Over the weekend, we stopped at Kerbey Lane in Austin to grab breakfast. Our waiter, Chris, overheard our conversation and determined I worked in the investment world. Immediately, he gushed about how great cryptocurrency is. For him, he watched it go straight up and had become a committed fanboy.
As the 20-something gushed, he used the words “crypto” and “blockchain” interchangeably.
The waiter acted as though tomorrow was Christmas and Santa was filling his stocking with Bitcoin. He spoke nonstop for a seeming eternity. Finally stopping and gasping for air, he asked what I thought.
I told him our office discusses blockchain technology daily. It will change the way we document asset ownership.
Today, if we buy title insurance on a property, a title company does research to determine the rightful owner of that property. In the future, blockchain will have a permanent and irreversible digital record conceivably attached to every asset. In each block, the current owner — and every previous owner — will be listed in a permanent digital record.
As such, blockchain will significantly change how audits are done or determine who owns a house or who the original owner of a piece of art was, for instance. Governments like this as it potentially aids in determining how terrorism is financed, how people launder money or evade taxes. Governments are adopting blockchain technology for their currency simply because producing and tracking digital currency is easier and cheaper than paper money.
Chris could not sit on his hands any longer and he returned to using the words “blockchain” and “crypto” as equals. They are not equals. Blockchain is a type of technology for building and tracking a permanent digital database of every owner of an asset.
On the other hand, there are many types of cryptocurrency. It is a form of digital “cash” for lack of a better description that uses blockchain technology.
As Chris danced back and forth, he pronounced that Dogecoin is up more than 7,500% this year. Ethereum is up 300% year-to-date while Litecoin and Bitcoin are up more than 100% this year.
His data was right. However, I asked Chris three questions.
Who stands behind any cryptocurrencies? I may not like the way the U.S. government devalues the U.S. dollar, but I know the largest economy in the world stands behind our currency.
Chris’s answer was “the people” stand behind cryptocurrency. Really? What people? Is it a government or regulatory body? Chris did not know. His response did not make me feel any better.
What gives a cryptocurrency value? When Starbucks buys beans, adds hot water and sells the miracle elixir as caffeinated soup I understand the input components, why people pay for it and what gives it value.
However, for the most part, cryptocurrency does not produce a good or service. As such, it has value simply…
Read more:Dave Sather: Crazy for crypto
