Cryptocurrencies represent an evolution in the infrastructure of our digital economy. The inefficiencies and problems of the current digital bank-mediated economy are now obsolete in the face of a superior means of providing digital payment: blockchain, a brilliant and simple approach to verifying the transfer of funds from one account to another.
We’re already using digital currency, in the form of every transaction mediated by a bank or financial intermediary. Every one of these transactions must be expressed through a convoluted series of information flow, which is costly to the sender and recipient, and is extraordinarily inefficient and slow. In addition, the infrastructure for these transactions consists of countless vulnerabilities, the patching of which is a Sisyphean struggle – these networks will never be safe.
However, blockchain offers a superior form of digital currency – by using simple cryptographic principles and the ubiquity of computer processing power, transfers can occur instantaneously, are irreversible, and are impervious to fraud.
Quite simply – there is no good reason that transfer of funds should take days or cost so much, in the information age. It’s analogous to sending telegrams when you can instant message. In fact, it’s not just analogous: it’s an exemplar. Ever since the abandonment of a gold standard, a transfer of funds is nothing more than a transfer of information, a message between two parties. Why are we paying banks to handle those messages for us, when it makes us vulnerable to fraud, and takes the same time it does for the post office to deliver a parcel?
Cryptocurrencies aren’t an alternative to cash; they are an alternative to banks. It’s not cash that needs replacing; cash is great. Cash doesn’t face the problems of digital non-blockchain currencies.
Cash and crypto, side by side. The best of both worlds. Crypto representing the natural evolution of digital currency, which we already use now anyways.
Which is not to say that banks are fully obsolete. They serve functions that blockchain cannot (escrow, investment, loans, etc); cryptocurrencies simply do one major job of banks infinitely better than banks ever will without blockchain – instantaneous transfer of funds between two parties.
We’re not the blindly faithful: we have our fears around blockchain. An internet of things, which receives support from blockchain technology, is a serious existential threat: we don’t need to disconnect ourselves even further from the physical world. Secondly, and more immediate – I fear any technology that we rely excessively on, that we put excessive trust in, and that empowers a small technocratic minority. But in a way, that’s always been the system. Maybe blockchain has the potential to take us beyond that.
Despite the fears, we have to move forward. It’s our prerogative as humans, and maybe simply as organisms – to pursue higher complexity.
Learn more about Bitcoin over at Khan Academy.
Learn more about the superiority of cryptocurrencies over non-blockchain digital currencies at Crypto.bi.
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