Blockchain: Blueprint for a New Economy
Ever since the big economic crash of 2008, people have been questioning the current economic system, and although we’re on a way of recovery many people still believe that the current economic system is doomed to fail. Personally, I can’t completely disagree with them. The currencies that our economy is currently based on are fiat currencies, this means that these currencies are not based on any actual value, like it used to be the case with gold. The dollar and the euro are these fiat currencies, and the governments determine their value. The danger with these fiat currencies is that they can lose their value when governments create too much of it, and we’ve seen this happen before with all fiat currencies in history, all of them have gone to zero at some point. The dollar awaits this fate as well, and therefore I like to introduce you to a new economic system using blockchain.
What is blockchain?
Blockchain is a new way of transferring goods and data, which can also be currency or value. It works with the following mechanism. Blockchain is a network that is comprised of nodes, which are the computers that are connected to the network. This network acts as one big database, wherein there is no central point but everyone holds the information on their node. The network is completely transparent and anyone can look into the data. If you were to want to make a transaction then this transaction is encrypted into a block that needs to be verified before it is added to the chain of blocks. Verification happens through the solving of mathematical problems. The first person to solve a complex mathematical problem, which takes a lot of CPU, has the right to put the next block on the chain and therefore verify a transaction.
This blockchain technology is currently used by cryptocurrencies, which is a different form of an economic system, and the one that you might be familiar with is Bitcoin. I’m not saying that our new economic system will be Bitcoin, but it can be something like it.
Why is the blockchain technology a good new economic system?
Blockchain technology can be the new economic system since it discards some of the problems that we are currently facing with our fiat currencies. The first one being the fact that fiat currencies aren’t tight to any actual value. Cryptocurrencies on the other hand have a set amount of value available, which ensures that the value of these currencies won’t drop. This will prevent an economic crash from happening, and it make people put more trust into their money.
Another problem is the mere existence of banks, since we’ve seen them make many mistakes the past years, and many of us have lost our trust in banks. With a blockchain technology system there is no need for a central bank to put your trust into. Another benefit of not having a central point is that corruption becomes close to impossible. You can hack a bank, but you can’t hack a decentralized network.
Finally, blockchain networks are 100% transparent, so everyone can see into all the data. This too makes corruption, fraud and all such unfairness very unlikely to happen. Your money will be a lot safer this way.
Hopefully you can agree with me that it would not be a bad idea to introduce some sort of blockchain technology as our new economic system, as we cannot be certain that an economic crash like that in 2008 won’t happen again. If you want your money to be safe, then you better put your trust into a blockchain technology instead of in the banks or our government.