Decentralization And Why You Should Care About Crypto & Blockchain

I purchased my first Bitcoin back in 2014 for roughly $400 but it wasn’t until 2017 that I devoted my time in learning more about cryptocurrencies and blockchain technology. At the end of last year, Bitcoin traded above the $20,000 mark setting an all-time high up to date.

I had previous experience in the stock market but crypto is a completely new game, more hectic, more exciting, and yes of course, way more risky. In fact, it’s told that 1 year in crypto equals around 10 years in traditional financial markets. And the last 12 months have been such a wild ride following the ups and downs of this still young but promising market that is here to stay.

In summary, I invested in more than 15 projects worldwide, participated in several Initial Coin Offerings (ICO), both public and private sales, traded various tokens for profit in exchanges, send tons of Ethereum from one wallet to another, paid real stuff in crypto, and why not, made good money.

But if you think that crypto is all about getting rich quick, you’re all wrong. Blockchain has the potential to disrupt the way our economy works for the better. I’m talking about the very fundamental parts of our economy. It will change the banking system, health care, insurance, transportation, commerce, and it will change the way we transact value across the world.

Many people compare this revolutionary shift to the dot-com boom in the 1990s. In the same way the Internet changed how we trade information, the blockchain is already changing the way we trade value. Thus, some of the startups behind cryptos which are developing innovative blockchain infrastructure might become extremely valuable in the near future.

But let’s talk about the reasons I believe blockchain and digital currency such as Bitcoin will play an important role in the coming years and decades.

Next Financial Crisis

Recent developments in global economics are indicating that a next global recession could be close. The potential economic risks that come from the U.S. trade war with China, instability in Italian debt markets, UK economic growth slowing to weakest rate in five years, a new housing bubble, unemployment rates remain high in countries such as Spain or Greece and the undoubtedly worrying crisis of trust in institutions and governments are important factors.

Robert Kiyosaki, the man who wrote one of the top finance books of all time (“Rich Dad Poor Dad”) has recently warned we could be heading for the “biggest crash in world history”. The constant printing of more money is inflating a large bubble which will cause the next massive economy crash. Kiyosaki also says that the US dollar is coming to an end because metals and cryptocurrencies are going to become the only options to store value.

The question here is: should you invest in Bitcoin or other cryptocurrencies before the crisis becomes a reality? I’m not a financial advice to answer this but you should consider this option, for at least, a portion of your savings. In my opinion, the next economic crash will come and the performance of cryptocurrencies in that period will depend heavily on the level of adoption and universal utilization of tokens and digital currencies. We still need to encourage consumers to use cryptocurrency for everyday transactions.

While Bitcoin has shown resistance to economic factors that usually affect financial markets, it is not totally immune to the effects of a market collapse. However, if the U.S. dollar becomes highly inflationary, cryptocurrency could be a popular alternative currency as it isn’t tied to a specific country or institution and has a limited supply which grants the label of store of value.

Government, corporate, and consumer debt are at near all-time highs at the same time as interest rates are climbing. For anyone looking for the next great bubble, here it is, the debt bubble. If a catalyst pushed the U.S. economy into recession, and if the government is forced to print more paper to stimulate the economy, it would the perfect storm for cryptocurrency adoption. And not because people believe in a currency that is free from the control of central bankers, but out of pure necessity.

Financial crisis in Greece and Venezuela forced citizens to flock to cryptocurrency to protect their purchase value from hyperinflation. So there is no reason to think Americans and others around the globe would not act in a similar fashion, given similar circumstances. If that ever happened, the demand of Bitcoin would increase and given the fixed supply at 21 millions, the price would potentially follow up to levels currently hard to predict.

Descentralized applications

Blockchain was intended to disrupt global financial systems by providing a trustless, peer-to-peer electronic cash system. But the technology has evolved and proven to do a lot more, essentially enabling developers to disrupt not only financial systems but also virtually every industry. This is possible through decentralized applications (Dapps).

Today’s top platforms, such as Airbnb, Amazon, or Uber, all have one thing in common, they are scaled intermediaries and created powerful marketplaces. But the companies behind those services still exercise a significant control over the platform: data validation, payment mechanisms, pricing, the rules that govern the marketplace, etc.

The blockchain could create a whole new model of platform intermediation for the sharing economy. Dapps connect users and providers directly without the need of a third party. In other words, they simply don’t require a middleman to function or to manage a user’s information.

Protocols and information are stored on a distributed ledger (aka blockchain), protected by cryptography algorithms providing a higher level of security, enhanced transparency due to the fact that transactions are easily verifiable, and highly efficient way of processing big data because there is no need of a central data center that harbors the information. Therefore, Dapps are virtually immune to power outages and all sorts of physical malfunctions.

Conclusions

The blockchain is essentially a new form of the Internet with infinite possibilities aiming to improve systems with transfer value capabilities. A digital currency is a great proof of concept for blockchain technology, but quite frankly, it is one of the least interesting to me.

This technology will change industries of any kind with innovation. It will transform the way we work, vote, and transfer value. But most importantly, it will allow financial inclusion in the third world countries, empower low-income communities to build a better future having full access to information and finance, reduce corruption levels, and fight censorship and surveillance.

The phenomenon of cryptocurrencies is just the beginning of a new era, more decentralized, open, permission less, borderless, trustless and censorship resistant in which people regardless their nationality or race will regain the freedom that governments and obsolete financial systems have taken from us.

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