The once-busy trading floor at UBS’ Stamford offices.

1. A Simple View of Blockchain

5 min readOct 12, 2015


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This is the first post of what I am calling Creole. The object is to convince a general audience that blockchain technologies like bitcoin and other “digital currencies” will have a large impact on our world.

This isn’t a popular view. Today it is difficult to even explain what bitcoin is, or how a blockchain works. Proponents too-often rely on dense technical explanations, or vague gestures towards far-future use cases. To many this sounds dodgy. If this new technology is so great, why can’t you explain it?

We’ve seen this dynamic before. Blockchain technology today is a lot like the internet in 1993 or 1994. A new technology used by a limited number of enthusiasts, associated mainly with geeks and pornographers. Explaining the internet in 1993 meant either getting into technical details like IP addresses and packets, or describing a vague future with uncertain benefits. Not a pursuit for serious people. The “web”, which would eventually fulfill most of the early advocates’ promises, barely existed.

But to understand that the internet would change the world, you didn’t have to understand the technical details or believe in a specific utopia. Mostly, you needed one key insight: the internet radically reduced the cost of moving information. Any process, product or business that involved moving information would be impacted by the internet. The businesses that didn’t even realize they were in the information business — “we sell CDs, not data!” — would be decimated by it. It is striking, if popularly mundane, to think about how the world has changed in 20 years:

Before the internet, media access was tightly delineated by national borders. You could access international media if you really sought it out — when I was a kid in a small town, there were a few families on my route who received the Sunday Times — but it was expensive, and difficult to discover if you didn’t already know you wanted it.

Now, anyone anywhere (with some exceptions) has access to all media from any country in the world. They don’t receive it as a bundle of paper delivered to their doorstep, but rather through the new common medium of the web.

Before the internet, individual people could only exchange messages or phone calls across great distances using very expensive intermediaries like phone companies.

Now, anyone anywhere can communicate instantly with anyone else, in any form, using a device they carry around with them in their pocket.

Before the internet, there were very high barriers to launching new media products & companies. Distribution of physical media is very expensive, and the existing networks were largely controlled by the incumbent industries (e.g. most printing presses had, and continue to have, tight business relationships with the papers that use them). You had to be local to compete with local media.

Publishing newspapers and books is still expensive, but publishing on the internet is free and accessible to anyone. Anyone can compete with “local” media because all distribution is global distribution. This lowered the costs of entry and allowed many new companies to compete in what was previously an industry dominated by a small number of players.

I believe blockchain technology is a lot like the internet in 1993. We don’t have our “web” yet, the consumer-facing leap that will open it up to a mass audience. But the underlying technology is sound, and this industry is the site of an incredible outpouring of entrepreneurial energies (and capital investment).

Within the community, it can be easy to lose sight of this big picture. There are many competing projects and competing visions for how blockchain technology should evolve. Some of these projects will succeed. Others will fail. Things will not turn out as we expect. But at this point in late 2015, it is clear that however this early industry turns out, blockchain technologies like bitcoin will have at least one revolutionary property: they will make it incredibly cheap to move money. To control it, to manage it, to send it.

What might that look like?

Before blockchain, financial access was tightly delineated by national borders. Most people only had banking relationships, if any, with the select few banks that have local branches in their hometown. You could open up accounts in foreign countries if you really sought them out — and they offered specific tax advantages or investment opportunities if you did — but it was expensive to set up, and difficult to discover if you didn’t already know you wanted it.

In the future, anyone anywhere can access financial products and services from any company in the world. They don’t access them through traditional banks or using traditional mediums of exchange, but over a new global network of common exchange.

Before blockchain, individual people could only exchange value over great distances by using expensive intermediaries like banks & financial services companies like Western Union.

In the future, anyone anywhere can transfer value instantly to anyone else, using a device they carry around in their pocket.

Before blockchain, there were very high barriers to launching new financial products & companies. Receiving, managing, and distributing large sums of money is difficult and expensive, requiring specialized expertise, a large staff, and privileged relationships with existing large financial institutions.

In the future, receiving and distributing large sums of money or managing large numbers of transfers will be an inexpensive, automated process managed almost entirely by software. Barriers to entry for new entrants into financial services will be radically lowered, allowing many new companies to compete in what was previously a small industry dominated by large players.

The internet analogy isn’t perfect. But it’s a helpful lens. The internet transformed every industry whose business was, in some form, moving information from A to B. Blockchain, the argument goes, could have an equally transformative impact on any industry involved in moving money. If your business needs to move money around, and pays for that service, blockchain might cut your costs and expand the realm of possible business models. If your business is the business of moving money around, then you might want to call your CTO.

Moving money from A to B is, today, quite profitable. Firms like Western Union charge an average of 8% on a transfer of $200. One of their largest markets is international remittances sent to developing nations — typically, an immigrant remitting a portion of her income back to her family. In 2015, ~$440 billion USD will be sent to developing countries this way, billions of which will go to firms like Western Union.

Reducing fees on remittances has been a priority for development organizations for years, for good reason. Even cutting those fees in half would add ~$17.5 billion USD to developing nations’ economies — the size of the entire UK foreign aid budget. What if we could eliminate them entirely?

In the future, the fact that there was at one point a “remittance industry” will seem as absurd as there being an “email industry” today. Moving money, like moving information, is not a service you should have to pay for. It will just be a feature of the internet. A thing you do with your phone.

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I work in #blockchain, write here