Dividing the world into “centralized” and “decentralized” obscures important features of the bitcoin protocol. A more sophisticated lexicon would leave scope for “distributed” processes.
Bitcoin and Blockchain
The fact that Anderson’s theory of money seems to fail the Bitcoin test forces us to question our long tradition of issuing new coins that contain precious metals, or banknotes redeemable for some other, already valuable instrument.
Many people who are bullish on blockchain make grandiose claims that the technology will completely overhaul industries and institutions. But these claims often ignore the complexity of the real world and misunderstand what revolutionary technologies actually do.
There will be another winter. And another. To get the best sense of the potential here, it’s best to look at the price, not day to day, but on a logarithmic scale. Here is where we can see the potential of the technology. That has a much more meaningful significance than the fickle judgments of seasonal news hounds that make the difference on the daily margin.
By focusing almost exclusively on disruption, blockchain proponents can ignore the important role of adoption by existing players in finance and other industries.
Seemingly out of nowhere, we have now an entire suite of technology that could conceivably displace and even replace national money, traditional payment options, and even regulated capital markets, and bring us something new and much more wonderful.
With the stroke of a pen, President Donald Trump may have just accomplished what most observers thought impossible: he’s made the Petro relevant.
In the ideal world, you invent something wonderful, the world celebrates and starts using it. You get rich. We can dream, can’t we?
Wyoming has a thin population base, astonishing natural beauty, and a wonderful crew of politicians and regulators who believe in independence, innovation, and technological progress. Thanks to some wise activism from knowledgeable people in the space, the legislature just passed a series of bills that will make Wyoming something of a safe space for crypto.
There are two important differences between modern cryptocurrencies and the competitive monies F.A. Hayek envisioned.
It is absolutely essential to understand the distributed model even to have a first-level conception of what cryptocurrency really is. It is not a proprietary product. It is not a company. It is not even a brand. It is a technology. It is a technology that, by design and structure, doesn’t have an owner – or, more accurately, it is owned by anyone and everyone. It is a distributed ledger. The purpose of it is to carefully delineate ownership claims and provide a chronological and immunity audit trail of changes in ownership rights. Bitcoin is a token that provides evidence of authority and access to make changes in the ledger, and thereby absorbs and reflects the value of the services provided by the ledger itself.
Many people disagree with government regulation of cryptocurrencies and initial coin offerings (ICOs), but one could do a lot worse than Switzerland’s financial regulator, Swiss Financial Market Supervisory Authority (FINMA).