Why cryptocurrencies are here to stay and how crypto markets are like digital farmers’ markets
Are cryptocurrencies here to stay?
It’s a commonly asked question, especially in the recent bear market.
After reporting and writing tens of thousands of words on cryptocurrencies and blockchain, it became obvious to me that these new forms of interacting are creating massive opportunities, and I think will ultimately benefit end-users more than legacy financial and networking technologies do.
But there will be trade-offs.
Right now cryptocurrencies are kind of like boutique organizations with very distinguishable communities. There are figureheads and evangelists, trolls and haters — along with good information and a whole lot of misinformation.
These new transactional systems are designed to be decentralized, and in a way are about as far away from a corporate or bureaucratic structure as possible (although not completely). In this world, white papers have replaced the prospectus. Conferences and Reddit AMAs have replaced annual reports. And social media is where the various factions of the community go to find consensus — which is a messy, but necessary part of not having traditional forms of governance.
But why are cryptocurrencies here to stay?
Recently, I’ve started to think of cryptocurrencies like farmers’ markets.
Here’s how I see the similarities between farmers’ markets and the crypto world:
- Farmers’ markets were designed to disintermediate, just like cryptocurrencies. In other words, farmers’ markets create a platform for a farmer to sell directly to his or her consumers. With this model, there is no need for massive supply chains, or infrastructure, or the need for corporate entities to get involved. Buying food directly from the grower creates trust — a consumer can ask questions about what kinds of chemicals were applied, labor practices, or even ask about tips for preparation, etc. Crypto is similar in that the blockchain creates a protocol where people can conduct digital transactions without the need for third parties. While blockchain transactions might lack the face-to-face feel of a weekend farmers’ market, it does allow for two people or entities to conduct trusted transactions without the traditional third-party involvement.
- Farmers’ markets abide by a system of governance and there are rules, but they are not the same kinds of rules or regulations that grocery stores or mega-chains content with. Similarly, crypto exchanges and companies have to abide by certain financial regulations (like “know your customer” and anti-money laundering laws) and the industry is developing a form of governance, but large swaths of the regulatory landscape are still getting figured out.
- Farmers’ markets are a form of community. Most farmers’ markets reflect local economies and environments. While this is beneficial for a lot of reasons relating to community resilience and sustainability, it does have limitations (like it’s hard to get mangos grown in Mexico at a farmers’ market in Vermont. In some ways, crypto communities are forming around shared economic or political interests. Limitations also exist in these communities — so far there isn’t one system or economy that appeals to all crypto interests (which we can generalize as privacy, scale, transaction costs, security, etc.)
Why does any of this matter?
While this is a very simple and basic comparison So much crypto/blockchain news focuses on market news, price predictions, or some of the community back and forth. While all of that is important, it’s also important to look at the bigger picture of what this technology is doing, and what it is capable of in the future.
Originally published at new block crypto.