What’s the cost of using blockchains?

In the past few weeks I’ve written about that blockchains are a kind of distributed ledger, and how they can be useful. But in these posts I left with a few unanswered questions that I’ll try to answer here.

So far everything about blockchains seem wonderful. Blockchains will allow software, people and organisations to transact with each other in more transparent and democratic ways where authenticity can be verified in a decentralised manner. If more software was built like this we would no longer need to pay with freedom, privacy and surveillance. But what do we have to pay with instead? There ain’t no such thing as a free lunch. Continue reading “What’s the cost of using blockchains?”

There ain’t no such thing as a free lunch

Indian merchant carefully weighing the cost of his food before selling. I deemed the opportunity cost of not having this delicious dessert higher than its monetary price, which is why I bought some. Photo credit: Isabell Schulz

The first principle of economics is: Everything has a cost. This applies equally well to financial, political and social economics. It’s the very foundation that the current form of our society is built on. It’s a common misconception that cost can only be paid with a monetary price, such as money. But ultimately cost can be paid with other things.

The term “There ain’t no such thing as a free lunch” dates back to the 19th century where saloons in America used to serve free lunches to patrons who had purchased at least one drink before. The trick, however, was that the food always contained a lot of salt (e.g. ham, cheese and salted crackers), which in the end lead to thirsty patrons buying more drinks and thus generating a larger profit for the saloon. Continue reading “There ain’t no such thing as a free lunch”

What’s a blockchain? Can they improve our world?

Most systems that we know in life are centralised. For example, systems like governments, banks and public transport are centralised. This means that all people in the system only need to trust the one central authority that run the system for you. The only drawback is that you really need to trust that central authority to take decisions for you (government), handle your money (banks) or transport you from point A to B (public transport). Trust is what run these systems. And companies create a false perception of trust by charging lots money along with marketing like “we are better and more secure”.

Nevertheless, this centralised system is simple because many people believe that trust cost money, and therefore are happy to pay for it. It’s also convenient because you only need to trust that one authority. But it’s been proven time upon time that we can not, and should not, trust these centralised systems. Continue reading “What’s a blockchain? Can they improve our world?”