Cryptocurrencies are not everyone’s thing, to be sure. However, the thinking behind how to make a global currency based on a virtual “gold” standard, that’s totally anonymous get very deep, very fast.
And today we have the technology to actually make this kind of thing happen. But this is beyond bitcoin and other cyber currencies. It’s about what makes them secure, and private: the blockchain.
One recent article quoted a digital assets expert who has worked at the highest levels in the financial industry for three decades. She stated that the blockchain today is what the Internet was in the early 1990s. That is a significant statement to say the least.
The point is, not only will it provide decades of opportunities to invest that most people don’t even see yet, but it is a great chance to get some of our privacy back from the Internet.
What is the blockchain?
When the inventors of bitcoin were developing the currency, they needed a way for people to buy and sell directly with one another across the Internet without either party knowing anything about the other party but while also making sure that both parties were able to make the deal happen without the use of an intermediary.
The Investorpedia definition of a blockchain may be helpful:
A blockchain is a public ledger of all Bitcoin transactions that have ever been executed. It is constantly growing as ‘completed’ blocks are added to it with a new set of recordings. The blocks are added to the blockchain in a linear, chronological order. Each node (computer connected to the Bitcoin network using a client that performs the task of validating and relaying transactions) gets a copy of the blockchain, which gets downloaded automatically upon joining the Bitcoin network. The blockchain has complete information about the addresses and their balances right from the genesis block to the most recently completed block.
In the current fiat currency system, you (the buyer) throw your Visa debit card down at the store (the seller) and the transaction is recorded at Visa (which takes a 2 percent to 3 percent cut) that covers the purchase until your bank debits the money from your account and sends it to the store.
Banks, credit cards, an entire financial industry is based on being the middle man in these transactions. The blockchain eliminates that.
And now, other industries beyond cryptocurrencies are realizing the power of the blockchain. A couple even got married using a blockchain!
Art transactions where both the buyer and seller can remain anonymous is a compelling one, but not exactly something everyone does. However, the real estate sector is very interested in blockchains. With this technology you could buy and sell your home without dealing with escrow or many of the functions of a title company. All that would be done through a blockchain. That would save buyers and sellers (and renters) thousands. And considering the average American moves 11 times in their lives, that adds up.
Another opportunity is in pharmaceuticals. Counterfeit drugs kill 1 million people a year. Everything from fake allergy medication to fake cancer meds are part of this $200 billion shadow industry. A blockchain can authenticate the path of drugs from the factory to the pharmacy.
And most important, blockchains protect the anonymity of buyers and sellers in the marketplace. No one can backdoor or break into these systems (yet). The blockchain keeps everyone out of your financial business.
Right now, blockchains are limited to cryptocurrencies, and bitcoin has the most robust blockchain at the moment. One first step is to go to a trusted bitcoin trader like coinbase.
Start the process and take it as far as you like. These sites are very helpful and soon you will have an idea how it all works, even if you don’t plunk down any money. Then, when you’re ready, you can go back.
Very soon, a lot of people will be investing a lot of money in this new technology and the opportunities on both a personal and global level will be huge. It pays to see the blockchain in action now, so you can harness its power later.
–GS Early
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