Blockchain technology makes finances very transparent. This is ironic, because how the blockchain works and why crypto exists is opaque. Below is my crypto thesis and I talk about why crypto should exist.

I’ll highlight some example applications for blockchain tech and crypto here. Keep in mind even if I made this a 200K word post, I wouldn’t even be touching the tip of the iceberg on this tech.

That’s how much potential I think this tech has. So keep reading if blockchain tech and/or if you’re wondering ‘why crypto’?

Note: This post will be somewhat complicated. As blockchain tech is complicated. But in that complication comes massive simplicity. If the reading’s too dense, just skip to the last section, “TL;DR, Why Crypto?”

Why Crypto Reason #1: Global Need For Independence From The USD

In The Dollar Crisis, they drive the point home that the entire world is dependent on USD. Below is a gist of what the book’s saying:

• In WW2, the US became very rich from profits it gained from exporting goods for the war effort.
• Post-WW2, US did what any dumb rich person does: spend a lot of money without making a lot of money. Exports decreased and imports increased. Drastically.
• Conversely, other countries now made their money from USD – as they’ll export to the US. But no longer buy much from them.
• This created an effect whereby most countries’ economies are highly dependent on the USD doing well, because the US is their prime customer. Other words: due to lack of customer diversity, a lot of countries became extremely dependent on the USD.
• This makes it hard / irrelevant for two non-US countries to trade with each other. Both countries are highly dependent on USD, so why not just export to the US directly?
• Most countries trade with each other nowadays through the SWIFT wire system, which always goes through USD before landing in the destination currency. And to be honest: if you were in some 3^rd world country trading with another 3^rd world country, would you rather take 3rd world country currency, or USD which you know to be stable?
• This presents an enormous systematic/global economic risk, because if the USD tanks, the world’s economy tanks.

Crypto solves this because it allows for a transparent and easy way for countries to trade, without depending on USD. And unlike choosing another currency, like the Yuan or something – crypto coins have no political incentives. It’s just code. And it just is.

No feds to print money, and no politics to manipulate the monetary system. Hence, crypto is a lot more robust (if made completely independent of USD instead of pegged to it) against politics / current events. It’s a pure-form representation of value. Other words: countries can just ‘start over’ if they all agree that some non-biased currency is now the standard fiat.

But this is a big “if”.

Complete independence from the USD is much harder than I just made it sound. It’s only possible if there’s wide enough adoption to these non-biased coins. Otherwise, there’ll always be some correlation in USD-to-crypto. What’s proposed above, where everyone agrees on a new non-biased coin to trade on is radical.

But perhaps some middle-of-the-road approach can at least blunt some of the dependence to the US dollar. And thereby blunt some of the systematic global risk of USD dependence.

For example: 20% of transactions are in these non-political, objective coins. Some threshold of traction is enough to provide an ‘exit route’ currency if the USD were to collapse.

Crypto Can Unify Finances

Finances are hard because there’s so many platforms. There’s my Wells Fargo for mortgage (don’t use them btw they really suck), Chase for domestic debit, Charles Schwab for international debt, and various Ally accounts for diversifying debit fraud risk. And then also a bunch of accounts for credit cards.

And each of these companies have a different backend/interface which makes it impossible to unify. Because there’s no standard.

But with crypto, one can standardize all financial transactions and add customizations to those standardizations with a smart contract.

An example is ERC20: it’s a standard interface on the Ethereum blockchain to create tokens (or “coins” – used interchangeably here).

Below are some thoughts on how one can unify finances by shoving it all in the blockchain:

You could have coins that are taxed differently. If there’s a coin for your Health Savings Account, that could be tax free (except non-medical withdrawals of course). And there can be another coin where you’re paid ordinary income (and will be taxed as ordinary income). This’ll make taxes much easier because the blockchain can computationally let you know very easily how much taxes are owed / due to you. And no manual auditing is necessary: everything’s already transparent and can be pulled from the blockchain.

Escrowing in real estate. A common usage for “smart contracts” is escrowing money. One can easily extend this case to real estate escrows. No more waiting nervously for days for “SWIFT” money to hit your bank account. And the best thing about the blockchain is: they don’t take weekends / holidays off like banks do.

• NOTE: A smart contract is just a contract on the blockchain where a programmer can code up a bunch of rules to dictate whether or not some funds should be moved. Think of a smart contract as free app in an ‘app store for money transfer’.

Escrowing in business. Easily transfer money from one business to another based on some conditions (as specified by a smart contract). This also sidesteps the annoying SWIFT system for international trade.

Buying goods. Unlike credit cards, transfers on the blockchain ledge are final, so you don’t have much protection for goods bought on debit. You could mitigate this with a smart contract escrow that holds the funds for 60 days (like Paypal) prior to releasing the funds to a vendor. But then the vendor needs to take 60 days of risk and their working capital would be much lower.

Another method is to have a big company with lots of resources be the ‘credit card company’. They can have their own “Visa” coin for example. And then you can just borrow their coins to buy stuff. You pay them back borrowed coins monthly, else incur an interest and a credit score fee. Then, if you have a chargeback, the crypto credit-card company will charge the vendor and give you back the money. And for everything you purchase, the crypto-credit card company can charge like .3%-3% or whatever they desire from vendors.

Since all data is transparent on the blockchain, the data can easily derive credit scores for future lending opportunities.

And since all data is transparent: the crypto credit card company can see how much money you’ve spent with them and issue you credit card points / rewards. They can do this the old fashioned way and give you points where you can redeem those points, or they can directly airdrop you an NFT for a flight/hotel (see below).

So why crypto? Other than crypto being able to diversify the world away from USD, it unifies finances.

Instead of having a billion apps do a billion different things, a unified global standard means you can easily have one app that’ll handle all kinds of different financial transactions. And then you just let the particular use cases be handled by Smart Contracts.

For example, instead of signing up for a new bank account at Charles Schwab, you can just approve a “Charles Schwab Debit Token” from this singular app to sign up. KYC? No problem. Store encrypted credentials on the blockchain and approve the companies you want to be able to decrypt it. This way, you don’t have enter your info to a million banks, a million different times.

Ok, but why crypto? You can do all of these money transfers already. Sounds like this is just slightly more convenient?

Yes, the upside is basically massive convenience to handle your money, which means you might handle your money more responsibly.

Think of buggy apps like Mint or Personal Capital, where they fail to pull data from one of your accounts, all the damn time. Some server is down somewhere, and you need to re-enter credentials. This happens for 2 reasons:

1. Servers can go down.
2. Every single financial institution has a different interface to Mint/Personal Capital, so the teams at Mint/Personal Capital have a very difficult time dealing with each institution.

Crypto solves both of these problems, which makes the ‘convenience apps’ like Mint not have either of those 2 problems again.

1. Blockchain is run on decentralized nodes. The only time ‘the server goes down’ is if all nodes mining Ethereum is dead. This is impossible unless there’s a world-ending event. Other words: interacting with blockchain means no intermittent issues, ever.
2. A crypto standard like ERC20, but for financial institutions would mean every single company must deploy a smart contract that has a subset of the exact same interface. This means a company like Mint can just come along, integrate code for one financial institution and that same code can be reused for all institutions. No more extra complexity / bugginess.

Why Crypto? Reason #3: Politics And Decision Making

DAO = Decentralized Autonomous Organization. This basically means you can use your coins to vote for things.

For example, in an election, you might be airdropped one free DAO coin in which you can use that to vote for candidate A or candidate B. No more ‘miscounts’. And no more controversy of voter count manipulation.

• For security reasons, centralization will be required to ensure you only have one person per vote. But the voting mechanism itself can be decentralized and automated. This means sans enormous security flaw, voting systems can be 100% fair, transparent, accurate, and automatic.

This has huge implications in countries that claim to be democratic, but isn’t actually.

Don’t want to vote yourself? You can also use DAO tokens to vote for a representative who make decisions for you.

You can also make other decisions with DAO. Instead of voting for a president, maybe you just want to choose a primary care doctor.

Hospitals can implement a DAO system where folks can ‘vote’ (decide) which doctor will be their primary care doctor. These mappings will be made transparent on the blockchain ledger so it’s easy to resolve supply/demand conflicts. For example, 50 people have their DAO on Dr. No – the hospital can just have the smart contract prevent anymore people from putting their DAO on Dr. No.

One thing with DAO tokens is that it’s original purpose is to have a voting board. For example, I own 20% of DAO tokens in a company. This gives me 20% voting rights. Hence, in a lot of applications, DAO needs to be massaged so that things are fair (i.e. political elections where only one DAO can be allocated per person).

For unique events like doctor visits and doctor choices, it may be easier to implement with an NFT instead.

Why Crypto? Because NFTs Can Be Used Accurately To Handle All Unique Events.

Non-fungible tokens are used for flex currently.

But the uniqueness of each token (i.e. non-fungible definition) means that you can uniquely map an event to each NFT.

Here’s a very complicated example I could think of.

• A hotel issues many NFTs, and each NFT represents a room and its respective starting date.
• A customer books a room with some starting date (by buying an underlying NFT) on the hotel’s website (so the customer experience doesn’t need to change at all). And the customer sets an ending date on the website, which is then relayed to the hotel’s smart contract.
• The hotel’s underlying smart contract invalidates all the other NFTs that correspond to the same room with overlapping dates, so no other person can book it.
• As long as the customer owns the NFT, some daily rate is drained from their account. And once the customer’s stay is over, the NFT can be burned (since that event is over).
• The customer experience is largely the same, so why bother with this crypto garbage?
• It’s because the handling of complicated, simultaneous events (like 10 customers trying to book the same room) are handled by the blockchain! And it only takes 1 standard “Hotel Smart Contract” interface for literally every hotel in the world to be able to make booking easy/bug-free. Thus, the booking can be completely error-free, forever, for all hotels in the world, with no effort in implementation, ever again.

Imagine 10 people booking the same room in the same second. Different hotel websites might handle this differently, causing varying customer experience. But the blockchain already has technology to deal with conflicting requests, as ETH miners would only mine 1 of the 10 requests (namely, the person that pays the most to get their transaction through gets the room). All hotels can just leverage this existing technology to handle simultaneous requests, without ever running into a bug, ever again. This causes a universal, predictable booking experience for hotels (and flights, and everything in between) worldwide.

And the beautiful thing is: the websites don’t need to change. Each hotel can keep their own branding / messaging on point. The blockchain tech will be hidden from the customer, yet make their experience a lot smoother. Instead of having to hire a devoted developer to handle any emergencies comes up, hotels can just rely on the blockchain never going down. The blockchain is decentralized, so there’s always at least one node to handle your hotel’s data. Compare this to a hotel using their own server, or an AWS server. Those sites crash all the time.

To recap: blockchain can make booking systems 100% reliable and error-free, with no maintenance whatsoever, saving hotels tons of money / time / effort, forever. And this is just one corner-case application in one industry.

Someone smarter than me can probably come up with a billion more examples off the top of their head.

Hotels are more complicated because of variable dates (guests can extend/shorten their stay and you don’t know if they’ll book 1 night, or 300 nights).

But you could see how this would work for things with much simpler events. For example, events with a fixed end point like a doctor’s appointment (you only get a 15 minute slot and can’t choose to stay for 10×15 minute slots) or a concert.

TL;DR, Why Crypto?

In summary, the answer to ‘why crypto?’ is the following:

• The world’s under-diversified in currencies. Pretty much the entire world must trade while considering the USD. Crypto allows the world to diversify away from the USD, apolitically. This is good because it blunts global economic ruin should something bad happen to the USD.
• Crypto and blockchain tech can unify finances by way of standardizing how fintech is built. This allows for massive convenience for all when handling money, including but not limited to no more manual tax filing.
• The tech can be made as a Decentralized Autonomous Organization. All this means is that you can buy tokens for voting rights in an organization. Or, this can be modified such that each person has only 1 vote. The latter allows for 100% transparent and fair elections.
• My favorite reason for why crypto is the NFT space. NFT allows you to map events to a non-fungible token.
• Blockchain is decentralized. As long as at least one computer on the blockchain is available to handle transactions, things will just work. This means all of the above applications (and more) will never have a server crash or some weird intermittent behavior.
• Blockchain is transparent. All transactions are written on the ledger as a matter of public record. There’ll be no more tax evasion / money-laundering and taxes can be done automagically since a piece of code can just scrape all your transactions and file taxes on your behalf (and do tax withdrawals / deposits automatically as well).

Basically, as long as money is important to society, crypto is here to stay. And the reason for that’s because crypto tech makes handling money 10-100X better.