What Makes me Excited about Crypto
The Internet Native way of Storing Data
When I think about a rough (and somewhat oversimplified) evolution of how data has been stored historically:
- We started with shells/tulips/ropes and beads as systems of accounting.
- Next, the Medici family invented the double-entry system, which is essentially what large financial institutions use today (except their accounting system is digital).
- Now, we have the internet native way of storing data, Blockchain. With blockchain, we open a wormhole of possibilities of what we can do as a society.
Blockchain as a technology by itself has countless interesting applications, from supply chain management on a hyper-ledger to storing healthcare data, and whatever “the Metaverse” is going to turn into. Personally, outside of crypto the thing that gets me most excited are hyperledgers, and they don’t seem to get that much attention. A hyperledger is a shared blockchain that's run by multiple Fortune 500 companies for various purposes in tracking equipment, inventory, etc. It’s super-efficient since you don’t need decentralized miners (it’s all cryptographically protected for the trusted parties), and is optimized for actual applications of blockchain technology when dealing with robust systems. It doesn’t fall into the “blockchain solves everything” movement.
That said, when we tie blockchain as a means of storing data, into cryptocurrency, that’s when I get excited.
The Decline of State-Issued Currencies
We are starting to see that the US dollar is going into decline. Internally, the US is faced with a worsening political divide, a growing track record of leaders who are disconnected from the general population, a large loss of trust in the ability of our government to function effectively, and historically unprecedented inflation coupled with the likely oncoming rate hikes, leading to the inevitable speculation of a recession in the near future. Externally, the US is faced with an ongoing count of overspending and underperforming in wars, losing geopolitical leverage in 2nd and 3rd world nations, and consistently losing the trust of global citizens and foreign leaders (less so now, but especially during the Trump era).
We know the US’s empire is coming to an end at some point, and my guess is that the US’s decline has already started. This begs the question, who/what is going to replace the US dollar? China seems to be a popular answer today, and for good reason. China has been giving out trillions to foreign countries, masquerading as a helpful friend before crippling these countries in debt and using it as leverage to extend their geopolitical influence. They also are known for their ridiculous rate of technological innovation within the country and history of being able to poach western companies' business into China with the promise of cheap labor, and poaching intellectual property from around the world. That said, China’s tactics have largely relied on using massive amounts of capital to produce these results. China’s growth rate has started to decline in the last 1.5 years and is expected to decline even more this year, with some speculating a negative growth rate. Why? My guess is that China’s expansionist model is running out of cash to be able to easily hand out. Additionally, there was barely a forex market for the Yuan till around early 2010. The Yuan as a global currency in the ranking to be adopted has been short relative to the country’s lifetime. I’m skeptical that the Yuan can begin to take down the dollar.
So where does that leave us?
Crypto seems to be a compelling narrative :)
Crypto is a means that we can establish a currency that can have regulation, and smart functions, without being tied to a government. We are detaching the nature of “statehood” from money. It is a way we can have ownership over our assets in a way that can not be controlled by a government or subject to the whimsical nature and decisions of large banks.
We can create currencies that have entities that make decisions related to the currency, like the Federal Reserve, without being linked to the US Government. We can hold our assets and participate in lending and borrowing and be free of the traditional financial institutions who acted as gatekeepers to what was possible. We can create smart contract micro-insurance policies, that suddenly guarantee people who previously never would have had access to. We can lend and borrow, and make returns by providing liquidity, without needing insane capital to participate as a mark maker like you do in the stock market.
This is where we start to separate the individual from the large institutions around them while making me incredibly excited. Not only might the future world currency be free from statehood, but this currency, among others, will be able to directly plug into an interface with an infinite amount of financial arrangements. Bringing sovereignty to individuals is what gets me psyched.
Hope you enjoyed this mini-take :)
Hope you enjoyed the quick intro. Feel free to email me with any questions at firstname.lastname@example.org. Also, always remember to do your own research, and don’t take this as investment advice.
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