Wired has a great series on Youtube where they get an expert to explain a complicated subject in 5 different levels from a child to a colleague and if you want a quick way of working out the level of someone’s cryptocurrency knowledge ask them about blockchain (and be prepared to run away if they don’t stop talking).
Cash has the amazing ability to be handed from one person to another and another and still be worth whatever arbitrary numbers are written on the notes. After the cash has been handed off maybe from a parent to a child, or friend to friend it then meets a retailer or bank teller where those pieces of cash can be rejected for being fake for example and even though you might not see them there are often many cameras recording the identity of whoever is trying to use the cash.
This ability to hand numbers from person to person is what blockchain can do with a high level of trust that a spreadsheet on one person’s computer can not. Maybe the spreadsheet owner is sleeping, hungover, in a conflict with you or worse corrupt. Blockchain uses cryptographic technology to solve the problem of having 1 copy of the database by allowing anyone to synchronize a copy where they can READ and CREATE but not UPDATE or DELETE. Trust comes from the decentralized nature of the spreadsheet a bit like bittorrent where you can be sure you are getting the same file as everyone else by checking the MD5 hash from a third party website, Bitcoin just does this every 10 mins for 1mb “blocks”.
So many people think that just because you have one feature of cash that magically it will solve all the world’s problems (often literally) but what they miss is what is printed on that cash. Since blockchains can be made in seconds now that has become more important than ever and too often overlooked.
If I sold beer I could create a blockchain and sell beer tokens for a 10% discount. Spend $100 and you can buy $110 worth of beer, lets call it a loyalty program. I can do this is cash too by buying a printer and printing beer bucks, but someone else can buy a printer to and counterfeit my currency. I can make a Google spreadsheet that everyone can read and record when someone spends my beer bucks but transferring them from person to person makes extra worth for me as the administrator. With a blockchain your customer who bought 110 beer tokens can trade then or gift them to 100 people and the last person can still spend them with me because I trust that I was paid a real $100 for them.
You can do this with anything, trading fees, electricity, phone minutes, fiat currency, stocks, commodities the list goes on but what happens if you arbitrarily cap the supply to say 21 million and are the first to market with brand value and a true decentralized network? Suddenly people will not just want to buy beer at the end of they day, maybe just maybe they will want to store value there.
