Blockchain technology, Distributed Ledger Technologies
Blockchain technology, Distributed Ledger Technologies What is going on these weeks has very few to do with blockchain technology. And we, the users and builders of the technology should share a few educational words for better understanding.
Blockchain is open source software executing public available code (smart contracts), the whole time available for accountability. A smart contract is not an account hidden in the Bahamas with very few auditing and few accountability, a smart contract is for all available in real time. What is falling now is a centralized exchange in the Bahamas where no one had the possibility to follow their operations, it is closer to how traditional finance works than closer to how crypto works.
We know little about the risks that centralized institutions are incurring at this moment, with the money they have by the depositors on their accounts and using it. That’s why many banks or funds have blown up in the past Long Term Capital Management or Lehman Brothers etc. and that’s why we all have doubts today in Deutsche Bank or Credit Suisse.
Now one of the biggest centralized exchanges has fallen, but they are not a systemic risk for the crypto currencies world. Crypto is decentralized and distributed, there is not just a unique currency on which all the business is pending. Nowadays there are many blockchains, with their own ecosystems, with their own use cases, independently running.
Keep separated traditional and centralized finance vs blockchain-crypto-DeFI.
In crypto - Decentralized Finance, lending protocols allow for little leverage, it is open source where you know the risks where you are depositing your money and where you can see the volumes or transaction traffic in real time.
I strongly believe Switzerland is doing great for having a clear regulation for those operating businesses on blockchain and exceptional that they are betting for the future of the technology, with many top startups from the sector.
This post is to protect a wonderful technology bringing innovative disruption to many processes, saving costs, creating value for many.
Saying all this, the risks are yet inherent to the innovation and projects itself, always do your job and check what you are buying, or where you have your investments, do not rely on trusted big names being involved in at the project.
A writing from the founder of a business using blockchain technology.© Art3Labs.