David Chaplin 's Opinion

A personal finance columnist for the NZ Herald

Inside Money: Bitcoins with everything - or how techno-freaks want to pull on your blockchain

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Photo / AP

This might be the future. But I hope not.

The digital utopia as described in the above, lengthy UK Daily Telegraph article sounds horrible beyond words.

According to the (very long) story, 'blockchain' technology pioneered in Bitcoin will soon extend to every area of our lives: law, share markets, governments, financial services, taxi ranks.

"The benefits of decentralised systems will be huge: slashed overheads, improved security and (in many circumstances) the removal of the weakest link of all - greedy, corruptible, fallible humans," Matthew Sparkes writes in his wordy, nerdy column.

"But how far will disruptive effects reach? Are we rapidly approaching a singularity where, thanks to Bitcoin-like tools, centralised power of any kind will seem as archaic as the feudal system?"

The short answer to that question is 'no'. For the long answer, read the Sparkes piece in full, if you can spare a couple of greed-riddled, corrupt, fallible hours.

However, finance is rapidly changing under the influence of technology - whether it's improved or not is moot - and will continue to be digitally-enhanced. Noted economist, Kenneth Rogoff, for example, argues money needs to be completely digital if central banks and governments want to control the economy more efficiently.

Of course, Bitcoin-believers want a digital currency for precisely the opposite reasons.
Sparkes quotes Andreas Antonopoulos, chief security officer at UK-based Blockchain.info, as evidence.

"Most of the hierarchical institutions we have built around finance are there to regulate the fact that if you give a lot of money and put it under the control of a single person, history tells us that they tend to steal that money," Antonopoulos says.

"That happens again and again. Almost all regulation is really to stop one person with control over a lot of money from stealing that money. [Bitcoin] technology makes it largely unnecessary."

History has also shown that believers in utopian solutions have invariably been disappointed.

Maybe this time will be different.

Sparkes concludes: "The big problem - and in the world of computers this has been solved so many times before - is that blockchain systems are complicated to use. But soon, they won't be. And then the masses will swarm towards them, creating a world we barely recognise."

- NZ Herald

David Chaplin

A personal finance columnist for the NZ Herald

David is a freelance journalist who has covered the financial services business on both sides of the Tasman for over 15 years. David has edited magazines and websites for the financial advice, investment and superannuation industries. Today, he contributes to various publications in Australia as well as his bi-weekly blog for the NZ Herald under the 'Inside Money' banner.

Read more by David Chaplin

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