Image from Binkabi Medium
What is the difference between $20 in cash and getting $20 out of the ATM machine? The answer to this seemingly simple question raises profound philosophical questions, and points the way to why Blockchain is revolutionary.
The answer is that the $20 is yours … your ownership of it does not depend on anyone telling you it is yours. But the $20 you try to take out of the ATM only exists because the bank’s ledgers say it exists. If the bank’s ledger says you don’t have $20 … you don’t. You can of course dispute this (and we do if we feel the bank makes a mistake), but who usually wins this battle?
So your possession of the $20 is dependent on another party’s private ledger. If you think about this for a moment, you will realize that your entire life is essentially governed by these private ledgers:
- You graduated from university? Well, this is only true if the Registrar at your alma mater agrees.
- You own assets? Really? well again this depends on your broker having your assets in their ledger. Of course, here there are back to back ledgers, because the broker who in turns depends on the ledge at the depository to verify their positions in securities. What happens if these ledgers are not accurate?
- You have a job? You are entitled to a certain salary and benefits? Well, again only if the private ledger at the employer says so. If you show up to work and the employer says it has never heard of you … what would you do next?
- You think you owe $50,000 on your mortgage? What happens if the mortgage service company says that you owe $75,000? This is not so far fetched — in the aftermath of the Great Financial Crisis, there were numerous foreclosures (and lives ruined) because the mortgage service providers kept sloppy records, did not apply payments properly.
In fact, when movies are made about the disappearance of a person’s ledgers (The Forgotten, Erased, for example), these are essentially horror films because the disappearance of the private ledgers remove all trace of someone’s pervious life.
Don’t believe me? Even in some religions, God Herself is keeping a ledger.
So it is not too much to say that your entire existence is dependent on private ledgers controlled by others (of course, this is also the reason the ownership of your personal data is shaping up to be perhaps the biggest issue of 2020s). That is, ledgers are life.
So what does Blockchain have to do with all this? Well, Blockchain is a ledger whose authenticity is not dependent on a single party. It is dependent on a system of rules, and transactions and balances are verified (as we all know) through a complex process that no one individual entity can corrupt and is immutable, so not subject to erasure.
And so wouldn’t you feel much better when many of our critical ledgers are on the Blockchain — identity, banking, assets, university records, pharmaceutical supply chains to name a few. When this happens, we will look back at the current system of private ledgers governing our lives as an incredibly primitive, unfair system, prone to numerous life-damaging errors.
Finally, for cryptocurrencies, are they more like the $20 in your pocket, or the $20 in your bank? Like the $20 in your pocket, of course. Your ownership of BTC does not depend on another individual or company saying you own it. As more and more people recognise the implications of this reality, we will see a titanic struggle over what is money.
This post also appears on the Binkabi Medium Page.
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