When most people think about a digital currency, like Bitcoin or Ethereum, what they miss is the very subtle difference between infrastructure, application layer and consumer interaction.
Breaking these down isn’t too complex, but the way people interact with the blockchain certainly are.
First of all, you have the infrastructure layer, the Blockchain. Three groups interact primarily on this layer. First off, you have the programmers, who develop and maintain the infrastructure. You can think of these people like the city planners and engineers that maintain the system.
Secondly, you have the miners, who generate the power in order to run the blockchain. They are often rewarded by generating coins which are then given back to them to sell on or keep, depending on their speculative value.
Third and last, you have the investors, one of us. Who buy or sell the currency/coin depending on their actual value.
The next layer is a little more complex. The application layer is where all the magic happens. Where business interact, to use coins in the real world. Whether this is a direct transaction or keeping a record on the Blockchain. This could be something as simple as a contract between two friends or even an entire record of property transfer. That’s the exciting thing about Cryptocurrency, the ways in which it can interact with the real world are seemingly endless.
An example of this is Ethlance, a Decentralised application that allows you to use Ethereum to trade freelancer services. It’s in the early days, but it’s interesting, to say the least.
Governments are also taking note of this. With the Dubai creating their own Blockchain, you can see that even beauracracies are taking note.
So what does this mean for our understanding of what’s going on in this digital space? It’s relatively simple, digital cities are being built, from the ground up. That’s what people are investing in. The earth, the roads, the power plants, simply the building blocks of a globally spanning digital system.
With this in mind, we can see why people, hedge funds and corporations are investing. They are investing in the equivalent of airports, roads and electrical plants. This understanding of what is trying to achieve is key. Especially when we consider the core of what’s being created here. Not only is it infrastructure, it’s an entirely new way of doing business on a global scale.
I’m not planting trees so I can look at them, I’m planting trees for my children’s children. It’s something the worlds lost sight of.