Gold is Pretty
Before I begin, I lament an ending. In less poetic terms, I’m rather going to miss our seminar! Where else can I find homework I always enjoy? I suppose that’s one very good lesson to take from this class- take classes in which I look forward to doing the homework.
Anyway. Blockchain.
I have a friend, who shall remain unnamed, who believes very firmly in gold as a superior store of value as compared to government issued currency. After all, the central banks do have us ordinary citizens by a leash; if they decide, wether on a whim or on a firm belief in its efficacy, to increase the currency supply for some reason, those of us who have savings have just watched our bank accounts loose value. Gold, on the other hand, has a very tight supply chain. There is no quantitative easing for mining.
Of course, much like cash, gold has value simply because we believe it does. Compared to many other materials- silicon, uranium, oil- it is less directly useful. However, reviewing its history, it has maintained a place of high value in society with relatively few instances of major bubbling, especially when compared to most paper currencies. People have never truly ceased to demand gold.
Consider another store of value; the stock market. Volatile and untrustworthy is the name of the game, and stock bubbles have been a tragic fact of life since the creation of stocks. This, I would argue, is what bitcoin and other cryptocurrencies resemble. An application of blockchain used as a store of value, built on the expectations of people buying, used like stocks to make money. Though it does share the anti-central-government flavor of gold, it lacks the ownership security, and prices vary wildly with the whims of the market. One bug discovered can cut your wealth in half; one failed fork and you’re out a million dollars.
This, in my mind, makes cryptocurrency only limitedly superior to the stock market. Both are subject to the whims of their investors, even if one does provide more protection from the whims of government. And yet, cryptocurrencies are only the most public face of the technology called blockchain. Used privately or publicly, blockchain could provide banks and their auditors with a means to verify transactions are legitimate; health care providers with a secure record of patient use; patent seekers to verify their intellectual property; or individuals in questionable professions like lobbying to provide a record of their work. With some modifications, I believe that blockchain holds promise for all of these applications and more.
To specifically address concerns about healthcare; having a blockchain ledger of prescriptions, where additions to the blockchain are made with the patient in room, could provide doctors a means of verifying patient need. Additionally, a distributed blockchain shared among the hospitals of any one country could allow for the secure transfer of patient records, accessible only via certain keys. While there may be some security risks, the current system is not exactly secure, as the WannaCry attack on the British health system shows; blockchain could provide at least a marginal improvement. The other applications mentioned above are most useful for private parties or governments, and thus pose fewer questions as to efficacy.
I am worried that the public face of blockchain may ruin the reputation of its more useful siblings. Cryptocurrencies are massive targets for wrongdoing; a treacherous combo of stock markets and hackable banks, vulnerable to predatory initial coin offerings and especially to bubbles. Blockchain, on the other hand, is a fascinating technology with many possible applications. But humans are predictable; we follow the popular, follow the sensational, and follow the money.
P.S. I’ll miss my weekly blog!