Chapter 12: Financial Blockchain Applications

"The one thing that's missing, but that will soon be developed, it's a reliable ‘eCash.’ A method where buying on the internet you can transfer funds from A to B, without A knowing B or B knowing A. The way in which I can take a 20 dollar bill and hand it over to you, and there's no record of where it came from. And you may get that without knowing who I am. That kind of thing will develop on the Internet." 

- Milton Friedman, 1999

“I don’t believe we shall ever have a good money again before we take the thing out of the hands of government, that is, we can’t take it violently out of the hands of government, all we can do is by some sly roundabout way introduce something they can’t stop.”

-Friedrich Hayek, 1984 

Upon mention of Bitcoin and blockchain, most people’s minds immediately gravitate to money and cryptocurrency at the expense of any awareness of the technology and its potential. In truth, dozens of different financial applications can occur on a blockchain. This chapter is meant to provide some examples, as well as dispel some misconceptions about blockchain and finance.

Many of the blockchain projects out there are focused strictly on the financial upside that the creators might receive from creating their own money. Today's various forks of Bitcoin (Bitcoin Cash and Bitcoin “Satoshi Vision”) represent inefficient debates regarding whether cryptocurrency is a form of payment (“peer-to-peer cash”) or a store of value, as Bitcoin Core and other cryptocurrencies have evolved to be.

Initially, when we started writing this book, many of the people we talked to thought the entire book would be about financial applications and the complete reinvention of money by the year 2035. From Jared’s experience in the early years of talking about the blockchain, the last thing he ever wanted to do when introducing the subject to someone is to start talking about money and ignoring the technology. One would immediately get hit with questions about problems like money laundering, terrorist financing, online drug marketplaces, and other criminal activities...

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