Hello friends!!
Welcome back to the Make Shyft Happen blog & podcast – the crypto series. This week, we’re diving into Blockchain…
Blockchain is the technology making all of this crypto stuff possible. It’s open-sourced and decentralized. And this is the very reason that economic power is now able to shift from the 1% of the world to anyone in the world right now. Since anyone can use this technology—it’s open source—you can use this technology as a developer or as an investor and everyone involved can share in anyone’s success.
For example, imagine blockchain as a global app store for a minute. As developers build cool apps on it, more people come into the app store to download the cool new apps. As more people come into the app store, the more it inspires developers to keep innovating and building even cooler apps and the more cool apps they build, the more people come in to buy the even cooler apps... And this cycle keeps reinforcing itself. And the more that people come in to the space, the more everyone benefits.
“This has a specific name for it called network effects."
Look into Network Effects when you find the time because it’s super interesting or watch this 10-min clip of Raoul Pal explaining (1) how Bitcoin and Ethereum will experience exponential growth using blockchain and (2) how it will be different from when companies like Facebook, Amazon and Netflix already did.
However, that’s the thing with companies like Facebook, Amazon and Netflix—they’ve already reached their early exponential growth. With blockchain on the other hand, we’re still just at the beginning. This is "Steve Jobs in his Mom’s garage" type of early, but with no barriers of entry at any stage of the investment timeline. So, even if it were early for something like Amazon, "normies" like me (lol) only get to buy something like amazon stock or apple stock on the stock exchange after the huge gains have already been earned by venture funds and investment banks.
I don’t know if you already know this, but it is actually illegal for anyone with a net worth below $1M to invest in startups at all in the beginning, where all the juicy returns are... Anyone else confused by this?!
Since blockchain has no barriers to entry for normies, normal people like me can get involved as early as we want and for as little as we want. The barriers are actually against the banks who need to wait for regulations to come around until they can get involved.
So, we the people ALL have access to 1000% returns right now because this technology is so new. Which is also why there’s more risk for massive loss. There’s still a lot of unknown.
So, what do we know for certain about the blockchain?
First of all, people have a way of overcomplicating blockchain because it can get super complicated—it’s literally a brand-new technology, with its own language and everything. But, in the same way that you don’t need to know how your physical laptop is built in order to use it and you don’t need to know how to code a web site in order to use one. You don’t need to understand how to code, or encrypt, or program on the blockchain in order to understand how it works and why it is important.
So stick with me because if any of this sounds confusing, or complicated, or boring... it will get interesting and clear. I promise!
“Think of the blockchain as a network of thousands of super-computers operating together to record blocks of information and linking these blocks of information in a digital 'chain.' Hence the name blockchain..."
It's more secure than any other technology, for one, because it’s protected by a bunch of digital systems instead of one centralized system, so in order to hack the blockchain network, you would have to hack the majority of the thousands of super-computers at the same time. In the centralized world, all you need to hack is one system. Even Visa, Yahoo, or Mastercard. Sure they have a bunch of computers, but all on one central system. Hacks at these big companies happen much too often.
“In its most basic form, blockchain is a digital, public ledger. Meaning it records transactions permanently, publicly and digitally."
Blockchain also validates transactions almost instantly and it does this all only with its computers and no third-party involvement—it's decentralized, remember?
Why is this so revolutionary?
Because this is the future of money and how we’ll spend it.
Look at what goes on behind the scenes today every time we make a single transaction. For example, in order to pay someone at a store for a product, even though tapping your credit card and walking out with your Starbucks, or whatever, seems easy enough, there are multiple people and multiple third-party companies working behind the scene to authorize that one transaction.
It’s a whole process. Listen to how confusing this is…
First, you tap your card on a physical reader, that by the way, needs to be switched every single time there's a new tech innovation. When they added the micro chip onto cards, for example, every single merchant then needed a new physical card reader in order to use that microchip technology. So, that has it's own flaws already... But anyway... you tap your card.
Then the merchant's bank contacts the payment network.
Then the payment network contacts the credit card issuer.
Then the credit card issuer sends back an authorization response.
Then the merchant's bank sends the approval message.
A company then prints the receipt.
You then sign the receipt and you finally leave with your product.
BUT even when you leave, your credit card has only been authorized for the payment. Later that day, the merchant’s bank sends the transactions to the appropriate payment network for processing and a whole other chain of events goes on while your statement just says "pending" for a day or two... If you are so inspired to read all about the details of this process check out this article by WalletHub or see the graphics in the Appendix at the very end of this post.
The point is, this is a very complicated process and while this whole process is going on, everyone involved is taking fees for every step of the way, and your data is being traded off amongst all of them—just to confirm that you can make that one, single purchase.
One of the pieces that makes the blockchain so revolutionary is that it doesn't send your personal data to anyone when you go to make a purchase and that entire process I just explained is done automatically by computers. So, you nothing is manual and you don't need a single third party whatsoever.
“Now, keep in mind this isn’t entirely positive and easy. This means ultimate accountability; if anything goes wrong with your money you have no one else to blame—it is all on you. That's why educating yourself on investing strategies, if you decide to invest in crypto, is SO important."
To summarize:
Here are the five key points that make the blockchain technology so powerful:
First of all, it eliminates third-party fees + data transfers.
It's permanent. Once something is encrypted in the blockchain it can’t be changed or erased ever. It's the most traceable data records we've ever had.
It provides complete transparency. Every transaction ever recorded on the blockchain is visible to anyone. You know exactly where your money goes and who owns what. This means, you can prove ownership of a digital asset (this part becomes much more interesting when we get into NFTs).
It's more secure than any other technology. In order for there to be a data breach you’d have to hack a minimum of 51% of all the thousands of computers and networks.
“The fifth and final piece of blockchain that makes it so freaking revolutionary is the fact that you can build things on it, so we can't even begin to imagine all the things this technology will be used for."
Remember the app store example in the beginning? If blockchain has the potential to be a global app store, a technology you can use to build whatever you want on it—what would you want to build? What would you want to buy?
And these aren’t hypothetical questions. I want you to really think about that because for the first time ever, you can be an early creator or investor in something much bigger than apple and smart technology, and everyone can share in the economic value of it; not just the 1%, which is the first time in history this type of opportunity has ever been possible.
The future of this could look like fewer to no data breaches, saving billions of dollars in transaction fees, a global and completely digital marketplace, fractional ownership of assets (so a bunch of people could own a piece of real estate, an autonomous car, a work of art, like NFTs) and so much more.
Remember, this is early. It is as if we are in the late 90s and we are watching AOL, AIM, email and websites being built for the first time and we are having to look into the future and see the possibility of Uber, Airbnb, and Netflix. So get creative…
What's next?
Now, if you’ve been paying attention then you remember that bitcoin is a digital store of value, it’s a digital asset. Which means in the same way you wouldn’t bring a gold bar to a grocery store to purchase bananas with it, you shouldn’t be transacting in bitcoin on a daily basis.
So then, why did I just spend this whole episode explaining how blockchain revolutionizes digital transactions? Because bitcoin is just one coin being built on the blockchain. It’s just one type of digital asset. It’s there to be secure and to help you maintain the value of your money, to protect it from inflation. However, there’s another coin built on blockchain that people are transacting with and building things on top of.
So, stay tuned for the next episodes where we get into ethereum, NFTs, what in the world web 3.0 is and why there is so much growth going on in this space!!
Until next time...
GN 😴
The Make Shyft Happen podcast is hosted by Leslie Wheeler and produced by Yaristotle. If you enjoyed this, please don't forget to subscribe! Tweet us any questions you might have @makeshyfthappen
---
APPENDIX
Credit card transactions from Authorization to Authentication to Clearing & Settlement
