The Future of Finance
In "The Future of Finance" by Tristan Miller, the blog post imagines a hypothetical bank with ideal financial conditions, using this vision to showcase the transformative potential of blockchain technology in creating secure, efficient, and equitable financial systems.
Imagine a bank. Your bank in particular, but better. This bank has been so upset by the economic turmoil of the last hundred years that it has implemented some radical changes. All accounts in this bank have been combined, so the checking and savings are now under one superior account. Not only that, but the interest gained for just storing your money in this account averages at around 25% year over year, and is unaffected by the national inflation rate. Additionally all fees have been reduced to just fractions of a penny, no matter the size of the transaction, and all transactions - payments, remittances, deposits, withdrawals, and otherwise - are settled near instantaneously. But to top it all off - because of the best security practices available - this bank has no control over any of your money. It doesn’t need it. That means no more unauthorized account freezes and no more losing your funds from a “run on the bank,” among other things.
Unfortunately, this bank doesn’t exist. Nor will it ever. That’s because this image made here cannot be made by a centralized authority whose primary concern is profit. But it is still possible to accomplish this idea in other areas, even today. But to do so would require a trustless and indifferent intermediary with no need for profit, essentially a technology that has the ability to store value permanently through encryption. The tech I’m mentioning in particular here, the solution to create all of the above, is blockchain technology.
Note: while blockchain has an infinite number of uses outside of finance, I’ll only be addressing it’s value as a transactional medium here. If you’d like to see how it has value in other fields, please come back for more information on blockchain in emerging tech fields.
Blockchain has been a buzzword the past couple years, a mythical being mysterious to most people. But it’s actually pretty simple. Blockchain is in its most basic form a public, decentralized, and immutable ledger. To break that down further, public here means that anyone in the world - with or without internet access - can look at each individual transaction ever made on what is called the “blockchain,” or a computerized chain of blocks each containing a set amount of transactions. Decentralized means no single person, bank, government, or general authority has control over the aforementioned blockchain as a whole, making it free for the general populous to use indefinitely. And immutable simply means nobody can go onto the ledger and rewrite a transaction, which would essentially give a would-be hacker an infinite amount of money.
Now the use cases here may seem small, aside from ideologies. But it’s actually crucial that this tech came out when it did. Let’s look at Venezuela for example. Back in 2014, Venezuela’s inflation rate quickly became the highest in the world, and in 2019 is now higher than 53 million percent. To put that into perspective, countries need to meet only a 50% inflation rate within a month to be considered hyperinflationary, of which Venezuela exceeded by over one million times. To combat this, many people in Venezuela began using cryptocurrencies such as DASH and Bitcoin instead of their Venezuelan bolivar as a means of storing value and transacting.
By doing so, Venezuelans effectively stopped the government from stealing the value of their hard-earned money and are then able to go about their day to day lives normally. Looking at a real life example, most Subways in Venezuela are currently accepting DASH as a form of payment, in preference to the national denomination, as pointed out by Jesus Flores (a Venezuela native) during the KU Blockchain Institute’s 2019 Digital Finance Conference. And this is preferable for various reasons. One reason in particular is that cash will often lose its value very rapidly, even overnight. Not only that, but Venezuelan point-of-sale devices will frequently break down as well (a common problem anyone in the world can face) making it impossible to use credit or debit cards. By storing the value of their money in cryptocurrencies, Venezuelans are now able to access smaller amenities such as basic fast food through payments made from the electronic crypto wallets on their phone. To see proof of this in action, you can even YouTube it and watch as citizens of Venezuela go to some local fast food places in Caracas to pay for their meal in DASH.
Since post-war Germany in 1914 to Venezuela now, countries around the world have seen the terrible effects of hyperinflation on the general populous; now, with the introduction of blockchain, the masses never need to worry about what might happen in an economic disaster. That combined with the convenience an effective digital cash has brought, the world is on the brink of change not seen since the invention of the internet. If you would like to learn more about how blockchain is changing the world, feel free to contact the KU Blockchain Institute and join in for the next event. And with everything happening at an unbelievable rate in this space, always keep in mind: blockchain is the future, and the future is now.