COMMON MYTHS ABOUT CRYPTO.
The invention of blockchain has let a genie out of a bottle. The decentralised secure distribution of wealth, information and computing power across boarders
We’ve come a long way over the past year with the perception of the cryptocurrency scene.. However there is still much confusion about the difference between digital payments such as visa/master card or PayPal, snd blockchain based solutions.
The decentralised arcutecture of blockchain means, no single point of failier can stop the network. Any attempt to shut a single node down is futile , as 100 will turn up in their place.
Decentralisation is changing the world at a rapid pace, not seen since the prolification of the the internet in the 90’s. Massive institutions have huge investments in centralised systems, and they have no wish for it to change.
Our digital society has faced a simiilar dilemma before. The music industry used centralised distibution network up until the 90’s. At this point a decentralised system called bit-torrent became dominatnt as a may o way off distributing music. For a short amount of time, everyone became a pirate. Music was accessible at the touch of a button, and record companies were powerless to stop it.
They tried to take a few individual users to court, but in the end nothing came off it. The genie was out of the bottle. Download music was here to stay, and it was up to the record companies to change their business models to fit this new technology.
Blockchain, is almost bit-torrent in reverse. Instead of aiming host to grab pieces of various music tracks, everyone on the blockchain network is checking, or adding to a single ledger. The challenge is making sure you are looking at the most up-to date ledger, and your transaction applies to the most up to date version of the ledger. This is where the magic of blockchain, and its consensus algorythem come into play. It’s beyond the scope of this article to explain this, but it works, and as yet has been un-hackable.
So the obvious question, is why is this new technology better than visa/PayPal that we use every day?
Our banking system has a lot in common with the old music companies of the 90’s. Its antiquated centralised ledger systems are coming under attack every signle day. In 2018 a UK major bank had to halt withdrawals from its cash machines for almost a week due to a centralised failier. Its simple maths… a single point to attack is a single point of weakness for attackers to aim for. With a distributed ledger, ever more compicated mathmatics keeps the ledger safe. The saftey being that once a number of blocks on the chain have been produced, it would take more computing power than that available on the planet to tamper with it and make new valid future blocks.
Centralised systems, are gatekeepers to our wealth. Banks are constantly being caught in fraudulent situations, and paypal has recentlly been refusing to process payments for people that don’t fit in with their compaies polotics. This has included ‘Pro Trump’ youtubers before he became president of the USA.
People are wanting control of their own money, and have a way to access it cheaply/securely/ and inflation proof , with the bank offering nothing.
The Genie is out of the bottle. We have something far superior than the national reserve curency, and banks don’t have to be part of it, however i have a funny feeling they will want to. The crypto based asset is no diferent from any other stock, currency or security. A new asset class to be traded and profited from is like cat nip to bankers. Don’t expect the individual funds to dismiss it even if governments would prefer you they did.
Governments will then have a choice, to either fight this or join in. Most will look at the posotives in launching a national crypto based curency. it will be counterfeit proof, virtually free to inflate, tracable and smart, so it could only be used for certain things if given in benifits. Each country will create their own inflationaary crypto currency. They will pay all goverment wages in this, including benefits. This (stable coin) will be pegged to the local currency 1:1 .
It’s possible to read more about the US plans to introduce their ‘FedCoin’ and how it will work, a quick google search will bring this up.
Just as Gold/silver/copper exist along side curency, crypto Gold will be the likes of Bitcoin. More a store of value than an everyday coin, At least at first…
The Genie is out of the bottle. Once crypto currencies are ubiquitous , we will start to see real innovation and competition in this area.
We haven’t yet covered the distributed decetralised app and the untility tokens that can be earned by holders to power the network, or the social media/persoanl data options to users…
This is what i plant cover in my next article.
I’d welcome any comments.:-
Nick