You probably seek 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 from the beginning. 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 updated at the same time as new blocks are integrated into the blockchain.
- When 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.”
Thus, we no longer need to rely on people who hold immense power over our dealings with each other and bear no consequences should what they do harms us.
Blockchain is a technology that enables new possibilities of collaboration and transactions, and cryptocurrencies are the ships going out to explore the blockchain wilderness. As products of our time, they are significant inventions that hold significant implications for our future, and below, I’ve shared 3 reasons why you should learn more about both.
- Social Demand
Bitcoin is a child of the 2008 financial crisis. It reflects a desire to not 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 of the social demand for not getting ripped off by the hubris of others. Currently, we are probably at the end of the early adoption stage. I leave it to you to decide what the next stage of the product cycle is.
Blockchain is a technology innovation because it solves the Byzantine Generals’ Problem. In this problem, the setting is a siege, and the generals surrounding 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 reassurance and collateral that the agreement will work.
- Easy Money
I am not talking about throwing your money in cryptocurrency and becoming a millionaire. I am talking about continuous quantitative easing (QE). QE definitely eases 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 write. In the last decade, QE has had some significant revelations for the future economy. Relationships between inflation, growth of money supply and GDP growth do not seem to work as 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 has 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.
So what does all of the above mean?
The future is uncertain, as it should be. Yet history repeats itself in some sense because what makes us human changes slowly. No one knows for certain how things will turn out, but cryptocurrency and blockchain are staying and becoming a more fundamental part of the future. While there will 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?
First, read about blockchain and get involved in the cryptocurrency community. Second, write down what blockchain is and all the endeavours you hear of, creative or practical, and any awesome ideas to share with others.
And when you become a little bit more comfortable, 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, I’ll jump in without a glance at 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?