Why is decentralized money potentially revolutionary?
Over its long history, the human race has had to struggle through five major paradigm shifts in money:
- The emergence of barter
- The first abstractions of value (e.g., shells and beads)
- The move to metallic monies, like gold and silver
- The move to paper fiat money
- The move to plastic money (e.g., credit cards)
Andreas maintains that the 6th revolution in money started with the introduction of #Bitcoin and the creation of the first network money.
Like the Internet, the Bitcoin blockchain is completely decentralized and allows for currency to run as an application.
Approaching it from another perspective, Bitcoin isn’t “money for the Internet,” it’s the “Internet of money.”
This line of thinking is more than a clever soundbite; it’s a profound truth that gets at the heart of why so many people are excited about this space.
What the decentralized properties of the Internet made possible for communication, the decentralized properties of the blockchain make possible for money.
Bitcoin has emerged as the first open, global currency not beholden to any nation state, institution, or central authority.
It is also programmable. Anyone can write applications on top of it and launch them, without asking permission from gatekeepers.
Why do decentralization and programmability matter?
Decentralization and programmability are the same attributes or characteristics that have made the open-source movement so exponentially innovative. From out of the late-night musings and buzzing of programmers that contributed to the confusion of that community have emerged staggering examples of emergent order that has irrevocably changed the world, almost always for the better.
Tons of software, including most of the code powering your computer, your access to the Internet, and even the pixels displaying on your screen right now, was written by decentralized open-source communities.
And now, there’s a monetary system that can be used and modified in the same way.
Putting it all together, we have:
- An ancient technology (money) that forms part of the core stack that civilization is running on.
- The first protocol which allows for experimenting with that technology at the scale and speed of open-source software.
From this vantage point, you don’t need much imagination to see the potential.
What’s the future of Bitcoin?
Of course, we’re still in the very early days of the blockchain and trying to predict where it’ll be in fifty years is like trying to foresee the emergence of Amazon from the crude Internet of 1975.
Still, there are indications, and as the co-host of the Futurati Podcast noted, we are being exposed to a variety of insightful glimpses of what’s in the pipeline.
The decentralized, anonymized nature of the major cryptocurrencies will prevail.
Many people, especially in the older generation, will remain confused by cryptocurrency. They’ll stick to national currencies, giving traditional banking a bit of staying power. Increasingly, though, these people will miss out on investment opportunities and efficient financial services.
It may become harder and harder for them to find retailers that accept their dollar-based credit cards without adding a surcharge.
At the same time, cryptocurrencies are seen as “geeky,” and it will take a serious upgrade to their user interfaces for them to reach mass adoption.
Speaking with noted crypto-evangelist Joel Comm, he helped us understand the possibilities of using non-fungible tokens (NFTs) to store documents like property deeds and driver’s licenses. This could substantially reduce the red tape involved in many routine activities while reducing the likelihood of fraud and legal disputes.
Corey Hoffstein, of Newfound Research, talked to us about the burgeoning market for NFTs and the challenges of applying traditional financial concepts to the crypto asset ecosystem.
And of course, famed Bitcoin podcaster Peter McCormack had a lot to say about the double spending problem, Bitcoin versus gold, and Bitcoin versus every other major cryptocurrency.
There are going to be a number of monumental new experiments with this technology, and I’m thrilled to be here to see them happen.