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An Introduction to Cryptocurrency for the Curious Gen Xer

A few years ago, I was completely unaware of cryptocurrency. As someone born in 1978, I qualify as the tail end of Generation X. So even as a concept, digital or techno-currency was probably outside the range of awareness for many people in my age group; most of whom were still learning to adapt to the rapidly evolving world-wide-web. The fact that this new form of currency was also prefixed as ‘crypto’ added to the confusion, and suspicion. It also did not help that the blockchain technology that makes cryptocurrency possible appeared to be conceptually inaccessible to most people outside the domain of computer science or cryptology. Naturally, it all sounded too unfamiliar and “cryptic” to many folks who were maturing into late adulthood in the first decade of the twenty-first century.

professor standing in front of whiteboard with bitcoin, etheruem, and neo logo

My Approach for Comprehension

Now a cautious approach is definitely warranted when it comes to mass-adoption of any new technology. It is usually advisable to do your own research to verify any obvious claims before jumping onboard. This is certainly the advice that the more ingenuous evangelists of cryptocurrency have offered me in my own explorations of digital money. As I eventually learned, cryptology — the science of encoding sensitive information — is nothing new.

Ciphers and codes have been reported in ancient India, Egypt, and Greece since at least more than a  couple of centuries ago. Modern cryptology originated in the late 1960s, with advancements in computational technologies and mathematics. And even though it has been heavily applied to espionage, the entire field goes much beyond that. Therefore as a science, it certainly does not deserve so much paranoia. After all, encryption is the foundation on which all modern security systems pertaining to communication and transnational activities of crucial nature are built on.

In the context of privacy too, cryptology (or cryptography) are far from some arcane concepts that evoke images of an Orwellian surveillance nightmare. In fact, the advocates of cryptocurrency are persuasively claiming that digital money is striving to do exactly the opposite of this. And if we have to be truly open-minded about the future potential of such a tech-currency, we must at least examine these claims for ourselves.

Cryptography and Money

Now in addition to the technical complexity, the other reason for cryptocurrency to be perceived as abstruse by many is the simple fact that it involves money. The inherently complex nature of economics naturally makes us super cautious when regarding any new financial paradigm or system for the first time. Cryptocurrency only adds to this inherent complexity, making it imperative to cultivate a critical outlook on its present and future prospects. This is exactly why education and research into this domain is crucial and the mantra, “Don’t just trust. Verify” is often cited by the well-intentioned proponents of crypto.  

Cryptocurrency as a Paradigm Shift

As has been pointed out frequently on cryptovantage.com, and other resources, cryptocurrency potentially represents a legitimate paradigm shift in the way we run our economic systems. Facebook’s efforts to launch its own cryptocurrency, Libra is a case in point. Other currencies like Ethereum and NEO have already been gaining steady momentum in the investment domain. Furthermore, the corona virus pandemic has added newer dimensions to the future of digital money, with many hailing it as more robust and resilient to market crashes than traditional fiat currencies.

But all this impetus to adopt the new paradigm has not been without its fair share of criticisms. Some of these criticisms are justified, while others stem from the alien nature of cryptocurrency. Regardless, it is only through a proper consideration of its current limitations and concerns that we can hope to design optimal applications from such technologies, particularly if we want to build more resilient economic systems in the future.

Cryptocurrency as a Foundation for a Better World

It is granted that the flip side to most of the optimism around cryptocurrencies is rightly characterized by a healthy skepticism around issues of regulation and trust. The well known fact that cryptocurrencies, like the prototypical Bitcoin, have been widely used in underground transactions related to trafficking of contraband, has certainly raised issues regarding trust and regulation. However, a valid argument could also be made that it is not the technology itself that is to be blamed, but the way we adopt and utilize it which determines whether it is a boon or a bane. For instance, the increasing mistrust in government-controlled fiat economy and the constant vulnerabilities being exposed around political power plays orchestrated around wealth inequality have certainly continued to stimulate an optimistic outlook regarding digital currency in the minds of many people who genuinely intend to use it for creating a better world. 

Cryptocurrency is the new Internet

Needless to say, the complexity of cryptocurrency is related to aspects beyond its computational foundation in blockchain or the ebb and flow of economics. There are also highly relevant social and political elements that have, and will continue, to shape its evolution as time goes by. One way of grappling with the multi-level complexity of cryptocurrency is to look closely at the history of another example of a recent technological paradigm shift — the internet.

What started off as a highly specific network-application created in the twentieth century by the US military for enhancing internal communication, the internet quickly burgeoned into the very substrate on which global communication systems emerged in the twenty-first century. Sure in the beginning it was not immediately obvious how the internet would impact the social, political, and economic dimensions of the human world. In fact, most of the world-wide-web was initially populated by applications ranging from trivially superficial activities to some seriously disruptive social practices.

It would therefore be naive to assume that the internet has been a utopian solution to our worldly problems. Rather it has been quite clear that with the rapid proliferation of this technology we have also witnessed the rise of novel problems in almost all spheres of human existence. Likewise, it is unrealistic to expect a different outcome in the case of blockchain or cryptocurrency either. However, the bigger picture here is not just about the current limitations and shortcomings of cryptocurrency, but about devising creative ways of adopting and utilizing these new technologies and their potential to engineer a better world than we have so far.

The Tempered Adoption of Cryptocurrency

So I am not suggesting that we just jump eagerly on this new wave of trendy tech and start blindly investing in cryptocurrency. I certainly realize that I have a lot of homework to do myself. But we should also not be rigid in our outlook towards these financial paradigms just because they are new and difficult to understand. Most new ideas are uncomfortable for us to accept right away, but it is only when we take up the challenge of figuring things out for ourselves that we come up with unexpected and creative solutions.