On today’s show we’re talking about another missing piece in the puzzle over the evolution of money.
Crypto-currencies were launched with the promise of replacing FIAT currency with a crowd sourced anti-establishment, off-grid alternative. The technology is rooted in the need for a system that would enable online micro-transactions where the transaction cost could be virtually zero.
If you want to make an online purchase within a game that costs only a few pennies, or perhaps a few tenths of a penny, there is no payment processing system that caters to these micro-transactions. Some of the early movers were looking for a light-weight system that would make it possible to create a low overhead transaction. Rather than charge users for the transaction, the would require each computer to do a small amount of work. That work in exchange for money was called hash cash and would take the place of a centralized infrastructure required to process a transaction. After all, data centres are expensive to build and to maintain. They consume a lot of power and required air conditioning. If instead of a datacenter, you harnessed the distributed computing power of all the users, you could get the work of managing and maintaining the database for free and require no data center at all.
This concept was the early days of what later became known as mining for bitcoin. If you do a small amount of work, you get some micro financial credit for the work.
Since the early days of bitcoin the notion of free work has been at the core of the distributed database that makes up the distributed blockchain.
The agenda behind these technologies was simple and pure. Create a low overhead financial transaction system. Later on, blockchain technologies took on the agenda of becoming a crypto currency. The notion of a store of value and an ever increasing value came much later.
It is this quality that has raised the ire of the financial regulators.
Governments generally don’t want competition for the nation’s currency. The US doesn’t want it, China doesn’t want it and have already outlawed crypto currencies.
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Host: Victor Menasce
email: podcast@victorjm.com