Cryptocurrency is looked at as a financial vehicle and this is something that is a mistake. In fact, once we understand what it really is and how it operates, we will see there is an entirely new set of rules associated with it.
The tendency is to see the word "currency" and feel that cryptocurrency is financial in nature. Hence, what is being erected, at its core, is a financial network. This is not valid. Instead, we are dealing with something completely different, which can causes a great deal of misunderstanding.
It is also what is throwing the government and regulators off. Their quest for control is so misguided it is unreal. Once we embark upon the reality of what we are dealing with, we see how fruitless their efforts will be.
Cryptocurrency has a financial component, that cannot be denied. However, it is just a component as opposed to the entirety of it all. This is where most go awry.
For this reason, we can conclude that we are not establishing financial networks. Certainly, there is this aspect to things. Cryptocurrency gives us the ability to transfer value. From here, we can build a host of applications to cater to all kinds of financial needs. However, that does not make it a financial system.
Let us look at Bitcoin as an example. What is Bitcoin when you really think about it? Is it some financial network that was erected to take over the existing system. Aside from a few maximalists, most know this is not the case.
Bitcoin is a network, that much we know. At its core, we see a bunch of nodes strung together via software. This is all the network is. Hence, we are dealing with a computer network.
This is what blockchains are. They are computer networks that are build to transfer, record, and save data. That is all. Of course, some of this data is cryptocurrency, meaning the financial component is built in.
There is a lot of news made about the SWIFT network. Most do not truly understand what this is. When they hear Russia was cut off from this network, the belief is they are cut off from international banking. This is not the case.
The SWIFT network is a messenger service. It is basically a way to send information back and forth. Hence, we can look at it as a communication system. By evicting Russia, the idea is they cannot communicate with other banks. Again, this is a fallacy. The Russian banks that are excluded can use other means of communication.
Here is where we see the Eurodollar system at its essence. Certainly, it built an entire financial network on top of a distributed communication system. Ledger technology is really about communication. It is the transferring of one asset, whatever that might be, from one "wallet" to another. Obviously they do not use that term but that is really what they are doing. They opt to call it balance sheet (off) banking.
Cryptocurrency is really just the digitization of this entire system while providing the ability to anyone. With peer-to-peer communications, we see the ability to send and receive money (data) with anyone we desire. There is no third party involved and the transfer takes place through a communication system. Instead of calling up another entity and instructions of where to send the money, the blockchain handles it.
This means the computers that are tied to that network "talk" to each other, confirming the data. Depending upon the validation process, all update their records to match the new data that is added.
Essentially, this is all that is taking place.
Understanding the basis of all this, now we can see how abundance is being generated.
To start, if we look at communication systems, we know a couple things. First, they get faster as technology improves. This is why Bitcoin is an out-of-date network. While it has qualities that are useful, the network itself is old technology. It was not upgraded.
Second, we know communication systems expand. Over time, more nodes are added, generating more activity. Today, we have global communication available to use anytime of the day. As long as someone is tied to the Internet, we can communicate.
Finally, systems get cheaper to operate. There was a time when individuals and companies received a fairly healthy long-distance bill. Today, we can video conference with anyone around the world basically for free.
Consider what happens when the financial component to this system can move faster, expand, and operate without cost (or minimal). The idea of going viral is taken to an entirely new level.
We also see why the network effect is so important. This originally was a concept developed by looking at communication systems. Many tried to apply it to social media, with mixed results. However, it does apply to cryptocurrency and the networks they are built upon since we are dealing with the interaction of different communication nodes. Now, instead of phones and fax machines, we are dealing with computer nodes.
The expansiveness of this realm means the financial components that are built upon this can keep expanding over time. Here we see where the upper limits is really non-existent. We have a potential of over 7 billion people globally. This is coupled with the fact that automation can put this near the unlimited level.
Money is an emotionally charged subject for most people. When we understand that we are now dealing with a glorified communications system, we can see how abundance is the future. Networks keep expanding on a daily basis across the world. This generates enormous value over time.
We also can see why it is absurd for governments to think this is something they can control. It is not. A global communication system that is established on a peer-to-peer basis is out of their reach. Especially since there are many different networks built within the system.
Unlike the SWIFT network, these cannot have someone thrown off them. That is why they are called permissionless.
All of this is unlocking entirely new capabilities. We are now at the point where things are starting to become evident to everyone.
What are your thoughts? Do you see how this is all shaping up?
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