Blockchain and Money: Why the Future is Larger Than We Can Imagine

We know that familiar feeling. Every now and then, we still catch ourselves stunned by the pace of progress all around us. As readers of this blog, we are undoubtedly the early adopters to ideas and technology that are yet to disrupt industries. Clearly, we are the first to see the future. Yet despite our tech know-how, we are seeing just half of the picture.

Predicting the future is a risky business. Consider that some hundreds of years ago — Thomas Edison said that alternating current was just a waste of time. Or that time when “wise” financial advisers argue against Henry Ford because “The horse is here to stay and the automobile was just a fad.” Or even that moment way back 1966 when Time Magazine said that “remote shopping, while entirely feasible, will flop.” The list of wise men making foolish comments about the future is a mile long. They could be right, but they could also be wrong.

That said, we can’t dismiss Bitcoin, or blockchain or AI as another “fad.” In all fairness, a majority of the crypto coins now in circulation are nothing but empty promises. Small silly coins, just like the thousands of short-term dot-com companies — are made to inflate, pop and burst. Only a handful of cryptocurrencies will prevail and stand the test of time. But the blockchain — its underlying technology is here to stay.

Suffice it to say that the technology behind cryptocurrency will be the “tsunami” for most industries. Blockchain can destroy outdated infrastructures. Likewise, it can reveal new gems and resources once the tide has ebbed.

Right now the waters are still rising. It will take years to reach its fullest height. But we warned though, those who will choose to stay where they are can get wiped out.

So what is it about blockchain? How can it affect such drastic changes? Let us examine.

Tokenization

Nowadays, tokens aren’t just for Vegas slot machines or kiddie game arcades. Tokenization now signifies the building blocks of blockchain assets and investments. Imagine people wanting to invest in real estate, or gold, or works of art, but they have only less than a thousand dollars at hand. Previously, similar types of big-ticket investments were only accessible to the likes of Donald Trump. Tokenization cuts these assets into bite-sized chunks so that even the “common man” can invest modest amounts. Additionally, there’s no need for the property owner, broker and real estate lawyer to create and maintain a hundred paper trails.

As you can see, tokenization as an attribute of the blockchain technology makes investing accessible and hassle-free. Tokenization converts assets’ rights into small tokens. It’s like cutting a single apartment into a thousand different parts. With this technology, geographic borders, local real-estate monopoly, and currency exchanges will all be a thing of last decade. Every single asset token is exchangeable and accessible, thereby improving your property’s value and liquidity.

Decentralized Trust

Paper money and coins are so 20th century! With the invention of the internet, our money system became more accessible and easier to handle. Take PayPal, credit cards and wire transfers. The banks act as the centralization authority that regulates everything. Thefts and errors can be prevented and even reversed. This is a good solution, also a profitable one for the banks. People have no choice but to entrust their money to these corporations. The banks can likewise pump out interest rates and service charges ad infinitum. Payment gateways charge excessive fees, one can’t send money to someone from a different banking network, hackers can collect your card details, and we are at the mercy of our banks. Clearly, this isn’t a reliable solution.

But now with the blockchain, we can buy and sell assets, services, and goods across borders. All these can be done seamlessly without relying on a single corporate institution or government. There’s no third party, no intermediary and no need for local currency exchanges. Sudden political revolts or domestic inflation cannot lessen the value of your cryptocurrency — in essence, it has become globally accepted money.

Efficiency

Blockchain/cryptocurrency is the total opposite of how banks work. This is a decentralized technology. One can send money across the blockchain, without having to go through a bank / central clearinghouse. This newfound efficiency is a breath of fresh air. But like any new technology, there are risks. Good thing that the future gains are higher.

For centuries, banks and major corporations serve both as custodians and verifiers of our own money. For government and institutions to do that, people have to trust them wholly. This system favors only the few, giving the elite billions of generational wealth. And since every citizen’s money is at the mercy of the government, even a single inflation event can devalue the fruits of their hard labor. For years, that’s the way the system works. We’ve got no choice.

Since the blockchain eliminates the need for human involvement to verify, count, convert, transfer and guard one’s money, this paved the way for a truly decentralized and trustless global currency. Suddenly, intermediaries such as government-regulated banks are no longer necessary. Unlike machines and codes, humans are more prone to errors, emotions, pride and self-preservation. The removal of the human component reduces friction and costs, making the blockchain network transactions less costly and more trustworthy.

This renewed sense of freedom from the government leads to greater autonomy. People can choose to pay the amount they want to pay and receive the same privileges as anyone regardless of geography or citizenship. Ultimately, the blockchain gives us the freedom to make better life decisions.

Conclusion

As we can now see, blockchain is the future of investment and money. A handful of big banks are likewise considering this new technology to overhaul their century-old financial system. We can always go with the crowd, oblivious to the sounds of warning and merely wait for big waves to crash. Or we can be that wise man who had chosen to build his house and his future on higher ground. Which one are you?

If you’d like to learn more, please visit us at Joint Commonwealth Fund (JCF)!