Peer-to-Peer & Non-Possessory Control is the Real Value Proposition
Sit back and think how many times characters in movies and books have bartered with gold coins, dreamt of gold bars or spoken of golden objects with a twinkle of lust in their eyes.
There are practical reasons that gold finds itself as the default placeholder for a thing of value regardless of the time period, character-plight or geographical location. Gold transcends nearly all hypothetical barriers, not simply because of scarcity, but because it is an apolitical, non-centrally-controlled, trustless commodity that is traded almost entirely peer-to-peer.
You can be transported in a time machine or spend years traversing Mordor, but when you find civilization, someone will accept your gold in exchange for much needed sustenance (or an army with ships). While its market value will likely have changed in your absence, regimes toppled and entire people (or elves) displaced, gold’s utility will remain impervious to systemic externalities.
But how can this be? Its most fundamental value proposition is as a bearer commodity that requires no third party involvement to exist or be stored. Like bearer bonds, a person needs only to have control over its location and it needs only to be in a person’s control to be bartered. (This is why everyone loves treasure maps!)
Cryptocurrencies Are Future Gold and Act As Bearer Instruments
The easiest way to explain Bitcoin and similar cryptocurrencies is to refer to them as digital bearer instruments (like bearer bonds, except they don’t represent an entity’s debt repayment promise). You can send them directly to another person. All you need is control over them, via a private key. Think of a private key as a secret password that you can safely traverse the world, galaxy or 007-esque plot line with. In fact, you don’t even need to find somewhere safe to keep them, like a vault or freezer. Bitcoins are stored in the open source, public blockchain as a protocol waiting to be instructed (redeemed) and are only transferable via a private key (a long number mathematically related to a public key).
While Bitcoin wallets are popular, they aren’t necessary to control Bitcoin. Online wallets, or hot-wallets, make it more practical to send and receive Bitcoin, but wallets are only as secure as your password and Bitcoin client software.
In its purest state, all a person needs is a private key to access a fortune. Private keys are unique and correspond to public keys, which like an email address is where mail/Bitcoin is sent and is deposited. These keys can be sent physically or electronically. They can be encrypted, portioned orhidden in plain sight. Non-possessory control over a publicly visible, yet unredeemable (without the private key) stash of treasure is something surely every writer wished was at their disposable and wasn’t until now — without magic of course.
originally posted to: https://medium.com/tech-talk/31494e34257e