Blockchain and cryptocurrencies.
In this session, we will examine the origin of the interest and the application of the technology behind blockchain, also known as the dynamics of distributed systems. We'll also deep dive into its application in the form of Bitcoin and blockchain. We will wrap up the session by looking at the possible future of cryptocurrencies and blockchain technology. From the perspective of finance trusting centralized authority, there is a clear distinction between centralized versus decentralized authorities. By example, the Oxford English Dictionary is a centralized, trusted arbiter for the English language, whereas Wikipedia is a community-led approach, IE decentralized. Traditionally, we associate authority with trust. We go to the dictionary, whether it's Cambridge, Oxford, or Webster, to look up words. These are our trusted sources. When it comes to information, the information is validated by authorities before it is allowed in the centralized source. In modern days, this is not exactly how we get information. We go to Wikipedia, for example, but who's the centralized authority when it comes to money? The trusted sources were the banks, and in a macro context, the government. So what are cryptocurrencies? Well, as defined by the Cambridge Dictionary, a digital currency produced by a public network rather than any government. We will explore this further later in the session.
Before we dive deep into cryptocurrencies, let's revisit the role of central authorities in our daily lives.
Who should be allowed to operate vehicles? We delegate that decision to a centralized authority by the name of the Division of Motor Vehicles or Department of Motor Vehicles, the DMV. The DMV authorizes those above the age of 16 who have passed driving tests organized by the DMV to drive. Furthermore, the proof of the authorization is in the form of a license. Why? Because we trust the DMVA centralized authority. The same applies to the practice of medicine by medical boards. We also trust the approval of the practice of law to the bar. In finance and investment. The ultimate authorities are the respective central banks. The emergence of a centralized monetary authority comes from the need for transaction settlement. While in the early days, gold and silver and even copper were the preferred medium of settlement. They were cumbersome to carry around with divisibility also an issue. So paper bills backed by gold, et cetera were Introduced. But what bills issued by which entity can be trusted, hence giving rise to legal tender issued by the government and its central bank backed by gold. I'm sure you all remember the gold standard. Can the authority be trusted? Well, as long as the notes printed by government and the central bank are backed by gold, but that apparently has not been the case for a while.
So what can we do when trust is breached? Well, if you do not trust a person with a license issued by an authority, for example, a medical doctor, what do you do? We ask for a second opinion. For example, another doctor. We can consult more people, specialist or more specialists, and then we triangulate to confirm. The heart of this approach is to get the information from multiple sources, a network approach. As such, we branch from a centralized approach, getting information from the authority to a network approach, getting and verifying the information from a network.
