Bitcoin, Smart Contracts, and the Power of a Peer-to-Peer Network
Skillseta is a narrative-driven technology education publication that aims to humanize the future of Web 3 and Fourth Industrial Revolution (4IR) technology.
Subscribe to ‘Skillseta’s [news]Letter’ for updates, new essays, and more resources — Here.
Imagine for a moment that you are an adult in your mid-thirties to early-forties. You’ve found your way after years of risk, struggle, and uncertainty with a measure of success. In the words of clinical psychologist Jordan Peterson’s advice, you “took aim” and “confronted the chaos” to excel. Now, you stand as a leader, having made your path in the world.
The time has come for you to settle down. You yearn for a community, a place to call home, where you can watch your children relish in the joys of childhood while you grow old too. Together with your wife, you find a home that makes financial sense — a significant accomplishment given your background.
You meet every requirement for the purchase, and, understanding that the market is fiercely competitive, with people flocking to your city from all corners of the globe, you offer above the asking price. You’ve anticipated this scenario; offering more should clinch the deal.
Then, unexpectedly, you’re denied.
Why? What under the heavens conspired against you to be denied something so rightly yours?
The Bitcoin white paper
On October 31, 2008, Satoshi Nakatomo shared the Bitcoin white paper to a mailing list of cryptographers. In it Nakatomo laid the framework for a different and new type of cash system. The genius of his creation would be the removal of “third party intermediaries,” in banking transactions between two people. An intermediary as it relates to banking, is defined as:
“an intermediary bank is a bank that acts as a go-between, connecting two different banks. Smaller banks require intermediary banks or correspondent banks to facilitate transactions with other banks, while larger banks may have enough connections to serve as their own intermediaries.”
The middle institution removed, you and and I may interact and transact, person-to-person, anonymously and freely.
Scroll down to the “Get Curious” section for additional links to terms mentioned and defined above.
The Subjectivity of Humans
When I first heard on The Defiant Podcast why Terry Crews — the beloved American actor known for his roles in ‘White Chicks’, his starring role in the sitcom ‘Everybody Hates Chris’, and his larger-than-life role as the host of ‘America’s Got Talent’ — was denied access to his money while traveling abroad, I thought to myself, ‘There’s no way this story can be true.’
The host, Camila Russo, sums up her interview with Crews:
“Terry has a very powerful story on how he got into crypto. It was at a design show in Milan. He wanted to support his friend at the show, but wasn’t able to withdraw money from his own American Express account. He realized a financial system that’s based on trusting a long line of intermediaries is broken. He thought, even when he did everything right, and he was already wealthy and famous, he still got the door shut in his face — so what’s left for the rest? He thought back to the families who were crushed under debt from loan sharks in the neighborhood he grew up in. He watched what happened with Gamestop earlier this year.” — Camila Russo, “Everyone Can be Rich in Crypto; There are no Divine Rights:” with Terry Crews
When Russo pressed him to explain why he was not given access to his money, Crews stated, ‘I was the only black person in this bank. I was the only black person in the area [Milan, Italy].’ He later added, ‘Apparently, American Express could not make this guy [the bank manager] give me my money.’
It is the subjectivity of humans that prevented the family in the story I told earlier from gaining access to a home in a neighborhood that was outside of their Rolodex or connections and it was that same subjectivity that disallowed Crews access to his money.
What to do?
How do we shed ourselves of our own subjectivity?
Sure, we can unlearn old methods and learn new ways of evaluating people, or we can turn the job over to non-human, access-granting technology such as Bitcoin, blockchain, and smart contracts. Running on blockchain rails, smart contracts allow for peer-to-peer transactions without the need for subjective third parties. In other words, if person A meets the requirements to transact with person B as written into the contract’s code, those requirements can be stated in a smart contract using a digital payment like Bitcoin. Once both parties meet the stated requirements, access is granted — or, in the case of our home buyer, it means a closed deal and his dream home.
Nick Szabo, computer scientist and author of the ‘Unenumerated’ blog, has a great way to explain the simplicity of how a smart contract executes on the blockchain, using the example of a vending machine.
“This logic is programmed into the vending machine. A smart contract, like a vending machine, has logic programmed into it.” — Nick Szabo
Could this technology truly transform our world away from our emotional, subjective primate brains to something more universal and transparent?
Question: What is another area of business you could see transformed by Bitcoin, blockchain, and smart contracts?
- Time to knowledge stack (read this short article on what is takes to knowledge stack and build your understanding and resume!). In week one on Skillseta, we discussed what a blockchain is: Skillseta Launches: Techno-Optimism and the Fourth Industrial Revolution — Here is what you need to know
- Read: Bitcoin white paper by Satishi Nakomoto
- Listen: Defiant Podcast with Terry Crews. Listen to his profound story and how the future of payments may fix this outcome.
- Watch: CODE IS LAW? Smart Contracts Explained (Ethereum, DeFi) | Youtube
- Define: What is a smart contract: “A smart contract is a self-executing digital agreement that enables two or more parties to exchange money, property, shares, or anything of value in a transparent, conflict-free way while avoiding the need for a third party.” | Blockgeeks.com / Smart contracts are programs deployed to a blockchain network that automatically execute when triggered by valid transactions. | Wikipedia
- Read: Nick Zabo’s ‘Unenumerated’ blog
- Define: SoFi. ‘What Is an Intermediary Bank?’ SoFi, https://www.sofi.com/learn/content/what-is-intermediary-bank/. Accessed 7 Jan. 2024.
Skillseta is a narrative-driven technology education publication aimed to humanize the future of Web 3 and Fourth Industrial Revolution Technology (4IR). If you enjoyed this piece, like, comment, and subscribe to ‘Skillseta’s [news]Letter’ for updates and new post. Questions? Suggestions? Edits? Email ehamilton@skillseta.com
Subscribe Here.
