What is the use of Blockchain? Is it a store of value? Or is it a medium of exchange? Or just a fad?
I think it’s awesome that you can store value in an inflation-proof coin like the Bitcoin. And it’s awesome that you can transfer this value fast and safely anywhere in the world. And I am very excited that you can even define self-executing rules around this value through smart contracts.
Yet, these are all minor things. The more radical proposition — the true value of this technology — lies somewhere else, hiding in plain sight.
Consider the Internet today. It’s everywhere. Pretty much anything any of us do today will involve the internet in a way or other. I am writing this in an airport where I just paid for an overpriced coffee using a credit card issued on the other hemisphere. That simple act involved perhaps a few hundred of servers and processors activating all over the world without any human involvement: Credit card companies’ databases being checked, bank servers been triggered, quotes being exchanged about currencies, ledgers being updated, accounting systems sitting in clouds been activated, algorithms on servers who knows where checking for suspicious behavior and deciding to let the charge through, signals being sent back to the coffee shop through other servers and machines. Coffee stocks and accounts receivables getting updated, sale trends being processed, barista performance being reviewed, tip ledger being updated.
All of this in the few seconds while I stand here jetlagged, watching the machine saying “Connecting”.
Alas, there’s more. My coffee purchase triggers a series of automated searches into my online activity followed by a bunch of other servers running emotional and who knows what other analysis models that will help some company in-between — that I never heard of, never interacted with nor authorized to do this — to profile me so that they or, more likely, their clients can better sell me some bullshit product a few months down the line.
This is the internet: millions of machines all over the world switching on and off a million times a second, silent and invisible, every time any of us pays for coffee, takes the bus or clicks on something online.
All these machines. Where are they? Who controls them?
Well, no-one knows exactly where they are, but they are all controlled by a handful of companies, really. Run by people like this guy:
These companies are under tremendous growth & profit pressure and they will work any angle to squeeze more value out of all of us. They are also single-points-of-failure and can be put under pressure by shady governments or criminals to hand over or alter contents in their databases. They can be sabotaged and/ or shut down. And even if they resist such pressures, their infrastructure remains vulnerable to any numbers of attacks. Your data (and your money) can and will be hacked and stolen. Your identity can be erased or modified. Your files can disappear.
The new version of the Internet
Now imagine a future in which I’d buy the same overpriced coffee, which would trigger a similar chain of machine-driven events. But this time a few things would be different:
- There are a lot fewer operations needed to confirm that transaction — there is no need to ask/ process quotes, there is no need to query several databases and connect to banks and third parties. The blockchain ledger will clearly show if the money I am trying to spend is mine to spend and instantly reflect it in the coffee shop’s account once i confirmed;
- My identity is encrypted, so no-one can look at my history or online activity without my permission (and hey, I may be happy to grant that permission in exchange for some awesome free service, but it would be my choice to make);
- This whole infrastructure is un-hackable. That means that no-one will ever be able to attack my data, take my money or modify any info about me. I am the only point of vulnerability here.
- Because it is decentralized, it cannot be put under pressure — no-one can shut it down or tamper with it without the explicit agreement of all of us (i.e. “consensus”).
So this right here is the blockchain’s most radical value proposition:
A new version of the internet that cannot be hacked, cannot be shut down and cannot be exploited
And there is more. Currently the majority of the world’s population is cut off the internet as we know it. They couldn’t buy that coffee even if they’d find themselves in this airport, through some miracle. The hard truth is that the internet is not the great equalizer that it was supposed to be.
A smart kid in a small US/ European town can go online and in a few minutes set up a remote server in a cloud, whip out a prototype for a product and start promoting their idea on social media to get the attention of clients and investors on the other side of the world. The same kid in a Nigerian small town will never be able to rent that server and will not be able to promote anything on social media.
They get to look at the pretty skyline, as it were, but they are not welcome inside the building.
No credit card, see. The true power of the internet — the processing power, the machines, the algorithms that have become legitimate, affordable utilities for the rest of us, are simply not available to them. This is unfair and a huge opportunity loss for the global economy.
I am among those people who believe that this new version of the internet could be different. It could be the real equalizer. My coins are as good as yours, whoever you are, wherever you are.
What would be the true value of that? Definitely higher than the few meagerly billions in Bitcoin today.