Pro Commerce

An explanation of blockchain

I’ve been frustrated finding an adequate description of blockchain to go along with a blog posted a few days ago.

Nothing I've seen seems to help me conceptualize it.

The reason is that a blockchain is based on two completely new technologies that few people are aware we have lived with.  And I hadn’t paid attention to these either.

One is massive number processing.  The other is distributed autonomous networking.

Most people can picture a number that is eleven digits long.  That is because we see that number of digits in U.S. government budget numbers and the dollar value of shares of public stock; eleven digits, it represents the number ‘a few billion’.  

When we download a file to our phone in less than a second it can contain millions of digits. Not eleven digits. Tens of millions of digits. An everyday experience we haven’t really internalized in our mind. A string of digits that would reach around an average city block.

When we put a date on our phone calendar it can instantly be put on our home computer, our friend’s calendar, our tablet and our office computer.  That is autonomous networking. It could involve thousands of computers if we are on a network with that many synchronized computers.  Autonomous networking happens every time we put a card in a transit card reader. Again an everyday experience we have not really internalized in our mind.

Blockchain is based on just these two realities of modern life.  A blockchain is a long list of numbers, often billions of numbers in a single chain.  That set of numbers can include a series of financial transactions, it could be a series of owners of a plot of land, with a description of the plot of land, it could be a patent, the entire score of a movie or a Broadway musical.  None of these are large in terms of contemporary computers.

And this chain of numbers could be duplicated simultaneously on thousands of computers (or more) to make sure that the number remains accurate and can be accessed easily to verify anything contained in the number.

That is what a blockchain is about. A reality of the modern world that is currently being put to use.  Many uses.

If you want a copy of your bitcoin, which is just a very long number that has been copied on thousands of computers around the world, you need a thumb-drive to record it.

The Seven Laws of Money Radio Interview

While doing the previous blog I ran across an interview I did on radio in 1985 on The Seven Laws of Money.  The interview is listed on a Youtube under the name Douglas Jamieson and the name of the interviewer is Charlie Serafin.  The producer is listed as Joan Margolith.  I don’t remember anything about this.

It is a good interview and I recommend it to anyone who wants to listen a half hour of me on the Seven Laws.  It was put on Youtube in 2013.

 

I bought bitcoin

I have been saying that bitcoin is not ‘money’ for nearly a decade.  

Have I changed my mind?

No.  Bitcoin is not money.

Money is a social construct that has many qualities including its function in pricing and carrying on transactions. See here. Bitcoin may have a few  of these qualities, only a few.

In the pre-Civil War era individual banks issued their own currency which was used as an attempt to act as money.  Books were published to evaluate the value of various currencies.  Gold backing was the proxy for the value of the currency.

Money was finally issued by the winning side in the Civil War.

In the summer of 1976 there was a banking strike in Ireland.  Personal checks were traded as currency with each check valued by the credit worthiness of the original writer.

I bought bitcoin and two other cryptos to learn more about what they are.  Presently there are about 40 recognized cryptos.  With many originating in Berlin.  Many of the main cryptos are popular in China and South Korea where they are used in efforts to move money out of the country. American libertarians are also big buyers.

What I can say at this point is that a crypto is best analogized to a global art print auction.  The number of prints of the same piece of art is relevant but is subsidiary to the value of the piece of art itself.  Or it can be compared to a lottery ticket where additions can be made to the original ticket.  The value of the total of the tickets reflects on the value of an individual ticket though the total lottery will never be paid out.

I already learned about transaction costs in cryptos.  I tried to buy Ripples.  But the URL was swamped on the three days I tried and never got through.  Had I gotten through on the first day, my $340 investment would have been worth $3,000 by the end of the week.

The blockchain software that underlies the cryptos is gaining wide acceptance in many fields.  It is important. Following the problems in the currency world is a good mechanism for oversight. I’m a latecomer to this world but not left out.