How Do You Help People Appreciate That Crypto Is The Biggest Thing To Happen In The History Of…
Lou Kerner

True believers are always an interesting part of any movement, whether it is driving something new (e.g. blockchain applications) or defending the old (policy should follow my religion, not yours). Here, around the blockchain and its application to currencies (crypto, digital, fiat, commodity (gold silver) the light of belief is more like a fireworks, some lighting the way forward, and some just a lot of razzle-dazzle while pockets are being picked, roulette wheels are spinning, and some hope to make money selling services (hotdogs, EFTs) to the whole show.

The blockchain is the heart of all this. As a distributed ledger it is a bit like the internal combustion engine. That engine provided a distributed mobility of power (run a car, run a saw mill). Blockchain provides a distributed ledger, and there will be no doubt dozens of good uses for a distributed ledger (property records, estate planning, etc).

One of those uses that will grow is verifying ownership for digital currencies and facilitate currency transactions. There is tremendous speculation around existing crypto-digital currencies. There is dispute about whether or not they qualify as “fiat” currencies since their proponents want to differentiate them from the fiat currencies of national governments. Whatever, that is not an important issue.

What is important is two things. First, the blockchain is essentially an open source application. Anybody can use it, including national governments, and the owners of store of value commodities (gold, silver, etc.). Second, in the long run the digital currencies that survive will have the three eternal features that make currencies usable. They are: a relatively stable store of value, a generally accepted medium of exchange, and widely used unit of account. Lacking all three they may remain in limited use but not as main line currencies.

Consider gold, it is still treated as a store of value, but is seldom used as a medium of exchange, and hardly ever as a unit of account. Gold is denominated in dollars. Dollars are not denominated in gold, other than in a trivial exchange rate sense. The price of gold is not set by its cost of production. It is price that determines if mines operate or suspend operations.

If you have “seen the light” enjoy the ride but put a seat belt on your wallet, unless you are willing to risk it flying out of you pocket or purse, as the roller coaster goes on its merry way. In the meantime think “blockchain”. If you have a good non-currency idea there, go for it.

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