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230531 Omocast on Crypto 002 - why an IoV, why not before,challenges and solutions
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Listen to 230531 Omocast on Crypto 002 - why an IoV, why not before,challenges and solutions by One Mans Opinion MP3 song. 230531 Omocast on Crypto 002 - why an IoV, why not before,challenges and solutions song from One Mans Opinion is available on Audio.com. The duration of song is 12:29. This high-quality MP3 track has 122.32 kbps bitrate and was uploaded on 5 Jun 2023. Stream and download 230531 Omocast on Crypto 002 - why an IoV, why not before,challenges and solutions by One Mans Opinion for free on Audio.com – your ultimate destination for MP3 music.
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The transcription discusses the internet of value and how it can enhance our traditional finance system. It explains the basics of the internet of information and how it democratized information exchange. It also covers the concept of wealth, money, and recording systems. The transcription introduces the idea of transferring value directly through a ledger instead of physical currency. It then explores the need for an internet of value and the challenges it faced. The transcription briefly mentions Bitcoin as the first successful cryptocurrency and highlights that there are many other cryptocurrencies available. It discusses the properties required for an internet of value, including decentralization, permissionlessness, immutability, disintermediation, and trustlessness. The goal of the internet of value is to replace the traditional finance system with a faster, cheaper, and more democratic alternative. Hello and welcome back to this, the second in a series of recordings dealing at a basic level with the internet, what it is, what it can do for us, our traditional finance system and what enhancements cryptocurrencies can bring to benefit us all. My aim here is to demystify the burgeoning world of crypto. As a quick recap on the first episode, we covered a few basics of the way we as a society exchange or transact information and how, when the tech was finally available, the internet of information rapidly evolved. Through the mechanism of tech, protocol, ecosystem, interface adoption that I explained before, the greatest democratization of information in history burst upon the world. Today, pretty much every piece of information in the world sits at your fingertips or those of anyone with a connection to the internet. We also touched briefly on the definition of wealth or assets, financial recording systems and basics of an economy that had evolved from having excess for trading our wealth for that of others. In that, we covered the development of a system of managing and utilizing our wealth through a representative value and exchange system, otherwise known as money, and a recording system for it, a piece of paper with numbers on it, a spreadsheet or, to give it its proper name, a ledger. It's simply a record of deposits, withdrawals or credits and debits, same thing really, and if you're anything like me, you'd probably make more of one than the other. Finally, we recovered the idea we could transfer our value or money directly from one person to another via that ledger instead of carrying our wealth or our money around with us and swapping it for the goods we want, and we finished by asking why it had not yet been paralleled on the internet. So before delving into the internet of value, we'll quickly dig just under the surface of how we bank in the modern world today before we consider what might replace it. Then we will understand how crypto can improve the whole experience. We won't dig any deeper than necessary as, to be honest, I doubt many people actually understand how their credit and debit cards work apart from actually using them. It's just a process. So our current electronic banking system is pretty much like this. Each bank has a huge spreadsheet or ledger, the master ledger, and in that document is a page or account for every customer they have. Let's call it a wallet. Each account or wallet has a pair of numbers. One is the public number, we're going to call it your public key, and it's just your account number that folks use to send you money. You can give it to them and they will credit your account. The other is a secret number, in this case your PIN, but for our purposes we're going to call it your private key. The spreadsheet can send value or numbers with the private key to any wallet or account. They can be credited to your account with your public key, but only the person who has access to the PIN or the private key can send numbers, value, or money from your wallet or your account, and that would be you. Oh, and anyone else who's got access to that private key, and of course the bank or whoever controls the spreadsheet or ledger. So why would we want an Internet of Value anyway? Well, suffice to say that it very much depends on who you are, but overall everyone, bar the Luddites, and I guess the Amish, want it for its efficiency. Others of its attributes make it desirable to different groups for different reasons. The Internet of Information is probably the greatest democratising force ever invented. Built initially for the military to provide a bulletproof way, if you'll pardon the pun, of getting information anywhere on a network that may have been damaged, it was designed as a distributed or decentralised, and remember those words, system, where if I send a packet of information to a destination, I have no idea how it will get there. One part of it might go one way, another go another. It doesn't matter. It was designed as a self-routing and self-healing network. So that begs the question, could we do for money what we did for information? Just before we answer that, and as we are on the verge of discovering a whole new world of crypto, in earnest, there is a small issue I'd like to address. So often when I am talking about crypto, people say, oh, you mean Bitcoin, and this is why I have so little hair left. Crypto is vastly more than BTC, Bitcoin. Internet or electronic money has been talked about since the start of computers, probably before. The idea is not new, however, there were a couple of basic problems in the way, and a couple of things that needed development before a practical application could be created. As it happens, Bitcoin was the first example that successfully addressed those challenges. As the first mover, it has retained brand recognition. But believe me, there is a whole world of cryptocurrencies, or tokens, as they're called, out there. Tens of thousands, in fact, last count approaching 20,000. And good old Bitcoin is just one, the first successful one. Some might even say, a little harshly, the Model T of crypto. Crypto has many different use cases, but again, we're going to stick to just the most common example of a person-to-person or a wallet-to-wallet transfer, as that is the fundament of all trade and exchange. So, can we have an Internet of Value using the Internet of Information? The Internet of Information transfers information, it doesn't matter how many copies there are. So if I take a photo on my camera and email it to you, there will be a copy of that photo on my camera, and a copy at your email account. And incidentally, on every hard drive or storage medium, on a router, that that file has gone through. This wouldn't really work for a medium of exchange, a currency or a money, because if I want to, say, swap my $5 note for your cat, and we're doing it in person, you hand me the cat, and at the same time I would hand you the note, or the cash. And that must leave my hand, naturally. As it leaves my hand, it arrives in your hand, but it can't be in both places at once. So the usual Internet of Information that leaves copies of stuff that gets transferred wouldn't work for crypto. And that's why it took, again, another innovation in technology, a protocol, an ecosystem, an interface, and now adoption process that could meet the challenges and requirements of an electronic money system. So what are they? First off, one of the advantages, the Internet, of course, it provides that as a messaging system, so it's faster and cheaper. But what we need to have, if we're going to have a financial record, is one that is permanent. It has to be, by nature, permanent, it has to be infallible, and here's a word that we all use in the Internet these days, immutable. And that means once that an entry has been made and agreed, it goes into a chain of blocks of data, yes, blockchain, and each version of the ledger grows from the previous one. It has to be safe. And that's the idea of a distributed ledger or a spreadsheet. It has redundancy. It means that if one copy or one node was destroyed, there's others that would maintain the records. And that's one of the problems with a centralised ledger in a bank, and that's why they have so many backups, because if the computer failed or they lost the hard drive, it would be terrible to lose everyone's records. It would also have to be secure, and that means that only the right people could transact. That opens a can of worms, by the way. But suffice to say, a four-digit PIN wouldn't cut it. The math for what is called public key cryptography was completed some decades ago. It just lets us send secure communications or messages between two endpoints. It's just two big numbers that are mathematically related. One is called the public key, here they are, and the other the private key. Yep, it'll all become clear. But the big problem for crypto was what we called that double spend, and that was that analogy I gave you of the photo being in two places at once because I could send it to you and I could simultaneously send it to someone else. That's called the double spend problem. It was the big stopper. When there is only one copy of a spreadsheet in one place, you can only do the transfer once with a pencil and so on. But if you want to have multiple copies, you also need to ensure that that transaction goes onto every copy at the same time that they remain synchronized. This needs consensus between all the distributed versions of the ledger. And that's exactly what they are. They're versions. They're not copies of the master ledger. There is no master ledger. They are simply all the same ledger, which is synchronized and changes on every node on the network at the same time. Getting a bit complex, and I think we'll just leave it there. But having described what the properties or characteristics of an internet of value would have to be able to function as a replacement for a traditional finance system, by way of explanation, I'll again draw some parallels between TradFi and the growing internet of value, crypto, which is what most of us just call it. Cryptocurrency. Once we had the solutions to the previous challenges, crypto could become a reality. But of course, the current players were quite enjoying their stranglehold on our banking. So there was no real incentive for them to change anything. And no one else was really motivated. Until 2007, 2008, the GFC. Satoshi, he, they, her, whoever they were, took the available tech at that time, turned it into a protocol using blockchain and public key cryptography. They got some friends together to create an ecosystem, and they developed an interface. In those days, it was just typing at your computer. At the same time, and we are now in the adoption phase. And of course, everyone knows crypto has seen explosive growth over the last decade. But before we really get sucked into the gravitational well of the crypto universe, let's remember what the aim of the game is with an internet of value. It is to replace the TradFi system, traditional finance system, with something much faster and cheaper, and hopefully democratic. Let's say without the other issues that the current system has. In today's world, our banking system is almost completely electronic. Some want to phase cash out. I would rather it stayed. And it is true that the vast majority of transactions are electronic. So we'll focus on that for now anyway. So what do we want for a crypto? Well, the granddads of the internet were pretty much all hippies. And they valued freedom very highly. For it is freedom, not just of speech and information, but also of wealth that is the root of democracy. So for them, decentralization meant not just multiple versions synchronized, keeping a redundant copy or a redundant record of transactions. But independent synchronized versions of the same ledger was an absolute must. Decentralization also provides for security and redundancy. But most importantly, when it is a decentralized model between independent centers, it also means it can be permissionless. That's the big one, folks. Permissionless in the same way we can use cash. So we need to have that attribute in a proper internet of value. Permissionless means if I had cash in my pocket, no one, unless they're physically present, could intervene. Also, as I said, that record, that versions of the ledger need to be immutable. That is, once a set of transactions are agreed and entered in the ledger, they become immutable. They become unchangeable. There is no way to undo them. Another property, of course, is disintermediated. What that means, effectively, is that there is no one clipping the ticket along the way. I don't need to pay a bank. This is person to person. In the same way that I could come up and hand you cash, so I could show my phone with a little app on it with my crypto to your phone with your crypto app, same crypto on it, and that transfer would occur instantaneously, permissionless, no one could stop us, and disintermediated. It's not going through any second party. There is no fee to be paid to a bank or whatever. The other one, of course, is to be trustless, and that's fairly self-explanatory. It doesn't matter who you're sending it to. You can send it, and there's nothing to be done about it. So, just to finish off, we've had a look at why do we want an Internet of Value, why we didn't have it before, a quick look at the banking system, how that works, and how now the Internet of Value provides a parallel or an analog to that system. What a couple of the challenges were and how they were solved. I think that'll do for now. Once again, you've done well to hang on. Thanks for listening.
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