BLOCKCHAIN IS DESIGNED FOR VALUE-EXCHANGE
01. Value Exchange in the Physical World
If Alice is to give Bob a $100 banknote in person, the banknote given out by Alice and the banknote received by Bob is the very same piece of banknote.
The physical property of an asset guarantees that if the $100 note is transferred, Alice will relinquish $100, while Bob will gain $100.
02. Value Exchange in the Digital World
In the digital age, where the money in our accounts are simply digital numbers, we need a trusted third party to ensure we don’t simply type in whatever number we want to be our account balance.
Therefore we need banks, clearing houses, governments, etc. These are trusted establishments who verify that Alice really has $100 in her account.
03. Value Exchange With Blockchain
In the era of blockchain, we all write on a common ledger, the copy of which is distributed across everyone on the network and maintained through cryptographic proof.
Since the record is public, everyone can trace back when and where did Alice got her $100 to start with, and make sure she cannot spend the $100 again after paying Bob.
The technology enables substantial benefits in terms of speed, security, transparency, convenience, and cost. Well-suited for applications such as payments, financial asset transfers, smart contracts, ownership splits, and notary services.
The aforementioned explanation has been simplified for optimal comprehension. However, if you wish to delve deeper into the intricacies of how blockchain technology is pivotal in the exchange of value, we recommend perusing our 2019 research report on Central Bank Digital Currency.
