What is the value proposition of Bitcoin? Distributed ledger, math-based trust, decentralized emergent consensus, …. But how about a summary in plain English?
The first wave of Internet brought us the Internet of Information, which has greatly reduced the cost of sharing and exchanging information. Because modern human activities are so reliant on information, this reduction has huge impact not only on how we conduct business, but also on how we live our daily lives. An important property information sharing is that when you send information you retain the original. This has been very useful in many applications. You can write an email once and send to group of people at a fraction of a second. When you publish an article, and many people can read it at the same time.
However, the property does not fit very well when it comes to transacting value (money, assets, rights, votes, etc), which are increasingly being digitized. The problem is while it is OK or even preferable to keep the original while sending an email, it is prohibitive if we keep the original when we send money. So we have been relying exclusively on 3rd parties / authorities (e.g., financial institutes) for bookkeeping when transacting on the Internet. Agreed on by many people now, Bitcoin and other Blockchain applications are the building blocks of the next wave of Internet – the Internet of Value, which will greatly reduce the cost of storing and exchanging value online.
When it comes to value exchange, the entire modern market economy is built based on a simple concept: contract. What happens the Internet of Value reduces the cost of establishing and enforcing this very building block 10-fold? Lots of things are going to change!
For serious readers:
- Andreas M. Antonopoulos. 2016. The Internet of Money. Merkle Bloom LLC.
- Don Tapscott and Alex Tapscott. 2016. Blockchain Revolution: How the Technology Behind Bitcoin is Changing Money, Business, and the World. Portfolio.