I've spent quite some time lately studying cryptocurrencies. There are obviously a lot of talk about Bitcoin and the new values it reaches every week. I was asking myself how many people actually saw cryptocurrencies and the technologies behind them for what they could be, and not just a quick way to make money?
My knowledge about Bitcoin ( and other cryptocurrencies ) is rather limited, but the concepts seems fascinating and it looks like these technologies could really change our way of life.
I was wondering if cryptocurrencies just came too soon for them to change anything significant in our societies? Most people might see cryptocurrencies as either a fraud, a scam or a very easy way to make some cash. How many actually understand the blockchain, and what problems it is trying to solve?
Do you agree that cryptocurrencies seem to be ahead of our society? Did we already encounter such technologies that just came a little too soon?
Top comments (5)
I think it's a matter of perspective. You and I are Europeans: our currency is pretty stable and our countries will not default anytime soon. So, for us, the € is a valid way to preserve our savings.
The same cannot be said about other countries (ie the defaulting Venezuela) where the money can become worthless in minutes. You can end up "losing" your life savings in just a snap.
Cryptocurrencies become then a way to safeguard savings: as long as the cryptocurrency is not traceable to a person no "state" can rob you of it. Also cryptocurrencies are not linked to the fate of singular states (to an extent of course).
That's why cryptocurrencies are so popular in underdeveloped countries.
Another reason is the ability to send money with no/few fees. Many emigrants work hard to sustain their family back home. Right now they have to send money with outrageous fees and/or terrible exchange rates. Cryptocurrencies are unconstrained (meaning there is no way to "block" its access in a country) so they solve that problem too.
Last but not least not everybody has access to credit/debit cards. Cryptocurrencies can solve that role as well: you can transfer money without carrying cash.
TL;DR
I do not think the cryptocurrencies are ahead of time. It might be for rich, stable countries where there is no need for anything else. But poor, unstable countries can and will leverage the freedom of cryptocurrencies.
It's incorrect to think a state can't rob you of your money in a blockchain. Unless the number of participants in a blockchain is overwhelming, with respect to a nation state's budget, they can take it over.
It's not out of reach for a government to assign a million nodes to do a takeover of a network. But looking at bitcoin it seems like just 10K nodes might be enough to takeover, or at lest for a schism (which would completely break the system).
Yes you are right of course, I stand corrected.
I meant to say no one can forcibly alienate your cryptocoins via purely "legal" means: a state can do that if you have a bank account for example. And there is nothing you can do to prevent it.
A government can also take possession of your other assets such as stocks, foreign money, land, enterprise, etc... but cryptocoins have to be sent from a wallet.
Great point, the trust you have in your country's currency changes the opinion you have on any alternatives.
The current technology for block-chain, in particular for bitcoin, has the problem of simply not being scalable. You couldn't run an economy on the system.
The second issue is that without the backing of any government it's hard to assign real value to a cryptocurrency. There's absolutely no system of guarantees that those values mean anything at all. It's an unbelievably large trust hurdle society would need to resolve before they could become mainstream.
Perhaps a third issue is that it doesn't have any kind of controls or regulation regarding financial products. A lot of the finance industry, including personal loans and investment, revolves around a lot of mandated behavior for financial transactions. The authorities on currency provide a low-risk playing field for financial transactions.
The technology of blockchain, and related ones, can solve several security problems related to trust in authority. They don't completely sovle the problem, and also require adequate participation to do so. They can be employed as anti-corruption systems, and are in some countries.