The crazy world of crypto and social good explained to my mom, my wife & friends in the simplest way I could think of

Vic Aquino

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(8 min. read)

With so much news and activity about "crypto" and its technology for world good, the last dozen or so years have been like the old American wild west.

How does one make any sense of the madness of hyper-volatile valuations and supposed environmental indecency, where 99% of the population still has no real clue what’s going on?

We’ll not get too much in the weeds on the technology side, though a summary is needed to start to understand the real human potential.

A web-tech-biz-geek boomer

I was not only keenly interested in what is being coined as “Web 3.0.” I wasn’t going to miss out trying to truly understand the biggest boat of all in my lifetime.

Case-in-point – I could never see the forest for the trees. In the mid-90s, I went through the email “fad” and didn't really see the internet upheaval or why should I stream on the internet when I could just watch TV?

Now with all the signs of this Web 3.0 over the last few years, it’s destined to change the world exponentially by comparison. So, this time, why not be more open-minded and aware?

What hurts a bit for me too is I worked at companies that put me in the middle of the last Web 1.0 and 2.0 movements. Maybe I could be great at what I was doing in the trenches, but I was pretty oblivious otherwise.

Having tried to discuss with others the ramifications of what is before us, I mostly get stares, faux interest, accusations of falling into a capitalistic pig-dog state and or ignoring an environmental fallout.

The goal for now is to simply bring awareness in a holistic sense and what it can mean on a social impact and social awareness level at a global scale.

Perhaps it may re-position your thoughts, your career and your life.

Crypto for dummies

The first thing to understand of what most people call crypto or crypto currency - it’s much, much more than that.

At the core basic level of this movement is the blockchain or blockchain technology.

These are digital data containers that stores file, function and transactional information that tie into other container blocks; hence blockchain.

What uniquely ties these blocks together is encryption - meaning a potential hacker can possibly hack into one block but would have to keep hacking into an unknown number of other blocks each with unique encryption.

The next important part of blockchain technology is it works over a global network. In direct contrast, big banks or governments are centrally run and privately controlled networks.

Basically, computer nodes verify each and every block to achieve widespread consensus on the blockchain. If a block cannot be universally verified, it is not allowed on the chain (an adverse byproduct is exorbitant energy use during this computer consensus process, but more on that in a minute).

This all creates a permanent ledger (think excel spreadsheet). Once something is written into the blockchain, it is deemed permanent. AND anyone can see it and verify it - it's total global accountability and transparency - though there are also private, group and hybrid blockchains.

Things like Bitcoin are built on blockchain. Etherum, Dogecoin, Cardano and many, many other crypto currencies are other examples of unique independent efforts. Think of the analogy as an application built onto a network. i.e., an email application over the internet, except this internet is on serious steroids.

Also, Bitcoin or any crypto coin isn’t an actual physical coin despite the shiny pictures we see out there.

Blockchain by itself is static

The secret sauce game changer is the “smart contract” (written in special computer programming code for now).

Think of the analogy of human DNA that is permanently programmed in a DNA sequence that makes up life and all the parts of it.

The smart contract provides the action script for blockchain.

Smart contracts store the rules, verifies the rules and executes the rules and can interact with other smart contracts.

A common smart contract analogy is the vending machine - it receives payments, verifies payments and executes the selection. There’s no middle man or third parties.

Smart contracts are automatic and self-executing.

Smart contracts remove human factors like corruption and mistakes, but a smart contract is only as good as the humans who implement it, right? The hope is it enables more equality and more fairness and systematically can lock out criminality and alternate truths.

All of this is already in use today.

Huge companies, like shipping giant Maersk and Walmart, were once with lots of old middlemen processes in their distribution chains. The savings and workflow efficiencies are significant.

Other examples: more transparent and accountable fundraising is possible to know exactly how and where your money goes and if obligations are met. Or music that directly benefits both artists and listeners. Artists dictate and control their royalties and listeners get paid when they share the music.

It’s all set up by the smart contract on the blockchain.

The simple thing to remember? This is the most direct transactional path from a source to you.

The worst-best thing is the gatekeeper processes are minimized. Traditional banks, escrows and service aggregates like a Spotify can get removed or get much less percentages than they get now.

Crypto difficulty for us regular folks

How do you invest or buy stuff with crypto? How do you set it up? Where do you go?

For sanities sake, a super simple setup breakdown:

1. Educate yourself and perhaps just use only discretionary money

2. Establish yourself on an exchange platform like Coinbase.com & connect your bank account

3. Choose a crypto currency like Bitcoin (BTC) or Etherum (ETH) to purchase

4. Set up a digital wallet like Metamask or Trezor to transfer your purchase from the exchange, especially as it accumulates

5. Practice all of the above with very small amounts

It’s all so convoluted to do right now and only befitting for the tech-nerd side of us, as in between the setup and execution are other surprises:

1. Fees: every transaction to buy, sell, or exchange has a fee. Or if you're purchasing digital goods, you’ll experience varying transaction costs that can sometimes fluctuate wildly (we’ll leave it at - it has to improve)

2. Passwords: 12 to 24-word seed phrases for setting up your wallets that you CANNOT lose and should not store digitally, two-factor authentication for buying, selling and exchanging currency

3. “Cutting & pasting” your 40+ character wallet address to your Coinbase exchange to transfer your crypto

4. Purchases that are sometimes not instantaneously transacted, though you can pick the speed of the transaction

5. There can be a multi-day wait for traditional bank funds to transfer to crypto exchanges

You’ll have to be very careful and deliberate with any transactions. It is permanent.

And you have to be extremely careful you are exactly on the intended domain and website and your wallet address is absolutely correct.

But know, it will get better streamlined, better serviced and more user-friendly in time like anything else.

The environmental concern

Blockchain (and Bitcoin) are resource intensive because of the massive amounts of computing power to verify and achieve consensus on a global network, but no doubt, there is certainly development in the works to far lessen the amount of resources and energy it takes.

A good example is Etherum that is the most active cryptocurrency on the blockchain. It’s evolving by later this year to exponentially lessen its energy consumption and expand its reach and capabilities with smart contracts.

Also, a better way to achieve blockchain verification will soon not need every node on the global network to achieve consensus; making it faster and more efficient, while using far less energy.

Even today by comparison, there are industries that have greater energy-sucks. The current Bitcoin network annual energy use is 129 terawatts vs. global gold mining at 241 terawatts and the global banking networks at 264 terawatts.

Crypto is just the popular kid on the block right now. Compare apples to oranges and a good PR campaign can make anything look awful by comparison.

Though it may seem like one-step forward, two-steps back, things will all certainly evolve and improve like every beneficial technology we’ve experienced in our lives.

Ok, what about investing in crypto?

All that is happening around crypto currency is so volatile. It’s not for the faint-of-heart. Just know, it’s still the early days and it ebbs and flows very heavily.

But as a long-term investment, you’ll see institutional investors and investor whales clearly believing in the crypto space, along with an army of smaller investors. There’s also a recent accepted viewpoint that certain crypto should be part of a truly diversified portfolio.

Bitcoin, for example, shouldn't be considered regular currency because its value has been so unpredictable right now. It can be more viewed as a longer-term asset similar to real estate, because it will be a finite commodity (unlike the unlimited, diluting US dollar).

There expects to be 21 million total bitcoins when it is all “mined” (almost 19 million mined so far). This “mining” is done by vast computing power farms solving massive computational puzzles. When solved, a virtual bitcoin comes into existence.

1 BTC (Bitcoin) was at a low of $30,000 and a high of over $60,000 just this year.

Cryptocurrency in fractional shares are available, of course, or we wouldn’t be where we are now.

Note: there are many other crypto coins structured to provide returns along with growing in value.

Bitcoin also won’t disappear, though nation states will try to minimize its impact so not to lose control of centralized governed money. Bitcoin is at the point-of-no return, at one point already reaching over a trillion dollars in value. There’s also a significant global business ecosystem all around it.

The human factors are the most compelling pursuits and goals

Blockchain technology provides the basis to accomplish social good on the largest scale possible to mankind, but still, beware of the dawn.

NFTs = non-fungible tokens = global digital certificate of ownership

The current NFT craze on the blockchain is an oversupply of fool’s gold in the form of digital art, except for the few. People and businesses are still learning about what is rare digital art ownership and how to add value through the smart contracts in their marketing strategies (NFTs are purchased with Etherum currency by connecting your wallet to a digital marketplace like OpenSea).

Though NFTs are most known right now for collectibles that aim to appreciate in value within a fandom community, it is all the other "boring stuff" that will be most significant for the masses in the coming years.

NFTs will readily show permanent and public proof of ownership for any tangible properties and assets, nuptials, events, wills and trusts, identity, citizenship and much more. For artists, it will turn the tide to fairer compensation from those who’ve conditioned their world to work on the cheap.

On the selfless front with blockchain. It is enabling humanity

  • Years after major disasters, victims deal with tons of paperwork from many entities just to rebuild. Blockchain technology can track, share, integrate and communicate all these resources on a permanent record to greatly lessen the burden on suffering families.
  • In Africa, blockchain powers financing that assures seamless, efficient micro-loans from lenders to small vendors for working capital that normal banks wouldn’t bother with.
  • Blockchain can and will enable identity ownership to over a billion people on earth. Displaced people who once had no way to identify themselves can receive social and economic services, open bank accounts, vote and more.
  • The voting dilemma in the U.S. – just think how we can unequivocally solve that issue and mathematically address untruths.

The world is your oyster, as the saying goes. This technology is empowering problem solvers who are creative, business-minded, tech-savvy, who are equally caring and giving so to achieve greatness beyond themselves.

The ultimate and real potential is upon us.

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Cited sources:

Olga Mack, Raoul Dal, Michael Saylor, Mark Cuban, Gary Vaynerchuck, Ofir Beigel, Steve Lund (BYU)

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A 50+ year San Jose-native focusing on social awareness, social good, social impact and the hidden gems and treasures of the area. Freelance journalist & sports contributor to SB Nation, Bay Area News Group & SF 49ers (@VicD_SJ on Twitter).

San Jose, CA
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