Cryptocurrencies

“Zero Knowledge”, contrary to what it sounds like, is actually quite interesting and fun. It might even be a solution to our long standing problem of validating the world’s transactions without a trusted third party or government or central bank. If you Google for the terms Zero Knowledge and Blockchains, you will be flooded with whitepapers, articles, explainers, investment advice, and everything in between. What does Zero Knowledge (ZK) even mean? Let me start with a toy example, and then we can work our way up to world peace. ...

Define Governance : the act or process of governing or overseeing the control and direction of something (such as a country or an organization). In this article, I will focus on whether any organization can have decentralized governance, and what does that even mean? And how is this related to cryptocurrencies. Let’s start with a very basic organization, and see whether it can be governed in a decentralized way. What is an organization anyway? Say some people want to pool their money and use it for charity. We have ourselves a rudimentary organization. During the organization’s inception, the founders make some bylaws – for example: for any charitable donation to happen, say 2/3rd of the remaining capital in the pool has to approve it. These bylaws are written down formally in a “human language” (the language being a “human language” is important). The organization will register itself with the government of that geographical area (let’s say, a country). In case disputes arise in the future, the courts of that country will interpret the bylaws of the organization, apply the relevant common laws of that country, and with the threat of force, ask the members of the organization to abide by the court’s judgment. We kind of get how this works. ...

DeFi stands for Decentralized Finance. Decentralized: Ideally, any single entity should not be able to stop the process or program or system in question. It’s running on some unstoppable system where anyone can execute operations. Finance: Savings, Loans, Exchanges, Margin Trading, Synthetic Assets (Equities, for example), Lotteries, Insurance, Collateralized Debt Obligations (why not?), and such. Before the advent of Bitcoin/Ethereum, financial products were run on a computer that some entity controlled. This entity had a physical address, and could be visited by law enforcement or regulators or more generally, whom I call “men with guns”. Bitcoin/Ethereum run on so many computers that it’s not possible for men with guns to stop it. Smart contracts running on Ethereum are hard to take physical control of – and stop, or modify unilaterally by men with guns. This is the decentralization that we are interested in. Because of this, we have “unstoppable programs”, at least in theory. ...

In 1996, a federal mint employee was eating bananas near where US dollar bills were being printed, and a Del Monte sticker on one of the bananas fell into the printing press and got under a transparent layer of a $20 bill. The Del Monte note was created. This particular $20 note is a collectible in some circles and has been auctioned many times before, and most recently for around $400,000. That the serial number of the note is printed over the Del Monte sticker makes this even cooler, and kind of unforgeable, and a fungible token became a non-fungible token. ...