The rise of blockchain technology has been compared to the early days of the internet, hence the moniker “Web 3.0”. In the early days of the internet in the 1990s, only a small number of people had the expertise, funds, and time to experiment with the new technology.
To connect, a user would have to physically connect the modem to their computer, plug the modem’s phone line into a phone jack, and then dial the ISP’s phone number using the computer. Once connected, the modem would establish a connection to the ISP’s servers, allowing the user to access the Internet.
I heard someone say on a podcast that we are on the “watch a YouTube video” level of blockchain development. This means that the average person needs to watch a YouTube video to figure out a wallet to download, safely store a seed phrase, learn how addresses work for different chains, etc.
We are not at the level where blockchains are intuitive to the average person, but we are getting there just like with the internet. Bitcoin and blockchains are barely a decade old, but there is little doubt that they will revolutionize our daily lives with enough time. Here are some ways that blockchains will power your future financial investments.
Improved Security and Transparency Plus Real-Time Settlements
This is a 100% true story to illustrate how these three aspects of security, transparency, and real-time settlements are needed in our financial system. I was trying to send ACH funds from my bank account to Kraken when Silvergate Capital (their banking partner) was shut down.
The transfer never went through, but Kraken had already funded my account and already allowed me to trade USD for BTC. Kraken was constantly messaging me to resend the funds and even froze my ability to withdraw the tokens until I did so. Of course, I didn’t just take their word for it, so I had to verify with my bank. The transaction was no longer on my online account, so I had to spend an hour on the phone with a representative to make sure that the funds never left in the first place.
Real-Time Settlements
It is obvious that the root of the problem in this story is that ACH payments take at least 2–3 business days to finalize. This allowed enough time for Silvergate Capital to fall apart, leaving my transaction in limbo.
Blockchain transactions, on the other hand, enable real-time settlements. This efficiency lowers transaction costs and accelerates the investment process, making managing your investments easier. Future developments will allow for tokenized venture funds and real estate to make your investments more liquid and easily transferable.
Security
Clearly, the security of Silvergate Bank in this scenario is a fault point. Our current financial system relies on the ability of banks to balance fractional deposits with their massive lending arm.
Additionally, this story illustrates how Kraken and other centralized organizations have the ability to shut down user accounts without warning. Blockchain technology utilizes advanced cryptography, making it virtually impossible for unauthorized parties to tamper with transactions. This enhanced security fosters trust in the system, ensuring the safety of your investments.
Transparency
My inability to view my ACH transfer progress is why I wasted so much time calling my bank and verifying that the money never left my account. Blockchain’s public ledgers offer unparalleled transparency, allowing you to track and verify all transactions.
This level of transparency reduces the chances of fraudulent activities and makes settling disputes instantaneous. In this case, I had to trust that my bank and Kraken were telling the truth instead of verifying a blockchain transaction on my own.
Conclusion
The adoption of Bitcoin and other blockchains bears a striking resemblance to the early adoption of the Internet. Both technologies began with a small group of enthusiasts who saw the potential for a new way of doing things. As with the internet, there were significant challenges to be overcome, including technical hurdles, regulatory uncertainty, and public skepticism.
Today, Bitcoin has a growing user base, with increasing mainstream acceptance and integration into the global financial system. Unlike the early days of the internet, the average person has the ability to be financially rewarded by being an early adopter of the technology.
While there are still challenges ahead, the parallels with the early days of the internet suggest that blockchains could continue to grow and transform the world in unexpected ways.
Joe Robert is currently the Chief Executive Officer of Robert Ventures, with over 20 years of asset management experience. Since he started Joe has created predictable double-digit returns for investors & Partners. Joe has invested in seed rounds with equity and tokens, along with a portfolio of Bitcoin, Ethereum, and other top cryptocurrencies.
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