Editor’s note: Readers of Crypto Capital have already met my new co-editor, Eric Wade. For those of you who haven’t, Eric has been involved in crypto for years. He was one of those guys who was so early into bitcoin that he could mine it on his laptop. Since then, he has mined dozens of other cryptos. He’s invested to made big profits in this space… like a 30x profit by buying Verge under a penny… a 22x profit on SiaCoin… a 30x profit on the Substratum ICO… and a 4x return on Stratis and Civic in 60 days. I’m thrilled that he’s joined our team – and I’m sure you will be too. This is Eric (and me) now…
Most of the talk around cryptos today is about prices – and volatility – in the sector.
But there’s one big benefit that cryptos – and the blockchain, the technology behind them – offer. It’s a benefit many people forget about. But it will change the world as we know it.
Tama Churchouse, my co-editor for Crypto Capital, and I recently sat down to talk about the crypto market today and the future of the market.
Below is a transcript of part of that conversation…
The power of cryptos to solve fraud
Eric: Government agencies like the Commodity Future Trading Commission (CFTC) have begun to see the power of cryptocurrencies to solve a lot of problems – like corruption, manipulation and fraud.
After all, at their very core, cryptos are founded on the concept of an immutable ledger. (If you need a refresher on how the blockchain works, check out our article here.)
That’s one of the things that’s very appealing to me about cryptocurrencies.
So if a transaction happens between two parties, anyone can go back and find it later on. It can’t be erased. That could let governments track down corruption a lot easier.
For example, if there’s a scheme out there to move money from party A to party B and it ends up with party C instead, there have been times that that’s been difficult to track down.
If I’m supposed to send you, let’s say, US$100 million worth of aid and only US$90 million gets there, that’s a pretty common problem with real currencies. Someone puts their stamp on it between where it’s starting and where it’s finishing. There’s money being redirected.
But with an immutable ledger (like the kind bitcoin uses) you and I can track where the money has gone almost instantaneously. You can’t necessarily always know who’s on the receiving end of it, but the CFTC has come out with some pretty optimistic statements saying cryptocurrencies can change how governments crack down on corruption.
Tama: Another example is a fully-functioning decentralised application (i.e., with no central coordination) or business.
Let’s say it’s an online gambling application. Let’s just say it’s an app, and you can access it on your desktop or on your mobile phone. It runs on blockchain. It’s provably fair because you can audit the code. If you’re playing blackjack, you can audit the code and see what the edge is.
It’s not like any other online gambling company where you have no idea what the house is taking. You can see it’s provably fair. And the entire blockchain is completely auditable. So every single cent, every single payout, everything is completely there. From an auditing perspective, everything is already there in the open.
This is one of those things that constantly gets forgotten about when talking about cryptos.
Information is there when you need it
Eric: What I like about crypto is the transactions are written down. They’re recorded in a block. The miners mine the block. It locks it down. They move on to the next one. So that’s why it’s called the blockchain. That’s what makes it a chain that can’t be broken.
But also what’s valuable is that information can sit there and wait until it’s needed.
A great example is a university’s certification process.
You could attend a class, do all your coursework, get your certification, and then the university can upload that onto a blockchain. So then later on when you’re attempting to get a job or you want to use that certification for something, it makes sure you’re not cheating on your resume. That information is readily available and immutable.
In short, the immutable ledger at the core of cryptocurrencies could soon change how we do business and go about our daily lives. There will be a time that unless the information we have is on a blockchain, it won’t be trusted. That’s a long way off yet, but it’s also something you won’t find in the headlines today.