5 Truths For The Blockchain Expert In Training
Cryptocurrency is an egalitarian movement fueled by hyper-capitalism. One force does not realize it is attempting to destroy the other.
Talk to anyone on the street about cryptocurrency and they will invariably bring up the price of bitcoin rather than the technical innovations fostered by its development. The bitcoin boom is blinding people to the revolutionary technologies underpinning this new economy. Ideas like decentralization, trust-less systems, and the reconceptualization of privacy in digital spaces are often overlooked. This is unfortunate, because the real excitement lies in the technical and societal progress available to us in the wake of these innovations.
With that in mind, I offer you some fundamental concepts of this new economy that will put you in a position to appreciate, learn from, and take advantage of this disruptive force we know as “bitcoin.”
1. This phenomenon fosters a decentralized society
Blockchain tech, the underlying technology fueling bitcoin, wants to facilitate the move from a centralized society to that of a decentralized society…One where value can be exchanged between parties without the need for an intermediary organization or entity.
Why is this important?
People are so blindsided by the prospect of making 20 to 30 times their initial investment that they fail to see that this is a technological revolution and spiritual successor to the original intentions of the open, free internet. Decentralization offers us a fundamentally different way to think about society, value, and participation in a decentralized, global economy. With distributed ledgers, we move from a ‘trust-based’ system (i.e. we rely on the trust of other entities to perform duties) to that of a ‘trust-less’ system (we do not need to trust the other party in order to ensure a successful transaction).
Here’s a great video on what decentralization is and why it is important:
2. In a perfect world, blockchain tech creates a level of privacy and security we do not currently have (and desperately need)
In today’s world of applications, we provide very large amounts of data to the services we interact with. Facebook, Google, Twitter…All of these services store our information on centralized servers that can be easily compromised, stolen, or sold to the highest bidder. With blockchain technology, the trend is to move away from centralized products that own our data to decentralized products where we are own our own data.
Why is this important?
In a world where data is like oil, it is crazy to give it away for free without our permission. Every interaction we conduct on the internet is stored, whether directly or indirectly, by our favorite companies because we have no other choice.
In this new economy, companies will offer products similar to Google, Facebook and Twitter, except they will be based on a blockchain infrastructure. Our data will sit with us on our computers, rather than in a large data center waiting to be sold to an advertising company. The beauty of such a system is that we will own the data we generate and can decide if, when, and how our data is distributed to third parties.
3. The majority of cryptocurrencies are not companies
Members of Cryptoshark understand a fundamental truth: Most cryptocurrencies are not traditional companies. The incentives of such organizations (or lack thereof) are usually different from that of a company.
Why is this important?
While some cryptocurrency projects are companies, many large projects are structured as non-profits. Oftentimes, a loose group of software developers and cryptography enthusiasts will join forces with no formal structure, bound together by utopian ideas about how society should operate in the 21st century. Many cryptocurrency projects are not companies offering “products” in the traditional sense. Rather, many projects are platforms, protocols, or global digital currencies looking to disrupt major industries or social structures currently in existence.
4. Cryptocurrency is not a “stock”
Many people equate holding a project’s currency to holding the stock of a company. The reality is, holding a coin can benefit a project in non-monetary ways.
Why is this important?
When investing in a project, understand you are investing in a digital “token” or “coin” that promises a) a global digital currency that will allow you to purchase goods and services with greater buying power in the future due to an increase in value and/or b) a utility token that unlocks offers in a project’s ecosystem. You do not “own” any project when buying into its currency. You are, however, strengthening and securing the network due to your participation in the network. You are also indirectly increasing the value of a project by investing and transacting with its currency.
5. The liquidity and openness of the cryptocurrency market is revolutionary in and of itself
Before cryptocurrency, a venture capitalist or angel investor had to wait years to see a return on their initial investment due to the illiquid nature of hedge fund and startup investing. With cryptocurrency, anyone (not just accredited investors) can invest virtually any amount into a project, 24/7, and sell that asset instantaneously. This attribute of the market allows assets, information and value to move between parties, on a global scale, in a way we’ve never seen before.
Why is this important?
The liquidity offered to new companies and the everyday, non-accredited investor creates greater flexibility and opportunity for everyone to participate in a global economy of ideas. As we speak, this new funding mechanism is overshadowing silicon valley and spreading innovation across geography and socio-economic boarders. Anyone can launch an ICO and raise capital to support an innovative idea. I would wager to say that this will create a level of diversity we have not seen for some time.
The technological progress we’re witnessing can be dizzying at times. Artificial intelligence, distributed ledgers, augmented and virtual reality…These are all forces looking to shape how we operate in the coming months and years. The distributed ledger, or blockchain, is a fundamental component of this new structure. It allows for value to be exchanged freely, securely and (sometimes) privately in a digital environment. Remember this as you embark on your journey to become a cryptocurrency expert. Your participation in these distributed systems offers more value than an investor speculating on an asset. You are, in essence, supporting an entire movement from centralized systems to that of decentralized systems.
You are, directly and indirectly, investing in the future infrastructure of an open digital society.
