To me, the principal feature that distinguishes cryptocurrency systems from other financial systems is the use of blockchain technology. In fact, a blockchain is just another kind of database and performs the same functions as other databases that handle currency-related transactions. Unlike say, the database employed by a bank, blockchain is trustless. Transactions aren't committed to the blockchain by a single entity, such as a bank. Rather, a transaction is committed by third parties who typically have no relationship to either of the parties to the transaction. Also, the blockchain is distributed, with copies all over the world that are periodically synchronized, rather than being under the control of a single entity, such as a bank. But if you trust the bank to handle your transactions correctly, you don't need fancy technology such as blockchain. In fact, almost every application touted around blockchain (notably smart contracts and open payments), can be done as or more efficiently on other kinds of databases besides blockchains. Also, blockchains aren't interoperable. So I can't send bitcoin to pay a counterparty on the Ethereum blockchain. So the technology underlying cryptocurrencies imposes further limitations on its utility.
Thanks, Gary. It’d be great to chat with you about applications of blockchain outside of crypto where the tech might have the potential to revolutionize the way we do things (particularly in ways that a blockchain lay person like myself might not be thinking!).
To me, the principal feature that distinguishes cryptocurrency systems from other financial systems is the use of blockchain technology. In fact, a blockchain is just another kind of database and performs the same functions as other databases that handle currency-related transactions. Unlike say, the database employed by a bank, blockchain is trustless. Transactions aren't committed to the blockchain by a single entity, such as a bank. Rather, a transaction is committed by third parties who typically have no relationship to either of the parties to the transaction. Also, the blockchain is distributed, with copies all over the world that are periodically synchronized, rather than being under the control of a single entity, such as a bank. But if you trust the bank to handle your transactions correctly, you don't need fancy technology such as blockchain. In fact, almost every application touted around blockchain (notably smart contracts and open payments), can be done as or more efficiently on other kinds of databases besides blockchains. Also, blockchains aren't interoperable. So I can't send bitcoin to pay a counterparty on the Ethereum blockchain. So the technology underlying cryptocurrencies imposes further limitations on its utility.
Thanks, Gary. It’d be great to chat with you about applications of blockchain outside of crypto where the tech might have the potential to revolutionize the way we do things (particularly in ways that a blockchain lay person like myself might not be thinking!).