As featured on CoinDesk.
In this opinion piece, Goldman argues that no economy is free from the risks of human imperfection and that a ‘trustless’ system like the blockchain is needed in a free-market economy.
Milton Friedman once said, “Only government can take perfectly good paper, cover it with perfectly good ink and make the combination worthless.”
So, why is it believed that we should entrust money management to governments?
It seems that as we progress and evolve through the problems inherent in our highly regulated, government-controlled economies, we ignore a simple truth. The truth is that our economies, our institutions, are not just merely created by man, but regulated, maintained, altered, manipulated and changed by man, for better or for worse, whether sought or unsought.
This is to say that no such economy or its participants are immune from human imperfection.
One word that represents an immutable standard in a successful free-market economic system, is trust. But what is it that must be trusted? A proprietor, a merchant, or a bank? The economy itself? The ability to prevent or allow interference?
We place our assets and transact with these “trusted” participants through reputations, relationships and experience. This trust is not to be assumed, for bad fortune may surface for those who do.
What if there was a solution to eliminate trust as a requirement for transacting safely in a free-market economy? One that has an inalienable set of rules, similar to the constitutional rights of American citizens.
We need a “trustless” system.
Enter the blockchain
Ever since bitcoin disrupted many of our lives, its underlying technology, the blockchain has awakened sleeping giants from big finance to governments around the world.
Now, they are racing to develop and evolve their ‘pre-Internet’, ‘pre-mobile’ infrastructure to this new ‘trustless’ standard. Blockchain technology is the database of the future, and the future is now.
How can I make this assertion? Well, a blockchain is a ledger of information that is digitally recorded. These records of information are stored in ‘blocks’ that form a chain. The information in every block is secured using cryptographic hashes, and are added in linear fashion upon the previous block. This prevents information in the ledger (the blockchain) from being altered, ensuring trust and transparency is maintained.
While mainstream outlets continue a negative narrative, they aren’t telling you how important the blockchain is.
Every major bank and stock market operator is currently looking to employ or developing technologies centered around blockchain tech as you read this. But the applications go beyond finance. Bitcoin and ethereum have proven to be the most successful applications of such technology, with the latter being centered around the digitization and execution of agreements through the implementation of smart contracts — the digitization of law.
The success of Bitcoin, Ethereum, and other cryptocurrencies has many finding out how to buy and sell crypto for profit. The excitement caused by investors’ plunge into Bitcoin and Ethereum has had a spinoff effect in spurring interest in the blockchain. For now, cryptocurrency is the best application of blockchain, but a breakthrough in other uses is right around the corner. Those interested in buying crypto the best place to buy cryptocurrency Canada has to offer. Bitbuy offers low fees and free crypto withdrawal.
While brainstorming alternative applications for blockchain technology, the possibilities become endless.
Most if not all ‘pre-Internet’, ‘pre-mobile’ infrastructure providers should adopt such technology, as it is cheaper, faster and more secure than the current technologies that precede it.
Food for thought
Imagine if you could own your own medical record? Your credit history? Have your country’s voting system protected by a blockchain? Or even eliminate the headache of a tax audit by providing the authorities with your unalterable ledger of information in token format?
Imagine a world today, analogous to the pre-9/11 intelligence community, where many redundant operations are going on, resources are wasted and the hoarding of intelligence prevents action, namely due to the lack of information sharing.
Imagine using a system to ‘share info, without sharing info’.
For example, the credit card companies, banks, payment processors, etc, do not share as much information with each other as they should. Such a system would enable them to share certain data without revealing specifics about customers or vendors — essentially metadata, that could assist with many of the challenges currently present in those industries today.
“The combination of economic and political power in the same hands is a sure recipe for tyranny,” said noted economist Milton Friedman.
The blockchain decouples such power and puts it right back where it belongs, with we the people.