The same goes for renting a house for ten days. You need to be sure that the tenant is good for his money, and the landlord is good for the house and the guaranteed availability during those ten days. Information (copy, value-free) versus assets (unique, value).
The role of the intermediary
And here is the role of the middleman , the broker. The bank, Airbnb, the credit card company, the auctioneer, the notary. They are all traders in trust. They are the linchpin in a transaction, and their only job is to prevent the double spent problem from arising. That is, the payer of a hundred euros actually loses his money – one nanosecond after the transaction is closed – and the recipient gets the money. The middleman is a centralized way to solve the problem.
The intermediary excludes. After all, not everyone has a bank.
The middleman is vulnerable. Ask JP Morgan.
And the middleman slows down. He can't do anything about that, an extra link simply takes time, the settlement lag . The banks used to take a few days, they got rich from that and we couldn't do south korea whatsapp number anything about it. We were dependent.
Sure, you can automate the central intermediary, that has been done. But even then, it costs money, it excludes, it is vulnerable and it will slow you down.
blockchain
Drawing: Sterre Steins Bisschop
Shift from central to decentral
There is another approach to solving the double spent problem. It is the decentralized approach. You shift the trust. It is no longer the linchpin (notary, bank) that gets the trust, but the network. You shift the trust from central to decentral.
And you do that – simply put – by making everything known to everyone. By giving everyone in the system access to the complete history of everything that has happened, the entire accounting. And, very importantly, no one can change anything in this accounting. You can only add a transaction. No one changes numbers from the past, there is no eraser, there is no delete key, there is no typex, there is only the possibility to add a block to the joint and accessible to everyone administration. Everything that has been done is indelible. It is an ever-growing chain of information blocks. It is public. It is an append-only ledger . An accounting in which you cannot change anything, but only add something.