoop up more coins at a depressed price.But what if there was a different way?What if you could design a system that would completely alter the economic landscape of the world forever?

The key is how you distribute the money at the moment of creation. And the first group to recognize this opportunity and put it into action will change the world.To understand why you have to look at how money is created and pushed out into the system today.

The Great Pyramid

Today, money starts at the top and flows down to everyone else. Think of it as a pyramid.In fact, we have a famous pyramid, with a third eye, on the dollar itself.One of the most cliched arguments against Bitcoin is that it’s a Ponzi or “pyramid” scheme. A pyramid scheme rests on the original creators of the system roping in as many suckers as possible, paying them for enrolling people in the system rather than by offering goods and services. Eventually you run out of people to bring in and the whole things collapses like a house of cards.

A Ponzi scheme is basically the same, in that you dupe the original investors with fake returns on their initial investment, a la Bernie Madoff, and then get them to rope in more suckers because they’re so elated by the huge returns.The irony of course is that fiat currency, i.e. government printed money like the Yen or US dollar, is closer to a pyramid scheme than Bitcoin. Why? Because fiat money is minted at the top of the pyramid by central banks and then “trickled down” to everyone else.

The only problem is, it doesn’t trickle down all that well.It moves out to a few big banks, who either lend it to people or give it to people for their labor. In fact, having a job or getting a loan are the primary methods that people at the bottom of the pyramid get any of the money. In other words, they trade their current time (with a job) or their future time (with a loan) for that money. It’s just that their time is a limited resource and they can only trade so much of it before it runs out.Think of economics as a game. Everyone in the system is a player, looking to maximize their advantage and the advantage of their team (a company, their family and friends, etc.) to get more of the money.

But to start the game you need to initially distribute the money or nobody can play. Distributing money sets the playing field. Now if you were in charge of the money, how would you distribute it to the network? You’d want to keep as much of it for yourself as possible, so you’d set the rules to maximize your own personal advantage. Of course you would! That’s what anyone in their right mind would do, maximize their own power to keep it for as long as possible.That’s precisely what the kings and queens of the ancient world did, and that’s what nation states do today. As Naval Ravikant said in his epic series of tweets on blockchain, today’s networks are run by “kings, corporations, aristocracies, and mobs.” “And the Rulers of these networks [are] the most powerful people in society.”That’s why every single system in the history of the world has distributed the money in one way:From the top down.Because it maximizes the advantage of the kings and mobs at the top.Unfortunately, that means most of the money never really leaves the top. It stays right there, as wasted and frozen potential that’s never realized.

There is little to no incentive for the money to move. Since money is power, hoarding it is literally hoarding more power and nobody would willingly give up that power.In other words, the game is rigged.What we need is a way to reset the game.Up until now, our prospects looked very dim. For example, we could pass a law, like a Universal Basic Income (UBI). That would give everyone a stream of money, pushing it out across the entire playing field and giving more people a chance to participate in the system. If more people can participate, we unlock all kinds of hidden and untapped value.

How many great inventors never managed to create their next breakthrough because they were stuck driving a bus seven days a week to feed their family, with no hope of free time or any clear path to digging themselves out of debt? How many great writers went to their graves never having written their great novel?

How many budding scientists never discovered the cure to cancer or heart disease?The problem with all of the plans before now, from UBI to socialism (high taxes on the rich to spread the wealth across the game) is that to redistribute the money after it’s already been distributed is nearly impossible. The people with that money rightfully resist its redistribution. And as Margret Thatcher said “The trouble with Socialism is that eventually you run out of other people’s money.”But what if the money is NOT already distributed?What if we don’t have to take it from anyone at all?

The inevitable outcome of all fractional reserve lending booms is bust.That’s the missed opportunity of all of today’s cryptocurrencies. Cryptocurrencies are creating new money. And unlike credit markets, which only pretend to expand the money supply, by lending it out 10x with fractional reserve lending, cryptocurrencies are literally printing money. And they aren’t loaning it to people, they’re giving it to them for their service to the network.It’s like microloans, without the loans. As Naval said: “Society gives you money for giving society what it wants, blockchains give you coins for giving the network what it wants.”So instead of giving all the money to a small group of miners, what if we could do better? A lot better?We can.I outlined one way in the an article about the Cicada project, How We Deliver a Universal Basic Income Right Now and Save Ourselves from the Robots.

The Cicada design flips the idea of mining on its head. Everyone on the network is a miner and nobody can have more than one miner.Miners are drafted randomly to keep the network running smoothly. You might be walking along, getting coffee and your phone gets called on to secure the network for a few minutes. After that it goes right back to sleep. As a reward, you might win new coins for doing nothing but having the application on your phone. Simple right?Because everyone is eventually drafted, everyone gets paid, in essence creating a UBI right now.And that’s just one way.If you think about it you can come up with dozens. Oh and don’t get caught up with thinking the only way to do this is with an ID. Lots of ways to randomly draft miners without that too. The key is to free your mind of the “Satoshi box” and think different.What we really need is to completely gamify the delivery of money, distributing it far and wide at the moment of creation.

Money is a Game. Embrace it. Give it out as rewards for using apps, or as distributed mining fees, or as shared cuts of the mining fees to organizations that provide value to the network are just a few more ways to do it right. Those are just the tip of the iceberg. There are thousands of ways but we just haven’t been thinking about the problem the right way.In other words, we missed the real power of Satoshi’s creation: the distribution of money.The first system that truly gamifies the delivery of money will rocket to exponential growth, upending the current system for good. That will set the initial playing field dynamically and allow players who never would have gotten into the game to compete. The more people who can participate, the more efficient and valuable the network becomes.“Networks have “network effects.” Adding a new participant increases the value of the network for all existing participants.”Right now, we’re not adding new participants fast enough to the cryptonets of tomorrow. The system is still vulnerable to the violence hack. Gamified money is the answer to exponential growth.

If the system can grow large enough, fast enough, it will become an unstoppable juggernaut, and the rest of the economic universe will need to come over to the new playing field. Once the Amazons and Google’s of the world join the playing field, their self-preservation instinct will kick in and they’ll want to protect and expand it. And this new network will behave differently. Instead of rewarding just the people at the top, who’ve been rigging the rules in their favor since the beginning of time, the game will completely reset with a new set of rules.What’s best for the whole network, not just the few players at the top, is best.“Blockchains are a new invention that allows meritorious participants in an open network to govern without a ruler and without money. They are merit-based, tamper-proof, open, voting systems. The meritorious are those who work to advance the network. Blockchains’ open and merit based markets can replace networks previously run by kings, corporations, aristocracies, and mobs.”Those that join the network and help it grow will thrive and flourish with it.

It will amplify their own value, making it grow faster than at any point in history. Every ounce they give to the system will magnify their own rewards.By c0ntrast, economies that stand against the network, attempting to cripple it with arbitrary rules, will pay a heavy price. The system will stretch across the globe and only the most essential rules will take root, because in order to upgrade a distributed system, you need vast consensus across the network. Since people can generally only agree on big, essential solutions, no self-defeating, narrow-minded rules will be allowed.Let’s say that a country decides to restrict ICOs to their citizens altogether or make cryptocurrencies illegal.

Instead of killing the network, the rules will blow back on their creators. Only their own people will suffer, as they won’t be able to participate in the explosion of new potential that ICOs bring to the table, draining money out of the economy into rival economies. Even worse, if they make cryptos illegal, they’ll simply drive that money underground, which will keep them from getting tax from their citizens, which will starve them of revenue.As the system spreads it will put people back in control of their own financial power.

No one will be able to take your money from you. And that is a good thing.Of course, not everyone thinks so. Some folks always worry that people will do bad things with this power, like commit crimes. But people will always do bad things. They do those things now and they always have. Crippling the system for everyone just to get those people is the height of insanity. It has never worked and it never will.Still, some people will never believe that.They trust their central powers unquestioningly. All you have to do is wrap up your argument in “protecting the children” or “fighting terrorism” and you can generally fool half of the people half of the time about any terrible policy you want.Yet I’ve found that people who see central systems as the answer to everything have usually lived in a stable central system for their whole lives.

A few days in an unstable system would change their minds very quickly.Don’t believe me?Imagine you lived in Syria right now.Your central infrastructure is destroyed, as is your money. You don’t want the war, but there’s nothing you can do about it. Now your house is gone, your friends and family are dead, your banks are bombed out and you’re cast out, adrift, homeless and penniless. Even worse, nobody wants you. The world has shifted from open borders to building walls everywhere. You’re not welcome anywhere, you can’t stay where you are and you’re broke.But what if your money was still there, recorded on the blockchain, waiting for you to download and restore a deterministic wallet and give it the right passphrase to restore it?How much easier would it be to start your life over?

Cryptocurrencies finally offer a way for us to control our own destiny. For the very first time in the history of the world, we have a way to generate and distribute money without a central power. People will have control over the money they rightfully earned.And even better, instead of setting the playing field so the game is always rigged, we can set the game up the way it was always meant to be played, with open competition and flexible rules in a dynamic system that allows everyone to compete.But we need to think big. We need to find a way to distribute the money far and wide without taking it from everyone else. Do that and we change the game forever.That’s what my team is working on. Want to talk? Find us in DecStack.com. Centralized money is the ultimate chain.Cut that chain and you free the world...

A bit about Daniel Jeffries

He is an author, engineer and serial entrepreneur. During the last two decades, He has covered a broad range of tech from Linux to virtualization and containers.

https://hackernoon.com/@dan.jeffries?source=post_header_lockup