Onchain is the new Online

🌐 Onchain is the new Online

Our Life Onchain

I know...you just started getting used to your life online. You buy everything online. You're keep up with your friends via social media. Honestly, when was the last time you set foot in a bank?

So what's the difference between online and onchain? Why are we moving that direction?

Onchain means some, most, or all your data will be stored on a public database called a blockchain.

It does NOT mean your data is now a volatile crypto asset.

Until now, you've likely thought of blockchain as Bitcoin and crypto, which it is. But it's also a natural evolution of technology. One that we'll use for financial data, as well as health, ownership, education, and creative information.

How did we get here?

Right now, most of your important data is stored on various databases, owned and managed by companies and organizations

You financial data includes the money you have, the investments you've made, the things you own, and your earning history. This data is stored on the servers of banks and other financial institutions.

It's also stored on the databases of organizations like your county or state, for the deed to your home and car. It's stored on the IRS and Social Security databases to track your earnings and taxpaying history.

Before the time of computers and the Internet, we tracked financial data, and all data, using paper. We stored it in filing cabinets and on large ledger books.

You owned an asset because had a piece of paper proving it.

But tracking data with paper isn't efficient. Computers, databases, and the Internet gave our data the ability to interact.

For example, I can use my online banking app to pay my credit card bill. I could also use that credit card to pay my Netflix subscription, and Netflix will track what I watch and for how long. They'll use that information to create new shows.

Why do we have siloes?

We moved to the current system of siloed databases because setting up that infrastructure wasn't cheap. The storage of the data had to be funded, and the companies and organizations that spent the money need to be compensated.

Paying for access to my data has been the way they turn their investment profitable. I pay the bank to store the data that represents my money. It isn't some monthly custodial fee. My payment is allowing the bank to lend out my money.

Once I make a deposit, it's the bank's money to do as they please (within regulation).

Likewise, my doctor keeps my health data. If I want to use that information - to qualify for life insurance, for example - I have to ask permission from the doctor, and possibly even pay.

To be fair, we've developed APIs to more easily view and move data, so it can better interact and be more efficient.

So here we are

A series of independent, siloed databases connected via APIs with the permission of the database owner. We call this The Internet.

Our lives are easier and more efficient when all our data is connected electronically. But those storing the data get to place restrictions on our access.

We put up with the restrictions because we didn't have an alternative. Just like we put up with papers, ledgers, and filing cabinets before there were digital alternatives.

Public blockchains are giving us the alternative.

Our data - financial, asset, health - can be stored on this digital ledger. And there isn't a central company managing the database.

It's stored and managed by millions of interconnected computers. The transactions go according to certain rules, which we all know because the code is open-source.

The validators (the ones storing the data) are getting compensated in crypto. But they don't own the network. They can't limit access or transactions. They can only help process according to the code.

Why will we move to public blockchains?

We'll have more control of our own data, including our finances.

We'll be able to send, receive, invest, borrow, and lend without having to ask permission. We'll also have the control to share data, like health, earnings, and asset ownership with third parties.

Where else have we seen this move to more control?

The early internet days involved logging in through a service provider like Compuserve or AOL. Those providers controlled the content and services.

Later, broadband and then WiFi became ubiquitous, and we can view anything on the Internet.

We've also seen the impact of streaming media services. We easily moved from cable TV to Netflix, Hulu, Amazon Prime, etc. I'm actually paying more than I ever did for cable, but I can watch what I want, when I want.

The Future Onchain

Once our data is onchain, and we get accustomed to managing and controlling it, the fun will really start.

The interaction of onchain money is what we refer to as Decentralized Finance, or DeFi.

We're seeing the growth of Decentralized Social Media on Farcaster.

At first we’ll only see copies of traditional systems and opportunities, but built on blockchain technology. As we get more comfortable, we’ll slowly add new options.

When Amazon started selling books online, we wouldn’t have guessed the evolution would take us to ordering a car to pick me up from the airport via my phone.

We’re already seeing funds move onchain.

BlackRock tokenized a money market fund which has been successful. The President of Franklin Templeton, Jenny Johnson, says all funds will be tokenized.

Moving asset like these onchain will create more efficiency, transparency, and instant settlement.

Of course, we’re not even sure of all the changes we’ll see from more onchain funds, because we don’t have enough adoption yet. But these monsters of finance are excited about the opportunities. They aren’t trying to FOMO and turn their funds into volatile crypto assets. They want to use the evolution of blockchain technology to create efficiencies.

You’ll have to learn wallet technology, which is how to interact with the public blockchains. You’ll eventually get paid, borrow for a home, and invest without the need to have a bank account.

The wallet will be the universal sign in and control, and we’ll discuss that in a future article.

We discussed Stablecoins last week, and the excitement when we start using programmable money.

It gets even bigger when we let that programmable money interact.

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Have a great week

Adam