Practical Thoughts on Blockchain

I’ve touched on blockchain very briefly in past articles, but I’ve never really dived into my thoughts in depth. I wanted to use this article to discuss some of the highlights of blockchain, particularly its two major potential endgames: universal currency and universal market access.

The first possible final use of blockchain is universal currency. While this might be possible in the very long-term, I would still say USD is the main front-runner for a universally valid, inflation-protected currency. There are non-volatile coins like USDT and DAI, but these are mostly collateralized with already existing currencies (for example, USD) and therefore fail to provide adequate service independently. There is also the problem of tech infrastructure friction; the places that need a universal currency are the places with high volatility local currencies, and the places with high volatility local currencies tend to be places that don’t host infrastructure that could handle the large-scale use of tokens, i.e. Venezuela or Zimbabwe. In order for blockchain to be used as a universal currency, we’re going to need to have universal tech infrastructure first, which in and of itself is a far off event. It looks like these countries are mostly stuck with using USD for now.

The second, much more bright future for blockchain is in UMA, or universal market access. UMA can be achieved in two steps: 1) democratizing alt assets such as real estate and private equity, and 2) fractionalizing shares to make them affordable for all. For both of these points, we already have some really good contenders; tokens such as Meridio and Republic hit on point 1, whereas more recent times have seen synthetic tokens being created to hit on point 2. I think this goal is much more realistic, primarily because the boundaries holding it back are artificial rather than natural. For universal currency, there is a quite physical problem stopping the whole thing from getting to that place. For UMA, there may be some government regulations and some very rich competitors, but that also hasn’t stopped technology innovations in the past.

So, in sum, I think UMA will be blockchain’s biggest gift to the world. I’ve been following blockchain pretty closely for about two years now, and so I’ve seen what the current trends look like; they seem to be best heading in that direction. I also understand that there is also use for blockchain in places such as logistics and audit, but here I see it more as a supplemental factor rather than a game-changer.

 

 

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