Blockchain and cryptocurrencies, for real
This is the sixth post in our series "From old money to Smart Money." If you haven't read the first five, we recommend you start here.
If you’re like most people, you’re a little skeptical of this whole “blockchain” thing everyone is talking about. It seems like some people have made a bunch of money investing in it, but nobody’s ever explained it to you in a way that made sense and seemed, well, real.
Here it is, simply:
- Physical cash is clearly the easiest and simplest way to pay: you can just hand someone cash and it becomes theirs. No need for any approvals or banks. No disputed transactions, either: whoever has the cash owns it (cash is what’s called a “bearer” asset).
- But physical cash doesn’t work for payments where the parties aren’t in the same location, and it’s also annoying to carry around
- Cryptocurrencies are the digital equivalent of cash: no intermediary banks needed, irreversible transactions, and whoever has the asset owns it
- The transfers are verified near-instantly and programmatically by a large set of independently-run, internet-connected computers that have strong economic incentives to do so properly (this is the "blockchain" bit)
There’s a lot more to it—including the existence of different cryptocurrencies—just like there are different types of cash in different countries. But at its core, that’s what it is: digital money that you actually own, the same way you actually own your physical cash. Money that you can send directly from one person to another without multiple people (well, banks) in between.
And when you think about it: doesn’t that seem like a flat-out better system than the one we’ve been talking about this entire time? That old system—modeled on the Pony Express and built for decades upon crumbling infrastructure—forces banks and financial institutions into positions where they can only win when you lose.
This blockchain stuff removes those middlemen. It allows for more efficiency. And we’d like to build new products for you on top of it. You can even put dollars on the blockchain and just use the technology to move those dollars better than any other system out there.
But unlike most other people in the cryptocurrency space, we’re not trying to convince you to invest dollars or other fiat currency in some new, volatile asset. No, we’d like to build great products for you using existing currencies (like dollars) and slowly migrate to this new system to make life faster, cheaper, and easier — to make your money work for you.