Lets take a moment here and think of how money has evolved over time. It was invented some 2000 years ago as a medium of exchange. Coins replaced the barter system, and evolved into banknotes, which evolved into cheques, which evolved into credit and debit cards, and now mobile payments. This is more or less where we are now. The big question is what happens next.
In one sense the answer is obvious: As the rest of our lives move online, money for all its intents and purposes is also being changed into digital bits. When you are waving your credit card over the counter or scanning your phone to make a payment – you are essentially instructing your computer to reduce a number stored in a ledger in your bank account, and increase the number stored on the merchant’s bank account by the corresponding amount. This is modern day magic – no cash has exchanged hands but the transaction has happened.
But in reality, although cashless payments are all around us, it is still hard to move money across borders – unless you’re a bank, of course. Why can’t we transfer money across borders just as how the Internet allows us to send emails?
Well, that’s because the Internet as we know it today always produces a copy of all our online activity (Yes, even on snapchat!) – something that could easily lead to duplicate money. This is why our monetary transactions need to go through a central governing body, and often warrants outrageous delays.
This means we need to make sure the technology underlying the transfer of funds (or any sensitive and valuable documents) resolves this enigma first. Thankfully, for us the 2008 financial crisis in the US inspired a series of new innovation known as the blockchain – an open source ledger used for record keeping that not only verifies each transaction, but is also impossible to hack.
The most common use case for blockchain is bitcoin – or what I like to call, Magic Internet Money. It is not backed by any central bank. It is like an odourless gas – you cannot hold it in the palm of your hands and smell the scent of freshly minted paper or rusting metal, but it exists. Even if you don’t own any bitcoin yourself, chances are you’ve at least read about the mania online, or unfortunately found yourself trapped in a heated debate about it. A bitcoin is a cryptocurrency generated to reward the miners supporting the blockchain infrastructure. It is now, however, traded as a commodity whose prices have seen the highest level of volatility.
Many people believe that bitcoin will not survive – mostly for very rational reasons. But if economic history has taught us anything – it is that people rarely do behave rationally. Over the course of the last several months, I have come to understand that bitcoin, or more importantly blockchain, the technology underneath it is here to stay for a very long time.
As more information is being exchanged online – blockchain is forcing us to rethink the operations and security of online transactions.
Much of the world’s Internet is controlled by a handful of companies – so whatever our predecessors envisioned when they stumbled upon the idea of the World Wide Web as a highly survivable system has morphed into something increasingly centralised overtime. And blockchain is just that rebellious technology that aims to return to the decentralised ethos of the original Internet.
Blockchain can be thought of as a general-purpose technology. And I genuinely believe it is the foundation that will change the next decade of businesses. Financial incumbents are aware blockchain technology puts on horizon a world without cash or a central authority figure. Similarly, blockchain architects are well on their way to becoming the next great meta application to leverage infrastructure – they are already disrupting social networks, banks, news aggregation sites, copyright platforms and more.
No one knows what the future holds – it is changing too fast for anyone to predict it. But one thing is for sure – the Internet as we know it is about to be completely disrupted.
In order to survive, we need to be exceptional. Instead of being speculative investors – we need to be innovative ones – the ones that help write the future of the Internet.