By Bennett Holloway
Ye, formerly known as Kanye West, recently took to Instagram posting a handwritten note which said, “My focus is on real products in the real world…Don’t ask me to do a NFT…Ask me later.”
Meme coins, price predictions and celebrity hot takes make the discussion surrounding blockchain-based digital assets a rollercoaster of entertainment and intrigue, but Ye’s hesitancy regarding NFT’s points to an underlying philosophical question that deserves more airtime in our musings about all things Bitcoin, crypto, NFTs and beyond.The question is this: Where does our collective trust lie?
Trust is intrinsic to contracts and financial activity mediated by third parties such as banks and payment processors. However, the advent of Bitcoin shook the foundation of that trust.
The Bitcoin network was released in 2009 utilizing distributed ledger technology (DLT) under the premise of “solving the double spend problem.” Fundamentally, Bitcoin allows individuals to execute digital cash transactions directly from peer to peer, rather than with the facilitation of a trusted-third party.
Subsequently, the DLT which Bitcoin’s network operates with circumvents third parties and has ushered in a wave of innovation. Since 2009, developers have utilized DLT and smart contracts (automated, self-executing contracts governed by code) to replicate many other functions commonly facilitated by legacy financial systems. The totality of these applications is known as Decentralized Finance (DeFi), and its space allows owners of digital assets to borrow, lend, trade, earn interest and much more. It’s important to note that DeFi activity is distinct from investing in digital assets or cryptocurrencies such as Bitcoin, Ethereum or Doge Coin from an online brokerage such as Coinbase or Robinhood, as they are centralized exchanges. DeFi has no such middleman. (Now would be an appropriate time to disclose that I’m not a financial adviser and that this article is in no way, shape, or form financial advice. Just covering my bases.)
The DeFi space was developed under the premise of being an alternative source of trust to big banks and the other major financial powers that be. This sentiment unleashed a movement of innovators who sought solutions to displace this central trust of, who they deemed to be, the abusive financial juggernauts of the world. The value proposition of DeFi is that trust is distributed among a worldwide, thus decentralized, network of users and secured by code which renders transactions secure and tamper-proof.Trust lies in the collective network and code is law. Herein lies a paradigm shift in social philosophy of money.
Currently, the DeFi space’s Total Value Locked (TVL) is around $250 billion, which is to say that it stands as a legitimate alternative for those who prefer their trust distributed.
So, where does our collective trust lie? Will we entrust code-governed networks that enable peer-to-peer financial activity? Will we remain steadfast in entrusting third parties to facilitate our financial activity as we have up until this point? Is there somewhere in between where the legacy financial system can ensure public trust by implementing DLT and smart contracts?
As individuals, reaching a decision to these questions is straightforward: You use what you believe in. But the collective adoption question is a weightier matter for the future of finance.
I’d love to engage in this question with anyone and everyone, and I believe a good place to start would be gathering some data to gauge the Harding community’s sentiment surrounding these two alternatives.
If you believe that Bitcoin and DeFi hold the superior philosophy of trust, an apt way to express this to me would be sending a minimum amount of 0.25 $BTC to bc1qchj4tujl2rnt9rujatcerd5pn9kj7r9rtqahce. If you second the sentiment of Ye in saying “ask me later” and prefer to trust financial intermediaries, let me know by venmoing a few bucks to @Bennett-Holloway-1.
However, if you’re like me, and believe the path forward isn’t as black and white and will likely entail some integrated adoption of two systems, let’s catch up on campus and share our thoughts in conversation. Good old-fashioned face-to-face conversations will never be replaced… unless the metaverse absorbs the entirety of our daily life.