Bitcoin, Cryptocurrencies & The Future of Money

The future of money is within cryptocurrencies, such as Bitcoin. In a TED talk summarised within this article, Neha Narula explains why digital cryptography based currencies are becoming so popular.

Neha Narula talks about the future of money in this TED talk. Cryptocurrencies, like Bitcoin and Ethereum, are becoming the future of money.

In such a world where digital currency is becoming the norm, humans and institutions are removed from the loop along with any former friction that was caused because of them.

The webbot, with Clif High interpreting the data over at Half Past Human, has been forecasting for years the fact that Bitcoin was going to get very popular and that it would be a good option for people to invest in. This sixteen minute talk is useful for understanding why this is the case and why it has already become as popular as it has.

Cryptocurrneices are based on an area of mathematics called cryptography. Cryptography is about secure information. Masking information so that it can be hidden in plain sight is why this is so successful. Because of how this works, the U.S. Government has actually classified cryptography as a weapon.

During WWII, breaking systems like Enigma, an encryption based machine, was critical to learn about enemy communications. Today internet browsers are secured in a similar way and this helps protect our financial transactions.

What this translates to is that we can actually do our own transactions ourselves, because of the secure technology that protects us, to a degree of course.

Back in the early 1900’s, a culture called The Yap existed in Micronesia.

The Future of Money – Bitcoin – The YapThese people used limestone discs for currency — they were very big. The largest is known to be four tonnes and about four feet across. So as a community The Yap just kept a note of who owned what stones, as they couldn’t be moved around very often.

Narula talks about a story, to prove a point she is making, where some sailors were transporting one of these stones across the ocean and some trouble came up causing the limestone disk to fall into the ocean. The sailors returned home and told everyone there what occurred, but after a discussion it was decided that the sailors still owned that stone, even though it was at the bottom of the ocean, it was still part of their finances.

The Future of Money – Bitcoin – Rai Stone
Rai stone on display at the Bank of Canada Currency Museum in Ottawa, Canada. (Wikipedia)

This is still happening right now in our day and age. Back in 1932 the bank of France asked the United States to convert their holdings from dollars into gold.

It was too inconvenient to actually ship all that gold over to Europe, so instead someone went to the location the gold was stored and labelled it as belonging to France.

Everyone agreed that France owned the gold. It’s just like the Rai stones that are made out of limestone which The Yap used.

Narula says in this video, “there’s nothing inherently valuable about the dollar, or a stone, or a coin; the only reason that these things have any value is because we have all decided that they should, and because we have decided that they do. Money is about the exchanges and transactions that we have with each other. Money isn’t anything objective, it’s about a collective story that we tell each other about value — a collective fiction — and that’s a real powerful concept.

Bitcoin is based on the same concept that The Yap’s currency system used.

Through thousands of networked computers around the world, all the transactions occurring over Bitcoin is recorded. Collectively they confirm who owns what.

You can learn more about how bitcoin works and hear the full sixteen minute talk below.