3 Reasons why you should learn more about cryptocurrency and blockchain
You probably want to find a balance between the mooning of Bitcoin and Jimmy Dimon’s claim that Bitcoin is a scam, but I am not so smart as to pander to you right from the start. Let me instead start with a simple explanation of blockchain.
Blockchain stores information in blocks.
There are people who maintain the entire blockchain copy on their storage hardware.
These individually stored copies are all updated at the same time as new blocks are integrated into the blockchain.
Anytime an individually stored copy of blockchain is different from the majority of the miners’ version, it is replaced by the majority version. This creates the reality that we don’t actually need an intermediary who handles the settlement of our transaction agreement because we don’t trust each other fully. Blockchain can be an alternative to the “Too Big to Fail.”
What this means is we no longer need to rely on someone who holds immense power over our dealsings with each other, yet they have integrated themselves so deeply into the system that we rely on that the harms caused by their hubris have been bore by us. This almost reminds me of the church authority in the middle ages, and the Jinyiwei during the Ming Dynasty, and I am sure there are many more historical equivalents.
Blockchain is a technology that enables new possibilities of collaboration and transactions. Cryptocurrencies are the ships going out to explore this blockchain wilderness. As products of our time, they are significant inventions that hold significant implications for our future. Here are 3 reasons why you should learn more about cryptocurrency and blockchain.
1. Social Demand
Bitcoin is a child of the 2008 financial crisis. It is a desire not to get ripped off by someone else’s arrogance and greed. The increasing adoption of Bitcoin progressed from a tiny group of cryptographers, to anarchists and libertarians, to common folks, and to today’s venture capitals and hedge funds. One can reasonably see cryptocurrency as a product for the social demand for not getting ripped off because of the hubris of others. Currently, we are probably at the end of the early adoption stage. I leave it to you to decide what is the next stage of the product cycle.
Blockchain is a technology innovation because it solves the Byzantine Generals’ Problem. In this problem, the setting is a siege, and the generals who are surronding the city do not trust each other and will not attack if they think there is at least one general who will not attack. The siege will fail if the majority of the generals do not attack at the same time. So how does one make sure they all attack at the same time? Blockchain solves the problem by allowing each general to confirm at any time a coordinated attack with all other generals. It also ensures that if there is a traitor, he would not be able to lie to any generals about the intentions of other generals. To conduct a successful siege, the generals no longer need to worry about the lack of trust amongst them.
Change the generals to any number of people, the siege to any agreement, and we have a way for people who don’t trust each other to reach an agreement without someone else providing to each of them reassurance and collateral that the agreement will work out.
3. Easy Money
I am not talking about throwing your money in cryptocurrency and becoming a millionaire! I am talking about the continuous quantitative easing(QE). QE definitely eased everyone’s eyebrows when there is a credit crunch, but when there is no credit crunch and people are having more confidence, the amount of money and credit in the world would be higher than ever if the number of credits created per dollar returns to previous height.
Every asset class is rising to the moon as I speak. Quantitative easing for the last decade has some significant revelations for the future economy. Relationships between inflation, growth of money supply and GDP growth don’t seem to work like before. And that brings up a question: Is economic theory reflecting what is happening or what will happen? Through some research, I realized that prevalent economic theory reflects only what had happened and serves as a framework for existing policies, business strategies, and social reference. Therefore, it should be reasonable to examine new developments under three fundamental scopes: social-economics, politics, and technology. Once you are committed, it is a matter of getting to the specifics of making money, where to make it and how to make it, and you are the master of the ship. (Disclosure: I wouldn’t mind you sharing them with me.)
If we jump out of our current time, space and circumstances, and be an unprofessional alien looking at our positions in all this…
The future is uncertain, as it should be. Yet history repeats itself in some sense because what makes us human change very slowly. If history is of any guidance, the changes with the greatest impact will be the ones that, without hindsight, be out of the vast majority’s mind before it actually comes into being. No one knows for certain how things will turn out, but one can ascertain the probability that cryptocurrency and blockchain are staying and becoming a more fundamental part of the future by thinking about the ramifications of what has been happening and what would blockchain and cryptocurrency change. While there will also be booms and busts, we should rely on the fundamental logic that competition is a major driving force of human progress. Cryptocurrency and blockchain provide many advantages for new entries, especially when the developed world is ever more receptive to fundamental innovation, and the developing world is ever in need of affordable solutions for commerce and business.
How should we, millennials, act at this time?
I would read about what exactly is blockchain, and get involved in the cryptocurrency community. Soon, I would write down what blockchain is and all the endeavours I have heard of, creative or practical, and my awesome ideas and share with others.
And when I become a little bit more comfortable, I would learn about a specific cryptocurrency such as Bitcoin, NEO or Ethereum and ask a bunch of questions. I would put some money and time into getting some experience and insights. Then I would take a step back, ask myself and others, and be mindful of whom I ask. And if I find myself willing to risk the perils, such is the time to jump in without a glance to the eyes of fortune. If I find myself unable to stomach the worries, I would do other things and definitely not come back when everyone on the street is talking about buying and selling bitcoin and other cryptocurrency.
This is one way to do it. There are many other ways to do it. The most important thing is to start and dig ahead until you have answered the question of how you want to be involved. I started with a question, and I would like to end with one: What would you like to know more about cryptocurrency and blockchain?
Author: Frank Xiang Wang, FinTech4Good Fellow