Everything will be based on digital contracts, and it shouldn’t shock us

Photo credit: Elnur Amikishiyev / 123RF

This article is part of Tech in Asia’s partnership with The Jay Kim Show where we publish the revised transcripts from the show’s podcast interviews with top entrepreneurs. This is heavily revised from the original show transcripts. For the full interview, go here.

Chris Snook is managing partner at Launch Haus and the chairman and founder at the World Tokenomic Forum. He is heavily involved in the blockchain/crypto space. In this interview, he shares the pitfalls we should be aware of in blockchain and the exciting opportunities we should look out for.

What’s going on in the crypto space right now?

Just to level set, I think the state of the market is confused. Let’s define blockchain first.

Blockchain is a storage medium. It is a source of what we will call “trustless truth.” Blockchain is not an AI. It is not a decision-making tool. It’s not a computing platform. And I think that’s key because when people mention blockchain, they often say things that it isn’t. They say it can do things that it doesn’t do.

Blockchain is not an AI. It is not a decision-making tool. It’s not a computing platform.

So when people say, “Blockchain’s efficacy in certain verticals isn’t valuable because it’s just a crappier storage medium than what currently exists,” they’re wrong in one way but right in another. They’re right if what they’re talking about is just blockchain itself—slapped behind a firewall, replacing some other on-premise storage system or database solution.

But they’re missing the whole point. They don’t understand what bitcoin, cryptocurrency, and blockchain applications are. Blockchain applications turn this storage medium into something that is governed by business logic and rules (i.e. smart contracts and things like that). So when you talk about debits, credits, and a distributed ledger technology, you’re tracking debits, credits, tokens, or smart contracts that can be stored on a blockchain.

Just some more vernacular: People often confuse currency with money, but there is a fundamental difference. Currency is nothing more than a ledger balance. When we think about dollars, yen, or what have you, we think it’s money because it’s paper.

But fiat currency is a decree and it’s arbitrary. It could be printed ad nauseam and it’s backed by nothing. It’s not real. The only thing that makes it real is that there is an army that enforces the use of it. But it’s just the faith that it’s going to be transacted and accepted that makes it valuable.

Basically, fiat currency is no different than cryptocurrency. So, when people say bitcoin is not real, they’re not lying. You can’t invest in ledger balances. I can speculate in cryptocurrency and fiat currency, but I can’t actually own a ledger balance.

Ultimately, we will probably have a crypto that becomes a reserve digital currency. The question is whether that will be decentralized like bitcoin, manipulated by special drawing rights, or both.

Lastly, there’s a lot of confusion around tokens, particularly ICOs, which should be called “initial token offerings” because what we’re selling is tokens. Tokens are bartered, while currencies are paid. That’s a big, simplified definition.

Tokens are a form of contract back in English common law. It’s an agreement for a value at a future date. It’s like a bearer bond. That’s what has regulators and everybody so freaked out.

How is this whole thing going to play out in the future?

What advice would you give aspiring blockchain entrepreneurs?