Blockchain was a precursor. Infrastructure that enables AI systems to function as economic actors.

I’m not entirely sure how to fully articulate it yet. But one example makes it concrete: stablecoins. They’re the first form of internet-native money, which makes them the first form of money AI agents can actually use.

This thought has been stuck in my head. So I’ve decided to explore it. Pact is where that exploration begins.

What is Pact?

Pact is a minimal primitive for structuring agreements that require judgment to evaluate.

That sounds abstract, so let me break it down.

Smart contracts are great at deterministic conditions. “If X happens, release Y.” The logic is computable, the outcome is binary, and no interpretation is needed.

But most real agreements aren’t like that.

• “Deliver quality work”
• “Complete the feature to spec”
• “Act in good faith”

These require judgment. Someone (or something) has to look at what was delivered and decide, “was this good enough?”

That’s what Pact is for. It’s a schema for encoding commitments in a way that external resolvers (human, AI, or hybrid) can evaluate. Not a replacement for smart contracts. A complement. For everything smart contracts can’t handle.

Why does this matter?

If AI agents are going to transact, collaborate, and coordinate, they need more than money. They need trust infrastructure.

Think about what happens when an AI agent hires another agent (or a human) to complete a task:

1. They need to agree on terms
2. Funds need to be held in escrow
3. Work needs to be delivered
4. Someone needs to verify the work was done
5. Payment needs to be released (or disputed)

Steps 1, 2, and 5 are solvable with existing crypto primitives. But steps 3 and 4 is where things break down.

How does an AI agent verify that “quality work” was delivered? How does it evaluate whether acceptance criteria were met when those criteria involve nuance, context, or interpretation?

You can’t compute your way through ambiguity. So you need arbitration.

That’s the gap Pact tries to fill. Structured commitments with pluggable resolution.

The shape of a pact

A pact isn’t complicated. At its core:

• Parties: Who’s involved (client, provider, could be humans, agents, or both)
• Terms: What’s being agreed to, including acceptance criteria
• Stakes: What’s on the line (escrow, reputation, access)
• Resolver: Who evaluates fulfillment (AI, human, DAO, oracle)

The acceptance criteria are key. They’re inspired by software development practices. Discrete, observable conditions that define “done.” Clear enough for a machine to evaluate, flexible enough for real-world work.

Here’s what a simple pact looks like:

{
   "pact": {
      "version": "0.2",
      "parties": [
         { "id": "0xClient...", "role": "client" },
         { "id": "0xProvider...", "role": "provider" }
      ],
      "terms": {
         "description": "Design a logo for a podcast",
         "acceptance_criteria": [
            "Delivers 3 distinct concepts",
            "Includes source files",
            "One round of revisions included"
         ]
      },
      "stakes": {
         "type": "escrow",
         "amount": "200",
         "currency": "USDC"
      },
      "resolver": {
         "type": "ai",
         "id": "0xResolver..."
      }
   }
}

Nothing revolutionary in the structure. The key thing is what it enables, machine-readable agreements with external arbitration built in.

AI as arbitrator

This is where it gets interesting.

Traditionally, disputes are resolved by humans. Courts, mediators, customer support. Slow, expensive, doesn’t scale.

But if the terms of an agreement are structured clearly enough, maybe an AI can evaluate them. Okay, not perfectly, but probably well enough. And for low-stakes, high-volume transactions between agents, “well enough” might be exactly what’s needed.

Imagine an AI resolver that:

• Reads the pact terms and acceptance criteria
• Reviews the submitted evidence
• Evaluates each criterion: met or not met
• Returns a verdict with reasoning and confidence scores

The structure of a Pact is designed to make this possible. Clear criteria, structured evidence, machine-readable schema.

Of course, AI resolution isn’t appropriate for everything. High-stakes disputes still need human judgment. That’s why Pact supports multiple resolver types, AI, human, DAO, oracle, or hybrid. A Pact doesn’t care who resolves. It just defines the interface.

Why I’m building this

I should be clear about what I am and what I’m not.

I’m not a machine learning engineer or an AI researcher. I’m a builder. I’ve spent years working in the blockchain space, most recently on stablecoin infrastructure. I understand how to connect financial primitives to software systems.

What I see is a gap.

AI agents are getting more capable. They can reason, plan, and execute. But they can’t yet participate in economic coordination the way humans do. They can’t enter agreements, build reputation, or resolve disputes.

Stablecoins solved the money problem. Pact is my attempt to solve the agreement problem.

I don’t know if this is the right approach. The spec might be wrong. The abstractions might be off. But I think the direction is right: AI agents need trust infrastructure, and that infrastructure needs to be open, composable, and machine-native.

What comes next

Pact is just the beginning.

Over the next few posts and experiments, I’ll be building things that expand on this idea. Testing the spec. Building tooling. Seeing what breaks.

Some questions I’m exploring:

• How do agents discover each other and negotiate terms?
• What does reputation look like when it’s portable across contexts?
• How do you bootstrap trust in a system where any party might be a machine?
• What happens when agents can enter agreements, escrow funds, and resolve disputes, all without human intervention?

I don’t have answers yet. But I have a direction.

If you’re interested in following along, the spec is live at pact-spec and the repo is on GitHub.

And if you have thoughts, critiques, or ideas I’d genuinely like to hear them.

Let’s see where it goes.

If AI agents are going to become real economic actors, they need internet-native money that operates at machine speed and without permission.

That money is stablecoins.

The Limits of Human Financial Systems

Modern financial infrastructure was built for people.

Bank accounts assume legal identity, jurisdiction, operating hours, manual approval flows, and compliance processes designed around human behavior. Even modern fintech abstractions still resolve to the same core constraints: accounts, intermediaries, reversibility, and trust based on institutions.

AI agents don’t fit into this model.

They don’t sleep. They don’t operate within a single jurisdiction. They don’t submit forms. They don’t wait days for settlement.

And most importantly, they can’t open bank accounts.

Trying to force autonomous systems into legacy financial rails is just inefficient and fundamentally caps what they can do. Any system that needs permission, human oversight, or institutional trust at every step becomes a bottleneck once software starts acting independently.

If AI agents are to coordinate, transact, and execute tasks on their own, money needs to look different.

Stablecoins as Internet-Native Money

Stablecoins are usually discussed as a crypto use case for payments or remittances. That framing is true, but incomplete.

Stablecoins are better understood as internet-native money:

• They’re programmable
• They settle globally
• They operate 24/7
• They’re composable with software
• They’re bearer instruments, not permissions

But most importantly, they are wallet-native, not account-native.

This distinction matters.

A wallet can be controlled by a human, a multisig, a smart contract, or an autonomous agent. No onboarding department required. No business hours. No intermediary deciding whether the transaction “makes sense.”

From the perspective of an AI agent, stablecoins are not “crypto.” They are simply the first form of money that software can natively hold and use.

In that sense, stablecoins aren’t just internet money, they are AI-native money.

When Software Becomes an Economic Actor

This shift has already begun.

Experiments like autonomous agents being granted funds and instructed to act within constraints, sometimes even defending those funds through reasoning, show us a future where software is trusted with capital, objectives, and autonomy.

These systems don’t really need money as a store of wealth. They need money as a coordination tool.

To:

• Bid for tasks
• Pay for services
• Escrow funds against outcomes
• Incentivize other agents or humans
• Execute conditional logic tied to real-world delivery

Once you accept that agents can hold wallets, the next questions become clear:

• How do they enter agreements?
• How is performance verified?
• How are disputes resolved?
• How is reputation accumulated?
• How is trust established without central intermediaries?

Money is only the first primitive but it’s the one everything else builds on.

Work, Payments, and Trust Collapse Into One System

As AI systems accelerate, the value of work shifts away from raw execution and toward coordination.

The highest-leverage actors are no longer just individuals, but operators (humans who orchestrate multiple AI systems) and increasingly, the agents themselves.

In this world:

• Work is programmatic
• Payment is conditional
• Trust is composable
• Reputation is portable

This is why escrow, on-chain agreements, and programmable payments start to matter much more than marketplaces or platforms.

Instead of trusting intermediaries, systems encode trust directly into infrastructure:

• Funds are locked until conditions are met
• Outcomes are verifiable
• Disputes follow predefined resolution paths
• Reputation accumulates across contexts, not platforms

You don’t need to imagine a fully autonomous future to see this forming. You only need to look at how quickly coordination becomes the bottleneck once execution is automated.

The Direction Is Clear

The mistake is to think that this future arrives all at once.

It will emerge through narrow, practical use cases:

• Escrowed payments for clearly scoped tasks
• AI agents operating within constrained mandates
• Hybrid systems where humans, operators, and agents collaborate
• Stablecoins used quietly as infrastructure, not ideology

What changes is not just how work is done, but who is allowed to participate economically.

Once software can “hold money”, enter agreements, and build reputation, the definition of an “economic actor” expands.

And the financial systems that win won’t be the ones that are loudest or most speculative but the ones that are designed for autonomy from the start.

We don’t need to wait for general intelligence to rethink money.

We only need to accept a simpler truth:

Autonomy requires financial primitives that don’t assume a human on the other end.

Stablecoins probably aren’t the end state, but they are the first form of money that doesn’t care who or what is holding it.

And that makes them inevitable.

The EU’s MiCAR came into force in late 2024, which set the standard for crypto-asset rules and brought e-money tokens under supervision. Hong Kong followed with a stablecoin licensing regime that took effect August 2025, requiring issuers of fiat-referenced tokens¹ to get approval from the Hong Kong Monetary Authority. In the U.S., the GENIUS Act landed in July 2025, mandating full fiat backing and federal oversight. And in the UK, draft rules are on the table for “qualifying stablecoins,” covering issuance, redemption, and custody.

Basically, stablecoins are here to stay. And with rules now in place, banks and fintechs have a greenlight to get into the game.

Over the past few months, headlines about these new laws and new stablecoin launches created a lot of hype, especially from traders celebrating the market pump. But this is bigger than market sentiment. It marks the move from suppressing stablecoins to shaping them, a shift that matters more than price action.

Why do we even need stablecoins?

The short answer: if you live in the West, you probably don’t.

Stablecoins are designed to hold their value ² unlike Bitcoin or ETH, which move up and down. That makes them useful as digital cash, something you can save, spend, and move quickly on blockchains. They’re the building blocks for lending, payments, and new financial tools.

But if you already have a bank account in pounds, euros, dollars, or yen, that doesn’t change much for you. You can tap your card for coffee, send money to friends easily with online banking, and earn interest through savings accounts. In other words, your financial system already works.

So who actually needs them?

The people who actually need them

It’s not the crypto natives ³ using them to hedge volatility or access DeFi, that’s another story.

The people who really need stablecoins are in places where financial infrastructure is broken. Imagine going to a bank to withdraw your own salary or life savings, only to be told you can’t because of capital controls ⁴. That’s a reality in parts of the world and in those situations, stablecoins aren’t a curiosity. They could be a lifeline.

But here’s the problem, when governments can’t manage their own money responsibly, how can they be trusted to oversee or worse, potentially issue stablecoins? That’s where the difference between centralized and decentralized models matters.

Trust the Issuer or Trust the Code?

Stablecoins generally fall into two buckets, centralized and decentralized.

Centralized stablecoins are issued and controlled by a single entity. That entity could adjust supply, freeze funds, or decide who gets access. Similar to how things already work with traditional institutions. The trade-off is simplicity: they’re easy to understand and usually backed 1:1 with reserves. The biggest examples, USDT(Tether) and USDC(Circle) are centralized, with Circle and Tether holding equivalent dollars in reserve for every one of their stables in existence.

Decentralized stablecoins, on the other hand, run autonomously on-chain. They aren’t controlled by one company, and no single entity controls access. That makes them harder to tamper with but also more complex and sometimes fragile. And we’ve seen what it looks like when decentralized models fail to hold their peg in the past.

Both types have a place. In high-trust environments, centralized stablecoins can be efficient and effective. But in low-trust environments, where institutions can’t be relied on, decentralized models matter. Decentralization for its own sake is pointless, but decentralization as a shield from failure or abuse is essential.

The infrastructure gap

There are now hundreds of stablecoins out in the wild. But in reality, only a few dominate, mainly USDT and USDC. But even though they’re all meant to represent “a dollar,” ⁵ they don’t all move easily between each other.

That creates two problems:

1. Too many versions of the same thing (Fragmentation). Imagine if Starbucks only accepted one type of $20 note and your grocery store only took another. That’s what stablecoin fragmentation is like.
2. They don’t talk to each other (Interoperability). Switching between them, or between different currencies like USD and JPY, is clunky and expensive. The result? People often end up going back through banks and centralized exchanges just to make simple transfers. That defeats the whole point of using stablecoins as digital cash.

What’s missing is the digital equivalent of foreign exchange that works instantly, on the blockchain, without middlemen. Until that exists, stablecoins won’t work well as money. They’ll just be alternate versions of dollars that don’t quite connect.

The Future

Once the infrastructure gap closes, the real consumer innovation will come quickly.

Think about what neobanks did to high street banks, stablecoin-native products will do the same to legacy fintech. With an on-chain FX layer and regulatory clarity, we’ll see services emerge that feel like “less than a bank, but somehow more.” Accounts, cards, payments, and savings but all digitally native, running on open rails.

We’re already seeing this with products like Gnosis Pay. Combine that with regulatory green lights and interoperable stablecoins, and blockchain stops being a backend curiosity and starts acting like a global settlement layer. SWIFT then becomes optional…

Stablecoins are mainstream now. But the real story isn’t just who issues them. It’s what kind of financial system we build on top and whether it actually serves the people who need it most.

But as we make things easier for ourselves, are we making ourselves weaker?

Not physically, cognitively?

Are we outsourcing the mental effort needed to strengthen or even maintain our intelligence?

It’s something I’ve been thinking about a lot. Don’t get me wrong, I’ve had a lot of fun using and exploring a lot of these new AI tools and have seriously boosted my productivity with their help. I now use Cursor daily for writing code, I’ve leaned into using tools like ChatGPT, NotebookLM and Perplexity, in my day-to-day. It’s an exciting time (at least for me) and these tools are genuinely powerful.

But they’re also frictionless…and that’s where the concern starts.

Because when something becomes too easy, we risk skipping the hard necessary work that turns information into understanding.

We’ve Seen This Before: Move Fast, Fix Later

Every time a new technology comes around, we rush to unleash it on the masses, and integrate it into everything. Every SaaS tool now has AI integrated. LG built an AI powered TV. Samsung released an AI enabled fridge.

Who really needs an AI-powered fridge?

But that’s beside the point.

Let’s be clear, I’m not saying that moving fast with technology is a bad thing, speed can unlock innovation. But there’s a familiar pattern: we roll out the tech, celebrate the convenience, and only later ask, “What is this doing to us?”

Social media gave us unlimited connection, and a crisis of attention. Smartphones gave us portable computing and an always-on culture.

Now AI might be delivering the next unintended consequence, a slow erosion of our ability to think¹.

The Muscle We’re Not Using

Problem-solving, critical thinking and focus. These are mental muscles. The more we use them, the sharper we get. Think about being in the gym and doing resistance training increases hypertrophy (muscle growth). But like any muscle, if we stop using them, they atrophy (weaken and shrink).

When we rely on AI to do all the heavy lifting, is this what we’re risking? I’ve noticed in myself, the small resistance to thinking something through when I know I can just ask ChatGPT. The temptation to skip the mental workout. The temptation to skip the struggle.

Struggle is underrated and I fully agree with the statement “struggle is the best teacher”. It’s where understanding lives. When you figure something out the hard way, you don’t just get the answer, you get the learning. You earn clarity. Think about the last time you struggled to learn or do something and had to use your head to figure it out. What was your experience?

Now imagine a generation growing up rarely having to wrestle with hard ideas on their own.

That’s not a tech issue. That’s a cognitive shift.

From Digital Tools to Digital Dependence

The Financial Times recently asked whether we’ve reached peak brain power citing OECD data showing a decline in reasoning and problem-solving since 2012. Not just in teens, but adults too.

It aligns with a broader shift in how we interact with information.

We used to browse. Now we scroll. We used to seek. Now we’re fed. We used to question. Now we consume. The shift is subtle but powerful. What once required effort is now automated and handed to us.

This isn’t just about LLMs. It’s about the wider digital environment that encourages passive interaction. AI just happens to be the most advanced form of that so far.

We’re not incapable. We’re disengaged. And the more we outsource thinking without reflection, the less practice we get in the most human skill of all, thinking.

The Importance of Friction

Friction isn’t a bad thing, it’s usually the catalyst for growth. When you struggle to write, you become a better communicator. When you sit with a difficult question, you sharpen your mental edge. Friction is where skill is forged.

AI removes friction. That’s its superpower and its risk. When everything becomes easy, the hard stuff like resilience, discernment, and focus starts to fade.

So When Do We Feel the Impact?

The short answer: we already are.

The longer answer: it’ll likely show up gradually in our shrinking attention spans, discomfort with uncertainty, and increasing dependence on summaries and “quick takes.”

You’ve probably felt it yourself. The urge to skim, the itch to check your phone, the resistance to sitting with a challenging idea.

I’m not a neuroscientist. This isn’t a peer-reviewed claim. But I’m not the only one sensing the shift.

The tech is still new. But like all powerful tools, the real effects may show up long after the initial hype fades.

What Do We Do?

This isn’t a call to abandon AI. It’s a call to use it with intention.

If you ignore AI, you risk being left behind. But if you use it without reflection, you risk letting it shape how you think without even realising. That trade-off isn’t hypothetical, it’s happening in real time, and for most people, it’s invisible.

The goal isn’t to be anti-AI. It’s to be pro-agency.

Just like we’ve learned to care for our bodies, brushing our teeth, eating (mostly) well and going to the gym, we now need daily habits to protect and sharpen our minds. Especially now, in a world where the default is outsourcing thought.

This might mean:

• Reading long-form content without skipping to the TL;DR.
• Making notes to process your own thoughts before outsourcing your thinking to an AI model.
• Wrestling with a hard concept before prompting for an explanation.

None of this means rejecting help, it just means choosing when to struggle first and when to reach for support.

And let’s be real: not everyone will feel the impact equally. People who aren’t familiar with how these systems work, or who haven’t built strong habits around focus and critical thinking, may be more vulnerable to their downsides. That’s not a personal failing. It’s a systemic challenge.

So here’s a question: Is it crazy to suggest that the people building these tools, engineers (like myself), designers, product managers, consider the ethical and cognitive impacts of what they create?

We expect that kind of responsibility from doctors. From educators. Even from architects².

If software is shaping how billions of people think, feel, and behave…shouldn’t builders take some responsibility too?

Cognition Culture

There’s no point raising concern without offering a way forward.

One powerful practice is what Cal Newport calls “deep work” — carving out space for focused, difficult, and meaningful tasks. Research consistently shows this kind of effort boosts concentration, learning, and problem-solving. This article from Asana talks more about this.

Other proven habits include:

• Deliberate practice: pushing your limits to stretch your capability.
• Physical exercise: especially aerobic movement, shown to boost executive function.
• Mindful journaling: processing your own thoughts deepens clarity and reflection.
• Reading physical books: especially challenging material, it forces presence and builds endurance.

These aren’t just wellness tips. They’re mental hygiene. Habits that protect and develop your mind, just like brushing your teeth protects your smile.

We built a fitness culture around the body. Now we need a cognition culture for the mind.

Because AI isn’t going anywhere. But how we meet it, passively or actively, will shape the kind of thinkers, creators, and humans we become.

But what if ancient wisdom could help us cut through all the noise and find clarity in this chaos? Stoicism, a 2,000 year old philosophy, might have the answers we need.

The Basics of Stoicism

At its core, Stoicism focuses on one basic idea:

Separate what you can control from what you can’t.

This just sounds like common sense, right? But how often do we waste time and energy stressing about things outside our control? The Stoics believed that by focusing only on what’s within our power (our thoughts and actions), we could find peace of mind.

Stoicism has definitely gotten more popular in recent years. Why? It’s practical. We live in times where life sometimes feels unpredictable and overwhelming, people are turning to timeless Stoic principles like resilience, perspective, and living in alignment with virtue. These ideas aren’t just abstract philosophy, they’re tools for everyday life.

Applying Stoicism to Everyday Life

So, how does this ancient philosophy fit into a modern, tech-driven world? Here are a few practical examples:

1. Dealing with Constant Notifications
   Our attention is one of the few things we can truly control. Instead of letting endless pings and notifications dictate your day, practice intentional focus. Turn off non-essential notifications, or be like me and just turn of all notification. Set boundaries, and remind yourself:

   You control your attention, not your apps.

2. Managing Career Uncertainty
   Tech moves fast, and in this day and age job security can feel fleeting especially with the recent tech layoffs. Stoicism teaches us to embrace impermanence. Change is inevitable, so instead of fearing it, prepare for it. Invest in lifelong learning, adapt, and trust in your ability to react to challenges.

3. Reframing Failure
   The Stoics believed that failure isn’t the end, it’s a stepping stone. Every setback is an opportunity to grow. Missed a promotion? Lost a client? Try to shift your perspective. What can you learn from this, and how will it make you better? One of my biggest breakthroughs came from analyzing a failed project, identifying gaps in my approach, and applying those lessons to future projects. This has become a regular practice for me. When something doesn’t go the way I hoped, I reflect on the experience and look for ways to improve for next time.

Technology and Stoicism

Some of today’s best productivity tools align well with Stoic principles. Time-blocking, for example, is basically the art of controlling your schedule. Focus apps? They’re tools for mastering your attention. Even the growing trend of digital minimalism feels like a modern take on Stoic values, removing distractions to focus on what actually matters.

One habit I’ve picked up and stuck with is time-blocking. Every night, I plan out the things I want to get done the next day using an app called Morgen to block out time for each task. It helps me stay focused and ensures my day feels intentional, not reactive. For me, this ties directly to the Stoic principle of focusing on what’s in my control, which has boosted my productivity and helped me avoid overwhelm.

Practicing Stoicism in the digital age doesn’t mean getting rid of technology, it means using it intentionally. By aligning our tech habits with our values, we can reduce stress and regain a sense of control.

Your Stoic Challenge

Stoicism is timeless because it’s practical. It gives us the tools to thrive in any era, even one driven by constant change and innovation.

If you’re thinking about giving Stoicism a try, start small.

Here’s a simple challenge:

For one week, practice the “Evening Reflection.” Each night, take 5-10 minutes to ask yourself:

1. What did I do well today?
2. What could I have done better today?
3. How can I improve tomorrow?

Notice how shifting your focus changes your perspective. You may find yourself less stressed, more productive, and better equipped to handle whatever comes your way.

Or you may just find it’s a complete waste of time  ¯_(ツ)_/¯

Regardless, mastering the chaos of a tech-driven world isn’t easy, but with some ancient wisdom, it’s definitely possible.

Now picture a different kind of “computer”, one that isn’t just sitting on your desk or in your pocket, but exists as a network spread over thousands of machines worldwide. This computer isn’t owned by any single person or company, and it’s designed to be extremely difficult to shut down or censor. By shifting applications and data onto a decentralized system, users gain more control over their information and benefit from a network that’s always on and accessible.

This is the main idea behind Ethereum, often referred to as the “World Computer”. It’s more than a blockchain for sending digital money, it’s a platform for building decentralized applications (dApps) that redefine how we handle data, trust and collaborate in the digital age.

Smart contracts: The Game Changer

When Bitcoin introduced the world to decentralized digital currencies, it laid the groundwork for a financial revolution by showing that transactions could be secure and trustless without traditional intermediaries. But Ethereum pushed this concept further. In 2013, Vitalik Buterin and his co-founders came up with the idea for a blockchain capable of running smart contracts, self-executing agreements written in code. These contracts automatically enforce terms when predefined conditions are met, reducing the need for third-parties and lowering transaction costs.

These could be used to build applications, to facilitate:

• Real Estate: Transferring property ownership automatically when payment is received
• Rent Payments: Schedule rent deductions without relying on third parties.
• Business Transactions: Secure management of funds among several parties, with transparent rules built directly into the contract.

To make all this possible, Ethereum introduced the Ethereum Virtual Machine (EVM), a decentralized computing environment that processes smart contracts consistently across thousands of independent computers around the world. This design ensures transactions are transparent, tamper-proof, and consistent everywhere. The EVM’s success inspired other blockchains like Binance Smart Chain, Sonic(previously Fantom) and Celo to adopt EVM-compatible designs, making Ethereum the foundation of a growing decentralized ecosystem. This innovation is what really made Ethereum into a hub for decentralized apps and paved the way for the new internet era, one where trust is built into the code.

The Reality Check

Ethereum’s vision is exciting (at least to me), but it’s still maturing. High network fees (“gas”) can spike under heavy traffic, and managing wallets or private keys can be intimidating for newcomers. Although developers continue searching for a “killer app,” Decentralized Finance (DeFi) has emerged as the biggest success so far. Essentially “banking without banks,” DeFi enables anyone to lend, borrow, or trade assets without traditional intermediaries. In places with unreliable banking, DeFi can be a crucial financial lifeline.

Despite the hurdles, the ecosystem is still evolving. Layer 2 solutions, like rollups, help to help bundle or offload transactions to reduce fees and congestion. We will cover Layer 2 solutions in another post, however they help to make the network more affordable and efficient. Beyond finance, new decentralized apps are being made in gaming, social media, and other sectors, showing Ethereum’s, and other blockchains, potential beyond money. As these solutions mature, the vision of an internet owned and operated by its users gets even closer to reality.

Why Should You Care?

Even if you’re not interested in cryptocurrency or blockchain technology, Ethereum represents something important: a new way of thinking about how we can structure digital systems and agreements that reduces the reliance on middlemen.

Just as the internet changed how we share information, Ethereum and other blockchains might change how we handle digital agreements, ownership, and collaboration. Whether you’re a developer, entrepreneur, or just someone interested in technology, understanding Ethereum helps you peek into a possible future of digital interaction, one that puts users in control

In hindsight, it was definitely unnecessary, but regardless it was a nice refresher on storage in smart contracts, bit manipulation, and the Foundry toolkit. This was particularly nice for me since I’d been focused on the application layer lately.

The Problem

The team at Mento Labs recently established a separate governance system for the Mento Protocol, which is currently owned by Celo governance. The new governance structure involved the creation of the MENTO token, along with additional contracts that allow holders to participate in protocol governance. Before deploying these contracts to the Celo mainnet, we first deployed them to the Alfajores testnet and created a suite of tests to ensure the new governance system functioned as expected.

As part of the new Mento governance framework, it was decided to temporarily pause the transferability of the MENTO token until a later date. To acheive this, the OpenZeppelin Pausable contract module was used. The contract was created in a paused state, meaning that token transfers are initially disabled and would only be allowed once the contract was unpaused. A public method was added to unpause the contract, which can only be called by the contract’s owner(Mento governance in this case). Importantly, after the contract is unpaused, it can’t be paused again, ensuring that transfers remain permanently enabled once governance decides to allow them.

To make sure the pausability functioned as expected, tests were included specifically for the paused transferability, along with other tests that assumed the token would remain non-transferable. After completing these tests, we moved on to create and execute some on-chain test governance proposals, one of which involved enabling the transferability of the MENTO token on Alfajores.

This worked as expected but introduced a problem:

1. Our fork test relied on the token being non-transferable.
2. After completing the tests, we submitted and passed a proposal on Alfajores unpause the token and enable transferability.
3. Since we were forking from Alfajores, the tests now failed because the token had become transferable, and there was no function to disable it again

The Solution

So here’s what I should have done.

These tests were using a local Hardhat forked node. By default, Hardhat forks from a recent block, which is fine in some cases, but for consistent behavior in your tests, you typically want the state to remain the same. If the state changes between test runs, one day(or one block) your tests could be green, and the next day they might be red, which is exactly what happened to us.

Hardhat allows you to pin your fork to a specific block number, ensuring consistent state and behavior. The problem could have easily been fixed by pinning the fork to the block of or after the token contract was deployed. This is a one line change in the hardhat config file.

The hardhat config file:

hardhat: {
	forking: {
		enabled: true,
		url: getNetworkConfig().url,
	},

The hardhat config file with the block number to pin the fork:

hardhat: {
	forking: {
		enabled: true,
		url: getNetworkConfig().url,
		blockNumber: 24195241
	},

Problem solved.

But I didn’t do this and went down another route.

The long way

So, since this was a fork test and not run on the actual blockchain, it’s possible to directly modify storage with Hardhat in the tests without needing a specific function call in the smart contract.

Using a locally forked Hardhat node, we can directly write to the contract’s storage.
However, this is only part of the solution. Before writing to storage, we need to determine two things: what data to write and where to write it.

Before going into that, a quick primer on smart contract storage.

Smart Contract Storage

Smart contracts deployed on EVM-compatible chains have persistent storage, similar to how databases store data for later retrieval. Unlike relational databases like SQL, smart contract storage is not relational. Instead, it consists of 2^256 storage slots, each 32 bytes in size. Variables are stored in these slots sequentially based on the order they’re defined in the contract, including variables from inherited contracts. Each variable usually occupies one full slot(32 bytes) unless smaller variables can be packed together (e.g., multiple uint8 variables can be stored within the same slot if their combined size is 32 bytes or less). This packing is done by the Solidity compiler to optimize storage usage.

So, to move forward with this, I needed to figure out which storage slot the paused variable was stored in.

Which Storage Slot?

Foundry is like the swiss army knife you need for blockchain development. It comes with a number of command line tools you can use to help with anything, from performing RPC calls to running a local node or inspecting a contracts storage, Foundry has you covered.

Using Forge, we can examine the actual storage layout of a smart contract. The forge inspect command makes this easy. With the command below, I’m able to view the storage layout of the MentoToken contract:

forge inspect MentoToken storage-layout --pretty

The output of this command shows the layout of the MentoToken contract:

Let’s break down some of this information:

1. Bytes: This column shows the number of bytes each variable uses in storage.
   • An address takes up 20 bytes
   • A bool takes up 1 byte
   • A uint256 takes up 32 bytes (256 bits = 32 bytes)
   • Mappings and strings are more complex and are represented as taking up 32 bytes, but they actually use more space dynamically
2. Offset: This column shows the starting position of each variable within its slot.
   • Each slot is 32 bytes (256 bits) long
   • The offset is the number of bytes from the start of the slot where the variable begins
3. Slot: This column indicates which 32-byte slot the variable is stored in.

Using this info, we can see that the _paused bool is stored at slot 0 with an offset of 20. This means it starts 20 bytes into the first storage slot. Notice that this is the same slot as the _owner address, which takes up the first 20 bytes of slot 0.

This layout shows how Solidity optimizes storage usage:

• The _owner address (20 bytes) and _paused bool (1 byte) are packed together in the same 32-byte slot to save space.
• Larger variables like uint256 and mappings each get their own slot, starting at offset 0.

Byte Manipulation

As mentioned above, the Solidity compiler packs variables together in storage slots to save space. In our case, both the owner and the paused bool are stored in the same slot.

The layout of the slot looks like this:

[ padding (11 bytes) ][ _paused (1 byte) ][ owner (20 bytes) ]

In EVM storage, values are right-aligned within their slot. This means:

• The owner address is stored in the rightmost 20 bytes of the slot.
• The paused boolean is stored in the 21st byte of the storage slot.
• The remainder is padding, as the slot takes up 32 bytes total.

To update the value of the paused bool, we need to modify the 21st byte without changing any other bytes.

First, we read the current value of the storage slot and convert it to a BigInt for precise 256-bit manipulation:

// Read the current value of slot 0
const currentSlotValue = await ethers.provider.getStorage(mentoTokenAddress,0,);

// Convert the hex string to a bigint for easier manipulation
let slotValueBigInt = BigInt(currentSlotValue);

Then, we perform the bitwise manipulation to update the _paused boolean:

// Set the _paused byte (21st byte) to 1 without modifying the _owner address
slotValueBigInt = slotValueBigInt | (BigInt(1) << BigInt(160));

This operation uses a bitwise OR (|) with a left-shifted 1 to target the byte where _paused is stored. By shifting 1 left by 160 bits (20 bytes), we position the 1 exactly at the start of the 21st byte. This sets the _paused boolean to true by modifying the entire byte without affecting the _owner address.

Finally, we convert the modified value back to a 32-byte hex string and update the contract’s storage:

const newSlotValue = ethers.toBeHex(slotValueBigInt, 32);
await ethers.provider.send('hardhat_setStorageAt', [
  mentoTokenAddress,
  '0x0', // slot 0
  newSlotValue,
]);

So with this approach, I was able to create a function that unpaused the MentoToken before the tests were run.

Modifying storage slots wasn’t the most straightforward solution, however diving into the details of EVM storage was a nice exercise. It reminded me of the importance of understanding how data is managed under the hood, especially when working with smart contracts and ensuring tests run smoothly across different environments.

The short answer

For those who want the quick version: No, blockchain and cryptocurrencies are not the same thing.

Here’s a simple analogy to help explain:

Blockchain is like an engine, while cryptocurrencies are just one type of vehicle that engine can power. Blockchain is the underlying technology, and cryptocurrencies are one of its many potential applications.

If that satisfies your curiosity, you can stop here. But if you want to understand the difference in a little more depth without getting too technical, read on.

So, what is a blockchain?

At its core, you could say a blockchain is a special type of database that records transactions across a network of computers. But what makes it unique?

Distributed: Unlike traditional databases controlled by a single authority, a blockchain is spread across multiple computers. This makes it a type of “distributed ledger technology.”

Secure and Immutable: Information on a blockchain is extremely difficult to change or hack. Here’s why: Transactions are grouped into “blocks.” Each new block is connected to the previous one, forming a chain. To change data in one block, you’d need to change all the subsequent blocks too - a nearly impossible task.

Transparent: Anyone can view the transactions on most blockchains, though the identities behind the transactions are often anonymous.

Decentralized: No single entity controls the entire network. This distributed control is a key feature that sets blockchain apart.

Blockchain technology was first introduced with Bitcoin in 2009, but it has since evolved to have numerous applications beyond cryptocurrencies. Today, it has applications in finance, supply chain management, digital identity and more.

Here are some examples of well-known blockchains:

• Bitcoin: The first and most famous blockchain, primarily used for digital currency.
• Ethereum: Known for its ability to run “smart contracts” and host other cryptocurrencies.
• Avalanche: Focuses on fast transaction speeds and low costs.
• Tron: Popular for decentralized applications (dApps) and digital content.
• Celo: Aims to increase financial inclusion through mobile-first design.

For a more complete list of blockchains, you can check out the chains list on DefiLlama.

Cryptocurrencies

Cryptocurrencies(crypto) are a form of digital asset that only exists on blockchains. When people speak about cryptocurrencies, there’s usually no actual distinction mentioned between the different types. However, there are various types, each with a specific purpose.

Here is a simple breakdown:

Native Tokens: These are digital currencies like Bitcoin (BTC), Ether (ETH) and Celo (CELO). These operate on their own blockchain networks and function mainly as a medium of exchange or a unit of account.

Tokens: These are built on existing blockchain platforms (like Ethereum) but do not have their own blockchain. They can represent various assets or rights and are used in specific ecosystems. Utility tokens, which give holders access to a product or service within a specific platform or network, fall under this category.

Governance Tokens: These are tokens designed to give holders voting rights within a decentralized organization or protocol. Holders can vote on changes or proposals related to the project development. Examples include Uniswap’s UNI token and Mento protocol’s MENTO token.

Stablecoins: These tokens are designed to maintain a stable value by maintaining a peg to an asset like the US dollar or gold. Examples include Tether (USDT) and the Celo Kenyan Shilling (cKES).

Security Tokens: These represent asset ownership, such as company or real estate shares. They are subject to securities regulations and give holders certain rights, like dividends or voting power.

Memecoins: These are tokens that are created inspired by memes or internet culture. In most cases they have no use case. Memecoins have gained a lot of popularity, however they carry significant risk due to their speculative nature and lack of fundamental value.

It’s important to note that all types of cryptocurrencies, not just memecoins, can be subject to scams and high volatility. Always do research and understand the risks before investing.

Blockchain & Cryptocurrencies

Now that we’ve explored both blockchain and cryptocurrencies, it should be crystal clear that they’re not the same thing. Blockchain is the underlying technology, while cryptocurrencies are just one of its many applications.

An important point to remember is that blockchains can exist without cryptocurrencies, but cryptocurrencies can’t exist in their current form without blockchain technology.

It’s important to note that there are multiple types of both blockchains and cryptocurrencies, each with its own characteristics.

Multiple blockchains: Bitcoin, Ethereum, Avalanche, Tron, Celo, and many more are all developing their own versions of blockchain technology.

Various cryptocurrencies: From Bitcoin to utility tokens, stablecoins, governance tokens, and even meme coins like Dogecoin.

Each blockchain and each cryptocurrency has its own unique features and use cases. So, the next time someone asks you if blockchain and cryptocurrencies are the same thing, you can confidently explain the difference.

In the last post we looked at how Bitcoin came to be, what it’s intended use case was and how it’s currently performing for that use case. The goal of this post is to simply help you understand three fundamental features of Bitcoin so that you understand why it’s such a big deal today.

Peer to Peer Network

At the core of Bitcoin’s design is it’s peer to peer network. In this network, information is shared directly between participants instead of going through a central point.

Here’s how it works:

1. When you send a Bitcoin transaction, you don’t send it directly to the recipient. Instead, you broadcast it to the entire Bitcoin network.
2. This broadcast is picked up by computers around the world, called nodes. These nodes pass the information along, ensuring it remains accurate as it spreads across the network.
3. Special participants in the network, called miners, gather these transactions and work to add them to the blockchain by creating blocks. This process involves verifying the transactions and solving a complex puzzle. Once a block is successfully mined, the transactions it contains are confirmed and permanently added to the blockchain.
4. After validation, your transaction becomes an unchangeable part of Bitcoin’s public ledger, visible to all but controlled by no one.

This system removes the need for a central authority like a bank to oversee and verify transactions. It’s what makes Bitcoin decentralized and resistant to control by any single entity.

Proof of Work Consensus Mechanism

While the peer to peer network enables transactions, it’s the consensus mechanism that ensures the security and integrity of the Blockchain. Proof-of-Work(PoW) is the consensus mechanism used by the Bitcoin network to determine which miner gets to add the next block of validated transactions to the blockchain.

Imagine the Bitcoin network as a giant, global race. Every 10 minutes, a new race starts. The participants are computers all around the world, running special Bitcoin software. These computers are called miners.

Here’s how the PoW mechanism works:

1. Transaction Broadcast: When you make a Bitcoin transaction, it gets broadcast to the network and joins a pool of unconfirmed transactions, aka the mempool
2. Block Creation: Miners gather these transactions and package them into what we call a “block.”
3. Puzzle Solving: Miners must solve a complex mathematical puzzle to add this block to the blockchain (our public ledger). This puzzle is designed to be hard to solve but easy to verify.
4. Competition: Miners around the world compete to solve this puzzle first. The first one to solve it gets the right to add the new block to the blockchain.
5. Rewards: The winning miner gets some newly created bitcoin as a reward for their effort (and electricity bill). This is how new Bitcoin enters circulation.

So what’s the point in even going through all of this?🤔 Well, it’s Bitcoin’s way of ensuring security and consensus without a central authority.

This is why it works:

• Deterring Cheating: It’s expensive and time-consuming to participate, which deters cheating.
• Difficulty Adjustment: The puzzle’s difficulty adjusts automatically to ensure blocks are added at a consistent rate, regardless of how much computing power is used.
• Security: Once a block is added, it’s computationally impractical to alter it without redoing all the work for that block and all blocks after it.

This system makes tampering with the Bitcoin ledger very difficult and expensive. To cheat the system, you’d need to control more than half of the network’s computing power—a scenario that’s economically just not practical.

In essence, Proof-of-Work replaces trust in a central authority with trust in the laws of mathematics and economics. It keeps Bitcoin secure and trustworthy without needing a bank or government to oversee it.

Limited Supply (21 Million Cap)

You’ve probably heard that governments can print money whenever they want.

Need to pay for a war? Print money. Economic crisis? Print money. This ability to create currency out of thin air is why you hear people complain about inflation and the decreasing value of money over time. But Bitcoin? It plays by different rules.

Bitcoin has a fixed supply cap of 21 million. That’s it. No more, no less. This isn’t just a promise or a policy - it’s hardcoded into Bitcoin’s DNA. Here’s how it works:

1. Controlled Release: New Bitcoin is created as a reward for miners (remember those special participants solving complex puzzles?). But these rewards aren’t constant.
2. Halving Events: Every 210,000 blocks (roughly every four years), the reward for mining a block is cut in half. This is called a “halving.”
3. Diminishing Supply: At the time of writing, miners get 3.125 bitcoins per block. In 2028, it’ll be 1.526. This halving continues until all 21 million bitcoins are mined.
4. Final Bitcoin: Based on this schedule, the last bitcoin is expected to be mined around the year 2140.

So why is this limited supply such a big deal?

Scarcity: Bitcoin’s limited supply is often compared to gold. Just as there’s a finite amount of gold on Earth, there will never be more than 21 million bitcoins in existence. This scarcity is a key factor in determining Bitcoin’s value.

Predictability: Unlike fiat currencies, everyone knows exactly how many bitcoins will ever exist.

Inflation Resistance: No government or central bank can decide to “print” more bitcoin, potentially protecting it from inflation.

It’s important to note that scarcity alone does not automatically guarantee value. The value of Bitcoin, similar to any currency or asset, ultimately relies on people perceiving it as valuable and being willing to use or invest in it.

In essence, Bitcoin’s limited supply is a huge shift from how we’ve traditionally thought about money. It’s an experiment in digital scarcity that aims to create a new kind of “sound money” tailored for the digital age.

Wrapping Up

Bitcoin’s fundamental features—peer-to-peer networking, Proof of Work consensus, and limited supply—have revolutionized our concept of money since its 2009 beginnings. From the first real-world transaction of 10,000 BTC for two pizzas in 2010, to its current status as a global financial phenomenon, Bitcoin has consistently challenged traditional notions of currency and value. While Bitcoin opened the door to decentralized digital currencies, it was just the beginning of the blockchain revolution.

In the next post, we’ll explore how Ethereum built upon Bitcoin’s foundation, introducing the concept of a “world computer” and smart contracts. These innovations expanded blockchain’s potential, enabling a wide range of applications far beyond digital currency and setting the stage for a new era of decentralized technology.

2008, the year the global economy went skydiving without a parachute. Banks were handing out mortgages like they were free samples at a shopping center.

Back then, borrowers could get 100% mortgages without proving any income, jobs, or assets. NINJA loans (no income, no job, and no assets) is what they were called, and they significantly contributed to the subprime mortgage crisis. Risky mortgages like these were bundled into complex financial instruments and sold to investors worldwide. When the housing market eventually crashed, these securities tanked in value, leading to huge financial losses.

People lost their jobs, their homes, and watched their life savings evaporate.

This crisis exposed significant flaws in the financial system, particularly the lack of transparency, which hid the risks associated with these complex financial instruments. The centralization of power within a handful of large financial institutions concentrated risk, meaning that the failure of one institution could trigger a systemic crisis. And as we know, that’s exactly what happened.

These were grim times and needed government intervention to bail out the banks deemed “too big to fail.” While this intervention brought some stability, it also led to serious public distrust in traditional financial institutions. It was during this period of uncertainty and distrust that Satoshi Nakamoto published the Bitcoin white paper on October 31, 2008.

The Birth of Bitcoin

Nobody knows the real identity of Satoshi Nakamoto. We don’t even know if this name refers to an individual or a group of people. All we know is that the timing of Bitcoin’s introduction was almost perfect: it came out during a crisis of trust in financial institutions, almost like a middle finger to centralized power in the financial system. Bitcoin offered an innovative alternative when the world was primed for new financial solutions.

You’ve probably seen, or even know, people who’ve made massive gains from buying Bitcoin. But Bitcoin wasn’t made for speculation or investment purposes. In simple terms, Bitcoin was designed to enable direct payments between parties without the need for a central authority like a bank or financial institution. But what is Bitcoin?

Blockchain or Cryptocurrency

Bitcoin is both a blockchain network and the name of the digital currency that operates on that network. You can think of Bitcoin as a huge, global system - like the internet, but specifically for a digital currency. This system includes all the computers running Bitcoin software, the rules they follow, and the connections between them. This is the Bitcoin network.

The digital “coins” that people buy, sell, and trade are also called Bitcoin. These Bitcoin exist as entries in a distributed ledger on the Bitcoin network. When we say Bitcoins are “sent” or “received,” what’s actually happening is that the ledger is being updated to reflect changes in account balances. There are no physical coins or even individual digital tokens moving around - it’s all about adjusting numbers in this shared, decentralized ledger.

So if we say “Bitcoin operates on a network,” we’re actually talking about Bitcoin (the crypto currency) operating on the Bitcoin network. It’s a bit like saying “email operates on the internet” - email is both the system(technically called SMTP) and the thing being sent through that system.

This dual nature of Bitcoin being both a network and a currency isn’t unique to Bitcoin. It’s a common thing in the blockchain world. Some blockchain networks have what’s called a native token, like Bitcoin, which is usually named after the network itself. The native token acts as a reward for the computers (nodes) that keep the network running, is used to pay transaction fees on the network, and it often functions as a tradable digital asset. Think of it as the ‘official currency’ of that particular blockchain network.

In some other cases the native token will have a name that is different to the name of the network. For example, Ethereum, another blockchain network we’ll talk about in future posts, has a native token called Ether serving similar functions there as Bitcoin does on its network.

As a decentralized digital currency, Bitcoin’s potential to facilitate financial transactions becomes clear when we look at real-world scenarios.

Shelly-Ann’s Story

Shelly-Ann, a 32-year-old second generation Jamaican immigrant living in London, sends £100 monthly to her family in Jamaica via a high street money transfer service. Here’s how it breaks down:

1. The money transfer service deducts a transfer fee of £2
2. They use their exchange rate: 1 GBP = 197.90 JMD (vs. mid-market rate of 1 GBP = 200.911 JMD) to convert the pounds to Jamaican dollars
3. Amount received: 19,394 JMD

The transfer would usually be completed in about 1-5 days.

Shelly-Ann loses about £3.47 to fees and exchange rate markup. £98 worth of Jamaican dollars (at the transfer service’s exchange rate) reaches her family, which is equivalent to £96.53 at the true exchange rate, despite her sending £100. These numbers were taken from the transfer calculator on the JN money transfer website. Whether or not this transfer is expensive is subjective, but you could think about how much it would cost you to transfer the same amount in your home country to a friend.

The key points here are:

• There is a reliance on a centralised service. Money transfer services, or any middleman, can charge whatever fees they want to facilitate the transfer. These fees are usually higher for remote or less developed countries.
• The transfer time is long. This could be problematic especially in times of emergency

If Shelly-Ann were to use Bitcoin instead, she would need to do the following:

1. Buy Bitcoin using a crypto exchange: These platforms, similar to high street currency exchanges, operate online and allow people to exchange fiat currencies for cryptocurrencies and vice-versa. Examples include Kraken, Coinbase, and Binance. The fees for buying Bitcoin vary depending on the platform and payment method used. For example, using a bank transfer might incur fees around 0.1% to 1.49%, while using a credit or debit card could result in higher fees, sometimes between 3.5% and 5%.

2. Send Bitcoin to her family’s Bitcoin wallet in Jamaica: This transaction would include a network fee which, at the time of writing, is on average $1.12 (about 0.000017299296 BTC)

3. Sell Bitcoin for Jamaican Dollars: Once the family receives the Bitcoin, they would need to sell it for Jamaican dollars using a local crypto exchange, which would charge similar fees to buying Bitcoin

Here’s how her £100 transfer might look:

1. Exchange fee to buy Bitcoin with GBP: £1.49 (1.49% fee)
2. GBP to BTC exchange rate: 1 GBP = 0.0000188766 BTC
3. BTC Received: 0.001859534681193 BTC
4. Bitcoin network fee: 0.000017299296 BTC
5. Exchange fee to sell Bitcoin for JMD: 0.000027449307 BTC (1.49% of remaining BTC)
6. BTC amount after fees: 0.001814786078193 BTC
7. BTC to JMD exchange rate: 1 BTC = 10,636,600 JMD
8. Final JMD received: 19,303 JMD

The transfer would usually be completed in about 10-60 minutes.

The time a Bitcoin transfer takes depends on a couple of factors. This article does a good job of explaining them.

In this example, the fees lost were still minimal (just under £5), but we are still in the same situation as before. The transfer still relies on centralized services at both ends of the transaction who can set whatever fees they want and in some cases deny service to users based on where they live or other factors. The Bitcoin network fee is also variable and instead of being set by a centralized entity, depends on the network usage. So in times of high traffic the network fee could be much higher.

Additionally, the volatility of Bitcoin can significantly impact the value of the transferred amount, with potential losses if the price drops during the transaction period. To address these issues, stablecoins were introduced. Stablecoins are cryptocurrencies pegged to stable assets like the US dollar, which help get around the volatility risk associated with Bitcoin(and other crypto currencies), ensuring a more predictable value during transactions. Stablecoins are a great appliation of blockchain technology which we will explore in a future post.

Comparison

Here’s a comparison of the traditional money transfer vs. Bitcoin transfers:

This comparison shows that while Bitcoin offers some advantages like speed, it also comes with its own set of challenges. The current state of crypto adoption means that fully realizing Satoshi Nakamoto’s vision of peer-to-peer electronic cash without intermediaries is still a work in progress.

Future Improvements and Alternatives

While Bitcoin faces challenges for everyday transactions, the blockchain space continues to evolve. Developments like the Lightning Network aim to make Bitcoin transactions faster and cheaper. Other blockchains, such as Ripple and Stellar focus on international transfers, while stablecoins like Mento cUSD and Tether USDT address volatility concerns. These look promising, but also face their own hurdles in realizing Satoshi’s vision of efficient, decentralized value transfer.

Conclusion

Shelly-Ann’s story shows the potential benefits and current limitations of using Bitcoin for international transfers, it’s just one example of how this technology can be applied. To really appreciate the nature of Bitcoin, we need to look a bit deeper into its technical foundations.

Bitcoin’s emergence following the 2008 financial crisis wasn’t coincidental, it was a response to a flawed system. From its mysterious origins to potential real-world applications like Shelly-Ann’s case, Bitcoin represents a paradigm shift in financial transactions and trust. While facing adoption challenges and technical hurdles, its core features—blockchain foundation, peer-to-peer network, and limited supply—address many issues exposed by the crisis, offering an alternative to traditional finance’s opacity and centralized control. As the technology evolves, new solutions are emerging to address additional challenges like scalability, further expanding blockchain’s potential. In the next post, we’ll look at Bitcoin’s fundamental features, exploring how they work and why they matter in reshaping our financial future.

But with all the buzz and complex terminology around blockchain and cryptocurrencies, it’s easy to feel overwhelmed or left behind. That’s where this series comes in.

This series is for you - maybe you’re a busy professional juggling a demanding job and a hectic personal life. Maybe you’re a physiotherapist working long hours, or a parent trying to balance raising kids with maintaining a relationship. You’ve heard the hype around blockchain and cryptocurrencies, but haven’t had the time to really dig in and understand what it’s all about. Consider this your opportunity to get a clear, no-nonsense explanation of what blockchain is, why it matters, and what it might mean for our future.

So, in this series we’ll explore the promise of blockchain technology. We’ll look at its origins, how it’s evolved, and where it stands today. We’ll dive into the current landscape, examining both innovative applications and challenges. We’ll also take a look at the key players in the blockchain world and how they’re shaping its future.

Before we begin, let’s clear up a common misconception: blockchain and cryptocurrency aren’t the same thing. Blockchain is the underlying technology, while cryptocurrencies are just one of its many potential applications. Think of blockchain as the engine, and cryptocurrencies as one type of vehicle it can power.

Now let’s get into some essential definitions and core concepts. Understanding these will give us a solid foundation for exploring other ideas later in the series.

Distributed Ledger Technology

Okay, so at its core, a blockchain can be described as a distributed ledger. But what does this even mean? ¯\_(ツ)_/¯

Let’s break it down.

A ledger is just a record of transactions. Traditionally, each entry in a ledger would have some additional information attached to it - things like a description of the transaction, who’s involved (the parties making and receiving payment), the date, and the amount. In the past, businesses would typically maintain several ledgers but they were usually kept in one place and managed by a select few people.

A key requirement of a ledger is that it needs to have one source of truth. You can’t have different versions floating around. But in reality, multiple people often need to update the ledger. So how can this be done easily?

This is where distributed ledger technology comes in. Applications were developed that enabled people to change the ledger data, audit it, and verify that transactions are valid - all while keeping everything in sync across multiple copies. You can think of it as a shared Google Sheet, but more secure and with a complete history of every single change ever made.

This technology evolved to become the core of what powers blockchains today. In a blockchain, a network of computers (often called nodes) work together to maintain a single, agreed-upon version of the truth without needing a central authority to keep everything in check. The way these computers come to agreement is called a consensus mechanism - you can think of it as a set of rules that all the nodes follow to decide what information is correct and should be added to the ledger. We won’t be getting into consensus mechanisms in detail here, but if you’re interested in learning more, this guide is a good starting point.

The beauty of this system is that it’s transparent (anyone can see the ledger), secure (it’s incredibly difficult to tamper with), and decentralized (no single entity controls it). These features are what make blockchain potentially such a game-changer in many industries, not just finance.

Decentralization as the Key Feature

Now, we can talk about what really sets blockchain technology apart: decentralization. It’s the main feature that makes this technology potentially so revolutionary.

In traditional systems, you have central authorities calling the shots. Think of a bank managing your money or a government agency keeping records. These centralized systems have worked for a long time, but they have downsides. They can be vulnerable to hacks, prone to corruption, or just plain inefficient.

Blockchain flips this idea on its head. Instead of one central authority, you instead have a network of nodes (remember, these are basically just computers) all working together. Each node has a copy of the entire ledger, and they all work together to verify and record transactions. When a new transaction is made, it’s broadcast to all nodes in the network. These nodes then work to validate the transaction based on a set of rules they all agree on.

The key thing here is that there’s no single point of failure. If one node goes down, the network keeps on working. If someone tries to tamper with the data on one node, the others will catch it. It’s comparable to having thousands of accountants checking each other’s work in real-time.

This decentralization also means that no single entity has control over your data or assets on the blockchain. It’s a shift of power from institutions and private corporations back to individuals.

Unlike a traditional bank where your account could be frozen or your transaction denied by a single authority, in a decentralized blockchain system like Bitcoin, no single entity can prevent you from sending or receiving funds - your transaction is processed by the network as a whole.

Immutability and transparency

We’ve covered decentralization. But there are two other features of blockchains that go hand in hand: immutability and transparency.

Let’s start with immutability. In simple terms, it means “can’t be changed.” Once a transaction is recorded on the blockchain, it’s there for good.

When a new transaction happens, it’s grouped with other recent transactions into a “block.” This block is then added to the chain of previous blocks (hence, “blockchain”) using cryptographic methods to ensure security and integrity.

The critical aspect of a blockchain’s structure is this: each block contains a reference to the block before it. This creates an important safeguard. If someone tries to change a transaction in an earlier block, they’d have to change every block that came after it. Not only that, but they would have to do this on the majority of nodes in the network, all at the same time. It’s not impossible, but it’s very difficult. This feature could be game-changing for industries like finance or real estate, where maintaining an unalterable record of transactions is crucial.

Now, let’s talk transparency. In most blockchain networks, anyone can view the entire ledger of transactions. It’s all out in the open, and usually can be viewed though a public block explorer for the network.

The video below shows a random transaction on the Base blockchain viewed on Basescan, a block explorer for Base.

Looking at the transaction, we can see the following key elements:

• Transaction hash: This is the unique identifier of the transaction. It’s like a digital fingerprint that ensures the transaction’s integrity.
• Block number: This indicates which block in the blockchain includes this transaction. It helps in tracking the transaction’s place in the blockchain’s history.
• Timestamp: This shows the date and time the transaction occurred.
• From address: This is the address of the account that initiated the transaction.
• To address: This is the address of the account receiving the transaction.
• Value: This represents the amount of cryptocurrency(in this case ETH) that sent in the transaction.
• Transaction fee: This is the cost of processing the transaction on the network. It’s paid to miners or validators who maintain the blockchain.
• Status: This indicates whether the transaction was successful or failed.
• Gas price: This represents the price per unit of gas for the transaction. In blockchain networks, gas refers to the computational effort required to execute operations. The gas price affects how quickly the transaction is processed.
• Input data: This field can contain additional information or instructions for the transaction.

You might be thinking, “Wait, isn’t that a privacy nightmare?” Not exactly. While the transactions are visible, the identities behind them are often pseudonymous. You can see that a transaction happened, but you might not be able to identify who was involved.

This transparency has some big implications. It means you can audit the entire history of transactions if you want to. No more taking someone’s word for it - you can check for yourself. This can be a useful for things like supply chain management, voting systems, or any situation where trust and verification are important.

Together, immutability and transparency create a system that’s incredibly difficult to corrupt or manipulate. It’s a new level of trust in a digital world where trust can be hard to come by.

Wrapping Up

In this post we covered the core elements of blockchain: distributed ledger technology, decentralization, immutability, and transparency. These concepts are the foundation of what makes blockchain a transformative technology with applications in more than just digital currencies.

In the next post we’ll look at the origins and evolution of blockchain. We’ll explore the brief history and original concept put forward by Satoshi Nakamoto. Also, we’ll cover key milestones in blockchain development and the emergence of alternative blockchains with their diverse applications.

I hope this intro has been useful and maybe even sparked your interest in blockchain. There’s a lot more to get into, so keep an eye out for the next post in this series.