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What Does ‘Portability’ Mean in Crypto Terms?

What makes a cryptocurrency portable? The fact that it fits in a cup holder or your pockets? In the world of cryptocurrency, portability has a specific meaning. If you know what interoperability is, then you have a good idea of what portability is already.

Today we hash out a definition of portability in crypto terms.

What is Portability?

In the world of cryptocurrency, portability refers to the friction that is faced when transferring the asset. The easier it is for an asset to move across bureaucratic hoops such as borders, exchanges, municipalities, trade zones, etc. the more portable it is.

An example of a non-portable asset might be Tesla stocks. You can’t move your Tesla stocks to a different wallet or anything like that, it stays in the same spot. As well, Tesla stock isn’t fungible with other stocks, while cryptocurrency is fungible with itself (e.g. Bitcoin is fungible with Bitcoin). In some cases, you may not be able to move Tesla stock onto certain stock exchanges, while Bitcoin doesn’t need to be on an exchange to be traded.

What Makes Bitcoin Portable?

Bitcoin is an asset you aren’t contractually bound to anyone for owning. The Bitcoin network is largely made up of groups; large, private, for-profit data centres, independent node-runners, and whatever remains of independent miners assuming the costs themselves.

Using the Bitcoin network also doesn’t require you to sign a contract or agree to any sort of conditions. Bitcoin’s portability comes from the lack of other parties involved in one’s ownership of it. There’s no paperwork or supervision that goes along with sending Bitcoin across borders. Supervision happens automatically by recording on the public ledger, it’s in the nature of Bitcoin as a program to handle tasks related to trust and verification automatically. Bitcoin’s lack of centralized ownership of the network promotes portability.

So when you want to transfer Bitcoin from your wallet in the USA to Indonesia for example, you don’t have to go through an institution to do it. You transfer the funds from your wallet to their wallet address and the transaction completes. By automating bureaucratic handling, funds have been legally transferred across two different jurisdictions.

Clausewitz and Military Comparisons

Interoperability is a term you may have heard of before. While it may have originated in the IT space, it’s used in any systematic setting, including the military. As well, portability relates to “friction” mentioned previously. Military theorist Carl von Clausewitz coined the term, referring to the difference between ideal operation of a system and real performance.

In human-led bureaucracies, there are a number of points where friction occurs. Compared to automated bureaucracies, which is more or less what cryptocurrency ledgers are, which have far less friction to their operation. Crypto networks aren’t totally frictionless but they do cut down a lot on opportunities for friction to occur.

Interoperability in Crypto

Interoperability refers to the ability for a system to work with other systems. Cryptocurrency has a high degree of interoperability because it is run on blockchains. Blockchains are a great technology because they can attach to the computer programs we already have running and can be implemented in any system, even outside of the world of finance.

It is in this way that cryptocurrency has become so portable. It was designed to be retrofitted alongside existing network infrastructure.

The networks themselves are interoperable as well. For instance the Ethereum network has thousands of different tokens and it’s relatively easy to swap between them. The same could be said for Cardano or Solana.

Of course that interoperability has limits. You can’t easily swap between Ethereum and Bitcoin or Cardano and Solana. In that case you’d have to either use an exchange to sell one crypto and buy a different one or use something called a bridge. Despite those challenges it’s still easier to swap one crypto for another compared to traditional stocks even certain currencies.

The Advantage of Portability

Are you asking yourself – so why is it good to have an asset which is portable? We live in an increasingly globalized world and being able to transfer your assets around the world is pretty useful in such a setting. Portability doesn’t just let you move an asset from one place to another though, it’s also useful for long term investment.

Barring some sort of nuclear disaster or solar flare, computers and electricity aren’t going anywhere soon, which means that an asset which operates on or alongside those systems (like cryptocurrency does) will likely be around long into the future. While it’s true that the tech field has had its booms and busts, the tech field is still here and still growing. As such, technologies related to it will probably also experience growth.

If an asset is highly portable like cryptocurrency is, it’s also likely that new developments will capitalize on the portable nature of the system. Outside of the world of cryptocurrency, blockchain technology is being appended to currently existing systems. So there’s an opportunity to invest in the development of those which have the potential to be critical infrastructure components.

In Summary: Take Only What You Can Carry

While portability is far from the only thing to consider when speculating about the value of an asset, adding some portable assets to an existing portfolio might be worth your while.

It’s also worth considering having a portable asset you can use as a kind of savings account. This removes the limitation of depositing, saving, and withdrawing within the confines of your country of residence.

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