To summarise, then, sending value around the Internet is much more complicated than sending pictures of cats around the Internet, but we know a few different ways to do it. That makes for a very low-cost infrastructure for transactions, which is precisely why the finance world is interested in it. When I send you a token, whether a coin or a link to a picture of a chimpanzee with sunglasses on or a digital dollar or a claim to a barrel of oil or whatever, you have the token and I do not. ![]() This is why I think tokens (and the world of decentralised finance in general) are so interesting. So, double-spending of cats isn’t a problem, but double-spending of cash is, and fortunately we know how to solve it. Why their research paper wasn't called “ Schrödinger's Cash" I'll never know, but I guess they're not marketing people.) This means that a counterfeiter, even with access to unlimited resources, will still not be able to copy a quantum coin. (Quantum money exploits the fact that it is not possible to clone an unknown quantum state. The Swedish central bank published an interesting paper about this a couple of years ago which, while noting that any such implementation might be some way off, pointed out that this could be a very good way to transmit electronic cash instantaneously across the universe. Satoshi’s great breakthrough was to find a way to align the economic incentives around forming a secure consensus with the work required to do so.įinally, and this may well happen in the future, you could use the basic principles of quantum mechanics to create electronic cash using the physical properties of nature. ![]() The technology to do this had been around for a while, but Mr. Third, and this is how cryptocurrency works, you could implement the tokens in software using some form of clever consensus mechanism to ensure that the right tokens are attributed to the right owners and cannot be misappropriated by bad actors (or at least not by tampering with the transaction record, the ledger). This is how NatWest bank’s “Mondex” worked in fact, back in the 1990s ( the reason we celebrate July 4th in England). You cannot copy all of the software either, because the chips are programmed not to give up certain data (such as private cryptographic keys) that you would need to create a device capable of replicating the specific characteristics. You cannot clone these cards because you cannot copy the hardware. This is why mobile phone SIMs and chip and PIN cards work. You can copy software but you cannot copy hardware. Secondly, you could store the tokens in some form of secure hardware.
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