The Key to Fixing a Broken Paradigm
The way you can identify a broken paradigm is that the problem gets worse the more money you spend on it.
Case in point: Internet security.
Spending on security patches and poultices rises some 20% every year. Yet the number of hacks of private data rose to an all-time record of a billion breaches in 2018.
Then there’s the scandal of global money.
The more money that is printed by central banks — and shuffled on international currency exchanges — the less growth and trade we get from it.
Even some $13 trillion of negative interest rate securities doesn’t make a dent.
Big banks and financial players now push around some $5.1 trillion every day. That’s roughly 25 times global GDP… and over 70 times global trade in real goods and services.
And what does this colossal floating currency game accomplish?
It only enables grasping politicians and toady central banks to steal from the future — your kids and grandkids — in order to pay off favored constituents and politically correct causes in the present.
Clearly, internet security and the global scandal of money are two of the world’s most obvious broken paradigms.
That’s why I’m so tuned in to advancements of the blockchain, and why I believe the heart of most wealth creation over the next 10 years will be the Cryptocosm.
The Focal Point of the Internet Reboot
Cryptocosm is a term that you likely heard during my recent live event.
If you’re unaware, Cryptocosm refers to this amazing effervescence of creativity that’s erupted all around the world.
All in an effort to supply a new architecture for the internet and, indeed, ultimately a new architecture for the entire world economy.
And it involves troves of new knowledge surrounding bitcoin and the blockchain.
I truly believe blockchain will eventually become the proper foundation for what the internet’s really become — a huge commercial database to connect transactions all over the world. But this time around, with complete security.
But the blockchain can be confusing for most people to grasp.
How does it work? How can it have so many applications? How can it be useful beyond cryptocurrencies?
To answer that, we’ll need to dive into the functionality a bit more.
Today I want to focus on one aspect of the blockchain, and how it can help solve one of the broken paradigms above.
Moore is Less… Less is More
The core of the bitcoin blockchain is termed a “Merkle Tree.”
In essence, this is a mathematical “hash” — or compression of all the block’s transactions that reduces them to a unique number of just 36 bytes.
The Merkle Tree is the magic function that makes it possible to sum up all the transactions across the entire blockchain and distribute them constantly across all the nodes of the network.
Because memory capacity still doubles every couple years at a Moore’s Law pace, each year Merkle-Tree functions enable the blockchain to occupy a steadily smaller share of a computer’s total memory capacity.
In other words, the larger the blockchain gets, the more efficiently it can operate.
Moore is less. And less is more!
Ultimately this will lead to more blockchain applications across the economy. Including security applications.
You see, that ability to keep a record of every transaction, fully distributed with the magic of the Merkle Tree, will instantly add a bulletproof layer of security to the internet.
Because centralization is the biggest threat to internet security that exists today.
Currently, all of our login information and credit card details are kept within walled gardens of various companies — Facebook, Amazon, Google, etc.
The problem is, these walled gardens are beacons for hackers. It’s telling them exactly where the important information is being held.
The blockchain, however, distributes all the personal information across the network, just as human intelligence is distributed across the world.
It’s not agglomerated in giant data clumps. It provides a timestamped, immutable record of all transactions.
In other words, it’s decentralized. And that is absolutely key to why blockchain will be the foundation for the Internet Reboot.
I’ll cover more about the blockchain — and how Merkle Tree applications will transform the Cryptocosm — in future issues.
The more you learn, the more you’ll realize that the upside potential here is enormous.
Editor, Gilder’s Daily Prophecy