I am both amused and disturbed by Blythe Masters' recent comments about how blockchains are merely "fancy databases". It completely disregards every fundamental principal that makes a 'blockchain' work. (
http://www.bloomberg.com/news/articles/2015-10-06/blythe-masters-says-forget-bitcoin-embrace-the-blockchain)
If you're going to be so abstract about it, you might as well say, "
An mp3 file is just a fancy arrangement of 1's and 0's".
See why this is foolish? It totally destroys the point: it's not about what it's comprised of - it's about the abstraction of what those concepts mean. She is committing the old fallacy of believing that it's possible to separate the notion of value from the technology. What makes a 'blockchain' work is that not *only* is it a shared database, but also that users have to compete to write to it, transact with it, and interact with it by way of tokens that must carry financial value by nature of the competition necessary to secure the network. Before this moment in history, data has been free. In fact, data and information have been *so* free that for decades companies that make a living with intellectual property have been in a widespread panic as to how to make data *not*-free.
The solution is simple:
everyone has to agree to a set of rules whereby data is secure and not free. But you can't force people into this system; they have to agree to "play".
This is what a blockchain is: the next generation of voluntary 'game' where humans agree that artificial tokens have value and will use them to represent higher, abstract concepts.
The first and most obvious concept we will use them for?
Money. Value. Property. And herein lies the beauty of a 'blockchain': when users compete for ownership of something, its value magnifies immensely and that abstract value can suddenly become many things: not just raw money. Suddenly entire categories of ownership can be represented by these 'fancy shared databases'. With the cryptography and mathematics securing the fundamentals of how users can interact, the users are free to assign arbitrary values and ownership across the network, but it's *crucial* to understand that the number one principal of money and value is still in effect:
it's all make believe.
As someone who has pioneered credit default swaps, surely she should understand the secret of value: it can be created out of thin air! If you can convince enough people to believe in your product, your product is real. This is what cryptocurrency like bitcoin attempts to do: convince people there is value in the product. Surely the ramifications of this are also clear: the more people that believe in a given asset, the higher the value and the greater the potential utility of it.
With the programmable and versatile nature of a blockchain, this effect is magnified such that the larger the network- the more potential applications there are for it
by an exponential factor. Blockchains aren't just vanilla 'tokens' to be owned. Ownership of blockchain tokens can be abstracted to an infinite number of concepts provided that a large group of particpants agree to assign imaginary value to those tokens. See where this is headed?
Bitcoin, the largest and first 'blockchain' can't just be replicated by some hack shared database across a few banks. Sure, a bank-led custom blockchain might carry a little more value than one that me and some friends in my neighborhood set up, but you will still fall woefully short of the global and titanic network that bitcoin has been organically growing since inception. You are basically telling people that religion is a "fancy game of make believe" or that poker is a "fancy game of war". Yes, on a
very base level what you are saying is correct, but you are failing to capture the enormity of the concept: you are failing to capture
why these things are important: the ideas presented by these games and networks can be abstracted up to much higher forms of value in the minds of the participants.
"The fancy game of war" that makes up poker is just the mathematics behind why it works, but real poker is in the value that the players ascribe the chips and the bets, bluffs, and folds that happen as a result of beliefs layered on
top of the fundamentals. The blockchain is no different: it's just another way to tap into the incredible power of human belief, which in this case boils down to the belief of humanity
in its own productivity and future. My homeboy Wences summed it up nicely:
https://i.imgur.com/PrH7zuC.png The banks and 'powers-that-be' chose Ms. Masters for a pilgrimage to develop a deep understanding of exactly what this 'bitcoin' is, and her current assessment of it is either deeply steeped in ignorance or outright misrepresentation. She is on the verge of making the same mistake that so many of her predecessors have made through history: just because one has been on top your entire life does not grant them a monopoly on the future.
“In times of change, learners inherit the earth, while the learned find themselves beautifully equipped to deal with a world that no longer exists.” -Eric Hoffer
Don't worry though, a lot of us misunderstood cryptocurrency when we first encountered it. If she keeps reading and learning from the best of us, she'll eventually come to the inescapable conclusion: bitcoin (and perhaps a select few other ledgers like Monero) are going to form the new world wide 'shared database' for value... and the time window to get on board for cheap is rapidly vanishing.
