Blockchains, Cryptocurrencies, Banknotes and Chopped-up Databases
In our previous article, A Freestyle Interpretation of Money, we argued that -from a value point of view- the form under which money exists is not that important, but that its scarcity is.
Now, talking about “form”, let’s have a look at the form of banknotes and the form of a random cryptocurrency.
Visually, the form of a banknote is … well … a banknote: a piece of paper on which is written a nominal value and a unique identifier number. Additionally, security measures are added in order to become uncopyable.
The form of a cryptocurrency, on the other hand, is kind of weird: it’s just a line of data in a database, indicating the sender and the receiver, a nominal value and a unique identifier number. Additionally, security measures are added in order to become uncopyable.
Hey! We just wrote twice almost the same thing in describing the form of a banknote and the form of a cryptocurrency. Let’s repeat: “… nominal value and a unique identifier number. Additionally, security measures are added in order to become uncopyable”.
And what are the differences? Well, there is 1) the support, i.e. paper for banknotes and a digital database for cryptos and 2) the absence of the indication of a sender and a receiver on the banknote.
Mmmm … interesting. Let’s try to reconcile them.
Let’s take all the banknotes of a nation, let’s take some Scotch and let’s stick them together to a long list of banknotes. Well, we kind of created a database in which each banknote represents a line in the database.
The other way around, let’s print the cryptocurrency database, let’s remove the sender and receiver references, let’s take a pair of scissors and let’s cut out the most recent transaction lines for each cryptocurrency unit. Well, we kind of created banknotes from a database.
Conclusion? In their essence banknotes and a line in a cryptocurrency database are very much the same!