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Tuesday, 9 January 2018

The Hindu Editorial : The Age of Crypto-Economics

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The Hindu Editorial : The Age of Crypto-Economics

Title: The age of crypto-economics

(The fundamental value proposition of the blockchain is that it eliminates the need for trust.)

  • The Finance Ministry recently issued a statement warning against investing in bitcoin and other cryptocurrencies (CCs). 
Why the distrust?

Two aspects of the bitcoin phenomenon have attracted great interest:

(1) The challenge it poses to states and central banks

(2) The potential of its underlying technology to unleash a new wave of creative destruction.

It would be safe to say that the world’s top central bankers have finally realised the futility of trying to control CCs. They are preparing to join them — by issuing their own Central Bank Digital Currency (CBDCs).

Why the concept was created??

The global financial crisis of 2008-09 raised a simple question:

what option do people have if banks are not to be trusted? A man (or a group of people) named Satoshi Nakamoto provided an answer: a peer-to-peer, ‘trustless’ electronic cash system based on a technology called blockchain.

Why is it attractive?

  • It solves the problem of double spending.
  • It offers economic incentives.
  • It differentiates CCs from Fiat currencies. 
  • It is inflation proof.
Blockchain, a website that tracks the market capitalisation of cryptocurrencies, lists 1,379 currencies.

For instance,
Ethereum, = you can set up an application that enables people to rent out idle storage space on their laptop. Someone who needs cloud storage can pay you directly, instead of paying Amazon, a leading cloud storage intermediary.

Market capitalisation

Storj = $298 million

Ethereum = $112 billion

Bitcoin = $259 billion


Clearly, technological innovations cannot substitute for the hard job of reducing socio-economic disparities through political mobilisation. If blockchain is getting traction, it is because it works with, rather than against, market logic.

Vocabulary words:

Pose = to present, create (बना हुआ)

Unleash = become unrestrained (उजागर करें)

Futility = pointlessness, uselessness (निरर्थकता)

Flaw = defect, blemish (त्रुटि)

Ledger = a book of financial accounts (खाता बही)

Timestamp = a digital record of time of occurrence of a particular event

Vocabulary words:

Decentralise = transfer from central to local government (विकेन्द्रीकृत)

Immutable = unchangeable (अडिग)

Disdain = disrespect, contempt (तिरस्कार)

Speculative = imaginary or involving a high risk of loss (काल्पनिक, विचार योग्य)

Untether = untie (बंधे हुए को खोल देना)

Irresistible = too powerful to be resisted (जो रुक न सके)

Frenzy = madness, Hysteria, uncontrolled wild behaviour (सनक)

Analogous = comparable (अनुरूप)

Inconceivable = unbelievable, incomprehensible (समझ से बाहर)

Render = provide or give (प्रतिपादन)

Disparity = a great difference (असमानताऐ)

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