Cryptocurrency and related technologies are the most liberating and important invetion of our lifetime. The internet was just a beginning; peer to peer transactions that are enabled through the blockchain paradigm will irreversibly change the course of society.
Enter the new paradigm
Like gold for earlier generations, and real estate for the baby boomer generation, Cryptocurrencies such as Bitcoin and associated altcoins are the greatest value and monetary opportunity of our time. Why do I say this? Because they solve the main purpose of our entire transactional finance system: the problem of trust. Think about it- the reason you use a bank is to guarantee that when you exchange value with somebody, say in a transfer of money to a third party, you can ensure that the money reaches its intended destination. This transfer leaves a verifiable (verifiable by the third party ie bank) trail as it traipses its way through the existing financial system. This process can be slow, onerous and expensive especially when the exchange of value has to cross borders. Bank intermediaries take fees for their services, ensuring trust but at a price.
Blockchain is the boss
One of the many groundbreaking advantages of cryptocurrencies, or to more accurate, the technology behind them, known as blockchain, is that you can transfer from one person to another anywhere in the world, without the need for an intermediary. The implications of this fact are wide ranging. The time and fees required for transfer of value drop drastically when the current antiquated finacial system is taken out of the way; meaning that the access to exchange of value is opened up to far more people worldwide that would not have had access to bank account (a smartphone and an internet connection are effectively the only barrier to entry for Cryptocurrency).
Banking faces extinction
THis means that Banks are no longer needed for Financial transactions. Blockchain technology, using a concept known as the open ledger, basically means that all transactions are verifiable and cannot be tampered with. The open ledger works like a huge chain-list of transactions, with many multiple copies held on all nodes throughout the blockchain network. The ledger is accessible by all users at any time, and is created in such a way dynamically that when a new transaction is made, verified and added to the chain it cannot be reversed, tampered or annulled. This verifiability means that trust is no longer an issue as the open ledger is publically accessible.
The 'chain' can be simply explained - if a previous transaction in the chain is removed, it no longer works or 'breaks'. The chain is immutable meaning that it only works if all previous transactions are correct and verified. Ok, so this opens alot of questions. One of the strengths- or weaknesses - of blockchain is that the addresses that funds are transferred to or from are not necessarily identifiable as to their owners - great for anonymity and privacy, but not for regulation and taxation. Blockchain and cryptocurrency opens the door for true libertarianism in finance and a swift move away from Governmental control of the money supply, which is either a fantastic or very frightening prospect depending on what side of the fence you sit on. The technology is not limited to financial records; any public record that requires verification currently lends itself strongly to the technology - think land titles or credit records.
Once in a Generation
As earlier stated, I really believe Blockchain and Cryptocurrency are the invention of our Generation. Bitcoin or any of the altcoins may not be the ultimate format for the technology, but I believe Blockchain puts banking and the financial system as we know it currently in peril, and it either has to quickly get on board with the innovation or risk extinction.
So now what?
So what's next? How do you get hold of a Bitcoin? What are Altcoins? There are constant internet rumours of scams amongst Bitcoins, and the anonymity of the transfers mean that this a very real threat to the uninitiated. In my limited practical experience I have found buying bitcoin with most major currencies is not that hard, using an online app such as Coinjar to buy Bitcoin. This gets you in the bitcoin game. Bitcoin kind of acts like a reserve currency for the crypto world, and you can trade Bitcoins for other 'Altcoins' (a generic descriptor for all other cryptocurrencies such as Ethereum) on an exchange such as Binance (linked above). These are two basic example of the plethora of trading and holding accounts available in the Cryptocurrency world. Check them or others out. As with any financial endeavour, make sure you do your research I hope that Cryptocurrency piques your interest as it has mine.
Disclaimer: Statements on this blog post do not represent the views or policies of anyone other than myself. The information on this site is provided for discussion purposes only, and are not investing recommendations. Under no circumstances does this information represent a recommendation to buy or sell securities. The opinions and statements expressed are my own and some links in the blog are affiliate meaning that I can receive compensation from companies whose products I have linked to.