Balaji Srinivasan, chief technology officer at Coinbase, calls the blockchain “a transnational, algorithmic regulator.”
Speaking at the Fintech Unbound conference hosted by the Cato Institute, Srinivasan illustrates how profound the societal transformation will be once power is shifted away from centralized organizations to distributed ledgers.
But first, he asks, “Who thinks that our financial system can be improved upon? Or is it just perfect?”
Imagining an entirely new digital economy is abstract and often technical, but Srinivasan, an electrical and chemical engineer who co-founded Counsyl, one of the largest clinical genome centers in the world, breaks down the algorithmic regulator.
“A lot of people in technology believe that blockchain is the most important development since the internet. And that’s a big statement. And why do folks think that? The reason is that once you’ve figured out how to make a database of all the money in the world, such that it would cost you more than a million dollars to have an entry that represents a million dollars, you can represent any kind of scarce thing.
You can represent not just money but stocks and bonds and commodities and mortgages, loans, derivatives. And even things that we would normally think of as scarce or valuable, like your potions in a video game. All these things can now be represented as ledger entries. In the same way that the internet was programmable, we think of the blockchain as programmable scarcity. Everything that was information, whether music, movies, books, newspapers, got packatized and digitized and transferred over the internet. You can now copy/paste it. You could index it for search engines. You could paste in a link and remix it.
And in the same way, everything that’s scarce is becoming blockchain based. So every stock, every bond, every loan, every mortgage. This is a pretty big deal. While I’m talking about blockchain, I just want to be clear that I and we do think that Bitcoin isn’t going away. It’s the first and continues to be the most important application of the blockchain concept. I’m very much in the camp of blockchain and Bitcoin.”
Srinivasan, who says Bitcoin is a better gold, maps out the scope of the market and lists the types of assets that will end up on the blockchain once entire industries become programmable.
“One thing I predict is that in about 20 years, everybody here will have about 50% of your net worth in blockchain-denominated assets. That is to say, your mortgage and your loans and your stocks – all those things will either be based on blockchain-based technologies or blockchain-inspired technologies for representing scarcity.”