Now that we know enough about the technical innovation called BTC, you need to ask yourself a question. So what changed fundamentally? Why did all these other cryptocurrencies come into circulation. The thing is, even after all this, I am sure most of you missed the part where BTC actually changed the whole technological landscape. That innovation was called
What was this blockchain?
This was nothing but the list, the technology that enabled each and every node of the BTC system to record all the transactions from day 0 to day final. Why was it massive, because it represented a fundamental shift of thinking when it came to recording things.
Think about it, way back in the day we used to have harddrives to store data, we had to use the internet to transmit the data. Data was distributed amongst all these computers who used to be connected to a network and then transmitted their data to each other. This model of sharing data became obsolete and we all shifted towards the age of the cloud. Cloudcomputing was a concept where data was stored centrally at a particular place, and users all around could access the same data. What we were trying to achieve was ensuring that data storage doesn’t become a burden, because it so happened that a lot of data redundancy happened in the previous structure. But with blockchain, we went back to the distributed concept. DLT is a term that all should learn in the context of the blockchain, which stands for Distributed Ledger Technology.
But the question that should come to mind is, why is this an upgrade? Is it a replacement for the cloud? And here redundancy of data is even more!
The answer to these is simple. This is not seen as a replacement to the cloud. Rather, this is something different, and while it is true that data redundancy is there, one has to remember that we are not as threatened with the possibility of storage space running out as we once were since the rate at which data storage density is increasing is making it cheaper and cheaper for us to store large amounts of data. And one has to understand that the blockchain will be used for a purpse that is different from cloud’s. In a block chain we are not storing complex programs/media files/algos. Instead we are just recording transactions, which require negligible amount of space to store.
Note: If anyone wants to see the exact math as to how this is possible, you can refer the BTC white paper and there it has been shown mathematically how inspite of the severe data redundancies, the storage space is not ending up as an issue.
So did BTC originate from Blockchain? Or did Blockchain originate from BTC?
Actually it was Blockchain that originated from BTC. The initial idea of BTC was to create this world wide system of currencty, without the use of intermediaries. But while implementing that, the coders had accidentally invented blockchain. They did not think that there would be any other use for it, but as it turns out, we realized that the underlying technology behind BTC is even more significant than BTC itself. And it is with this new and dynamic concept of blockchain that the idea of cryptocurrencies began to evolve.
Now we have a lot of cryptocurrencies. But which ones to invest in remains a question. Cryptocurrencies like BTC, Ethereum seem to be the talk of the day. The rest of it, will they survive the test of time? Only time can tell.
Now look at it this way, even during the great dot com boom on 1999-20000s, there were a shit ton of websites. There were websites that were so mundane yet everyone pumped money into them and IPOs of such useless companies kept on getting oversubscribed. There were many such sites which had no findamentals whatsoever. It all went bust when the bubble burst. And that is how people are viewing this cryptocurrency space, this is our very own bubble. Ours to blow, ours to bust, so we must use it. There were great IT companies like google, yahoo etc during the .com boom too, they were the ones that survived the boom and became huge. We too need to identify out cryptos, and bet on which will stand the test of time.
A trader’s talent and daily bread lies in his bets. It is this nature of the job that makes society frown upon him. They consider him a person who doesn’t add value. A trader has no loyalty towards his picks, he picks them up and dumps them when opportunity presents. They are the bad guys, but one needs to remember that our bets make us who we are. If we cannot convince ourselves to bet on something, then what are we doing? Are our brains so feeble and weak, is our conviction so hollow? No, we are just afraid, to lose our hard earned money. We need to remember that everyone who made money made bets. Zuckerberg bet on FB more than he bet on his Harvard degree, Larry Page and Sergey Brinn bet on Google, more than whatever money they were offered to sell the company in their early days. The only thing that enables us to take these bets is knowledge. And the only way to gather knowledge is to study. It maybe nerdy, but it is our fundamental purpose, to know more about the world than the other person, and to spread that knowledge. It is part of the reason why I am writing this blog. And true enough, we will be successful. For only us traders, are who can adapt to changing scenarios, study patterns and exhibit discipline.