There was some debate in the comment section of one of my articles yesterday that I thought I would answer in a post.
I want to thank @scandinavianlife for the comment that started the discussion.
Here is what was written.
BLOCKCHAIN is going to change society. Cryptocurrency on the other hand is less likely. People don't care so much about decentralization. Its a niche thing.
Any large company or bank or government can implement blockchain technology without the decentralization aspect, which basically makes it worthless for the rest of us. Only good for them. Am I completely wrong here? Not saying that crypto wont have a place...but this whole 50 trillion mcap and Steem to 100 and btc to 100k..hmm..I doubt that will happen.
In my view, yes a lot is being missed.
To start, I have no idea if BTC will hit $100K, $1M, or if John McAfee will eat himself on live television. The price of an individual token is hard to determine. There are some blockchains that will do well and others not so well. In spite of that, markets are their own entity and there is no guarantee a highly successful blockchain will receive favor from the market.
That said, I believe BTC is a unique entity in that it has the name recognition, liquidity, and the allure of "digital gold". It is not the best blockchain technically and might pay a price down the road for that. Nevertheless, it has the attention of Wall Street which could work our well for it.
People don't care so much about decentralization. Its a niche thing.
At one time the telephone, Internet, automobile, computer, and smartphone were all niche things. It is not widespread now yet there is no way of determining what things will be like in a decade. The one thing we do know is that centralized entities like Facebook are being hammered publicly. Part of the FUD spread about cryptocurrency is all the tokens stolen via hack. Isn't it ironic that is occurring because of centralized exchanges.
And we won't even enter the debate about data and surveillance which is starting to gain a lot of momentum.
Any large company or bank or government can implement blockchain technology without the decentralization aspect, which basically makes it worthless for the rest of us.
In my opinion, this is confusing blockchain with propaganda.
Blockchain is revolutionary. Blockchain is powerful. Blockchain is going to change society.
There is a problem right now. The major corporations are misleading people. There is blockchain and then there is propaganda.
When the banks say, for example, they are using blockchain for their settlements. they are not being truthful. If they were using blockchain, they would be doing something that is relatively new. What they are doing is decades old.
Distributed ledgers is nothing new. They have been around as long as the network. Shared databases go back to the old IBM days in the 70s, long before Oracle.
What institutions such as this are doing is using shared database technology to set up a distributed ledger that is under their control. That is not new; it is not revolutionary; nor it is powerful. It is highly useful but something they could have done years ago if they chose to.
The power of a blockchain comes in being decentralized. A "blockchain" that is not decentralized can be hacked. It can be shut down since there is a company or companies that own it. There is no guarantee that the transactions are as they claim since the system can be changed. Of course, since it is a closed system, who knows if the transactions were even done to begin with? Finally, a blockchain eliminates counterparty risk, something that is not the case with a centralized "blockchain".
An open, decentralized blockchain enables innovation. This is not present in what the corporations are proposing. Anything that is centralized is going to have procedures and guidelines as to what can go on that "blockchain". It will also be done only by people working for or contracted by that company.
That is not true with a blockchain. Anyone can hang whatever they want on the STEEM blockchain. The community then decides if it uses it or not. Anyone, anywhere in the world, with an idea can create an application. This is one of the most powerful aspects of blockchain.
We saw how innovation lagged the last 20 years as the Internet becomes a centralized network run by a few companies.
Not saying that crypto wont have a place...but this whole 50 trillion mcap and Steem to 100 and btc to 100k..hmm..I doubt that will happen.
This is a common mistake also. The market cap of cryptocurrency will not be $50T, it will be $250 trillion. Few have taken the time to understand what the token economy really means. It is taking what is not liquid and making it liquid.
There are hundreds of trillions of dollars in real estate, art, intellectual property, and partnership agreements that have little to no liquidity. There is a penalty to that when one goes to sell. It is also very difficult to get money out when needed. Any transaction contains a higher cost to make.
Just look at the difference in selling a house (6% commission plus fees) versus shares of stock (often under 2%). The reason for this is liquidity.
Because of this, all many assets in those categories will be tokenized.
If this sounds outlandish to anyone reading this, the first transaction of this nature is taking place on ethereum. A gallery is selling 49% of Andy Warhol painting.
https://www.ccn.com/crypto-auction-5-6-million-andy-warhol-art-to-be-sold-via-ethereum-blockchain/
https://cryptobble.com/2018/06/08/tokenized-andy-warhol-art-to-be-sold-on-ethereums-blockchain/
These are being termed Security Tokens.
Another byproduct of this is that people are going to be able to trade cross asset. One could take a piece of the partnership he or she has in an office building and trade that for a portion of a piece of art. It is simply a matter of selling the partnership token and buying the art token (or even doing an atomic swap).
Now, the only way to do something like that is with debt. Cryptocurrency eliminates the need for debt.
There is also another token that isn't really named but it is essentially an income or revenue token. Under this scenario, an individual or entity could issue a token against a future revenue stream. This would mitigate the risk to the entity that is going to earn the revenue while providing liquidity in form that could be traded.
For example, let us say a star college basketball player is expected to earn $150M in his career. He could issue $75M or $100M in tokens against that income stream. This give him less of a payout while reducing the risk he bombs or gets hurt. The token buyers would obviously be looking for him to max his earnings so the token has more value. This would be freely traded subject to the ups and downs of markets.
Or we could see a record company do this. Suppose they had a singer going on tour that is expected to generate $100M in profits. They could issue a token for that tour. The same would apply as I just mentioned. The company has $50M while the token hodlers are looking to have a successful tour. Tickets are purchased using the tokens.
Through the use of smart contracts on the blockchain, all monies related to those tokens are recorded on the public ledger. Hence, the gate from each stop of the concert tour is recorded along with associated expenses. The blockchain will be coded with the instructions of when to release the money and to whom.
Looking at cryptocurrency as a currency or, even, a utility token is missing a major part of the picture. Cryptocurrency is a paradigm shift. It is an entirely new model of funding. The examples I just gave are simply off the top of my head. I will not be surprised if there are 10 categories of token in 5 or 10 years.
There are going to be innovations we are not even thinking about right now. In 1992, does anyone believe most of those people were thinking about being able to post videos and pictures while upvoting content? Were most individuals pondering the idea of global communications for free in an instant? I am sure the newspapers, magazines, and long distance phone companies were not on that thinking about it then.
Many thought email and instant messaging were going to be niche applications too. Cryptocurrency will be as big as either of them.
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