Hey, fellow Steemians! I originally posted this on Medium.com as the target audience is people not already in crypto. This shouldn't be anything new to most of you, but I wanted to post it here on Steemit to see what you think.
Photo by Andre Francois on Unsplash
As 2018 gets underway, cryptocurrency — particularly Bitcoin — has become more and more of a conversation topic. Everyone knows that Bitcoin saw massive gains in 2017, of which it’s lost almost half since it’s all time high of $20,000 per coin. At the time of writing, it’s sitting at just over $11,000 per coin — an almost 50% drop. Is this the end of Bitcoin and cryptocurrency in general? Were all the naysayers, economists, and traditional institutional players right? I can easily and firmly say, “No”.
There’s one very large, very important thing that most people outside of crypto (and perhaps some inside crypto) don’t seem to understand. Bitcoin and these other cryptos aren’t just ephemeral money with no real world value. They’re not just data. To be more precise, the currencies themselves aren’t all that important. The technologies and possibilities that underlie them are. In fact, did you know that the US dollar is currently not backed by anything? Most people think we’re still on the gold standard, but we haven’t been since Nixon. Our money is actually less objectively valuable at the moment than many of these “ephemeral, worthless bits of data” we call cryptocurrencies. Furthermore, whereas a central bank can print more money, Bitcoin and many cryptos have a permanent, finite supply.
Core Ideas and the Blockchain
We currently find ourselves at the beginning of one of the largest and most important technological revolutions in history. Just as the Industrial Revolution completely changed the way we live our lives, Blockchain and similar technologies will fundamentally alter society. Now, that’s a pretty tall claim. Just what is it that makes crypto so potentially powerful?
Most cryptos are based on several core ideas: decentralization, immutability, security, autonomy, and transparency. Blockchain is currently the largest and most widespread technology that delivers these things. A Blockchain is basically a secure, decentralized ledger that is practically immune to fraud or tampering. Bitcoin runs on the Bitcoin Blockchain. There are a number of “platforms” that have their own Blockchains and are intended to be used as the network on which dapps (decentralized apps) and other applications are built, meaning Blockchain is being used for more than just currency. The biggest example at the moment is Etheruem. In fact, most legitimate cryptocurrencies that exist today are merely the currencies used to run on the various networks and ecosystems that are built on top of platforms like Ethereum. I won’t be diving into a lot of the specific details of how the Blockchain actually works. You can find plenty of videos on YouTube, or possibly even DTube — the new, decentralized competitor to YouTube that runs on the Steem Blockchain. In addition, there are DAGs (Direct Acyclical Graphs), which are a bit different than Blockchain and run on a distributed system rather than a decentralized system. I won’t be talking too much about DAGs in this article, either, but the most well-known and popular at the moment is IOTA with its Tangle ledger that’s capable of not just micro-transactions, but nano-transactions, making it a very powerful candidate to be the backbone of the internet of things. For example, imagine your self-driving smart car being able to drive itself to the gas station, get gas, and pay for the whole thing by itself via direct communication with the smart gas station.
Tech, Disruption, and a Better World
But why is all this important, let alone powerful? There are countless potential use cases for such technologies. I’ve already mentioned the internet of things, which contains so many possibilities in-and-of itself. Let’s take a look at some industries and areas that will likely either be altered or completely replaced:
Banking. You may have heard of a “crypto” called Ripple. It’s basically a network and currency designed for cheap and fast global transactions that will be overlayed on existing infrastructure. Simply put, it’s the cryptocurrency for banks. Some people believe in it and think it’s a great idea as it does, indeed, solve some real-world problems. However, many people traditionally in the crypto field hate it because 1) it’s for banks and 2) it’s centralized, meaning it goes against one of the core original purposes of Bitcoin as layed out by its creator, Satoshi Nakamoto. Personally, I don’t care for it.
However, there are other cryptos that are looking not to support the banking industry, but to disrupt it. One prime example is OmiseGo, which is focused on “banking the unbanked” using the Etherum network:
OmiseGO is a public Ethereum-based financial technology for use in mainstream digital wallets, that enables real-time, peer-to-peer value exchange and payment services agnostically across jurisdictions and organizational silos, and across both fiat money and decentralized currencies. Designed to enable financial inclusion and disrupt existing institutions, access will be made available to everyone via the OmiseGO network and digital wallet framework.
The crypto-world in general is very much focused on secure and encrypted peer-to-peer transactions in a decentralized manner, eliminating the need for middle men, as well as the need for banks since you have complete and direct control over your finances. I don’t know if banks will disappear in the future, but I like to think they will.
Even the financial markets will be impacted as brokerages disappear, or at least lose much of their current status.
Privacy and Digital Identity. Then we have privacy coins, such as Monero and Verge. This is where the debate sometimes goes south because unlike the normal blockchain ledger where everything is public (crypto-wallet addresses, not identities), these coins make your transactions truly private and untraceable. In a related and extremely interesting realm, there’s even a crypto called datum, which is all about reclaiming your digital identity and making it so that if anyone wants to use that information for any purpose, they have to pay you for it. This is very much related to the next section:
Social Media and the Internet in General. Social Media may even changed by cryptos. The most prominent examples — and one that actually has a working product — are Steemit (in beta at the time of writing and growing at an amazing rate), DTube (decentralized YouTube), and DSound (decentralized SoundCloud), all part of the Steem social media network. What’s the point of using these services instead of their larger, traditional competitors? For starters, Facebook and Google (including YouTube) bring massive, massive privacy concerns and other issues, such as all that advertising. The Steem network, on the other hand, not only decentralizes everything, but you actually get paid in the cryptocurrency Steem (~$6 USD as of this writing) based on how much the community likes the content you’ve produced. No ads, no invasion of privacy, and you get paid. Sounds too good to be true, but as far as I and an increasing number of people can tell, it’s not. How’s that for the power of cryptocurrency?
There’s also the Substratum network, which aims to completely decentralize the internet itself. This might not seem like such a concern if you live in the US or Europe, but there are some countries (Iran, China, etc…) where censorship is a huge problem. Even in the west, particularly the US, we have to always be vigilant for authoritarian moves from anyone in power (regardless of party) that would unjustly and unnecessarily reduce our liberties in the name of “security”. One of the best parts of the Substratum network is that — once they launch the working product, you can run the software to become a node on the decentralized web and get paid in Substratum tokens.
Music, Publishing, and more. There are a lot of services being built in the crypto-sphere that can radically alter many diverse industries. There are cryptos trying to bust into the music industry, allowing artists to get paid and funded directly by fans. Publica is disrupting the publishing industry and Po.et offers an immutable and efficient way to license digital content. There are cryptos getting into the gaming industry, the porn industry, and so many more industries that are ripe for disruption. That even includes the homesharing economy; Bee Token aims to replace AirBnB, and with what they’ve laid out, I’d say they have a decent chance.
Government and Elections. Can you imagine how powerful it would be to have a technology that virtually guarantees a stop to rigged elections, and potentially even government corruption? How about drastically reducing bureaucracy, red tape, and all that nonsense? Even social services benefits can be more efficiently handled on the blockchain. Personally, I’m not that big on government, but at the very least this new technology can help safeguard the most fundamental and critical aspects of our democracy.
All these are just a handful of potential use cases.
Overall, we can see how the true value and promise of cryptocurrency is greater security and privacy, greater opportunities, and greater freedom — politically, economically, digitally, and more. I personally believe that countries are not sovereign; individuals are sovereign. A country is a tract of land with imaginary borders and ideals that are often either not lived up to, or blatantly spat upon by those in power. People are what matter in the world. Cryptocurrency is one of the few chances that billions of people around the world have to live a better life. Further, it can propel people in already developed countries forward into greater prosperity than they’ve ever known. And I don’t just mean through speculation and investment — I mean through the full fruiting of the technologies and applications that are just now seeing the light of day.
Please note: This is not in any way to be construed as financial advice. These are just my views on what’s happening and likely to happen in the future. You are completely responsible for your own actions.