Once upon a time there were three little piggy banks and a big bad wolf of Wall Street.
The first was a regular piggy bank, fat and round with a belly full of good old hard earned cash. The wolf thought the contents of the little piggy bank smelled very nice and tried to find a good way of extorting the cash from its belly. Cunning as he was, he came up with a way of sucking the value out of the cash instead. He became a banker and slowly sucked the life blood out of the little piggy bank using a method called fractional reserve lending. He basically told other little piggies that he already had the cash and that he could lend it out to them if they paid him back the same amount plus interest. Slowly but surely the first little piggy bank got hungrier and hungrier even though it seemed like his belly was full.
The second little piggy bank was a little brighter than the first one so he filled his belly with gold, a precious metal that had been used to store value for centuries and he did pretty well for a while. But the more gold he ate the heavier he became and soon he realized that his precious innards weren’t worth much when it came to actually using some of it as he needed to carry his burden with him at all times to stay safe from the big bad wolf. The wolf paid little or no attention to the second little piggy bank. He didn’t need to. He’d just wait for the second little piggy bank to grow fat and juicy so that he, when the time was right, could influence some politician to confiscate all the gold by force and hide it in a big, fat vault somewhere, Fort Knox style.
The third little piggy bank however, was able to outsmart the wolf in an extraordinarily clever manner. You see, he was a cryptographer and in 2008, just after the wolf had gone on a particularly nasty rampage, he proposed a new way of conducting their business to the all the other little piggy banks on the entire planet. He published a whitepaper on how they could construct a safe haven by adding a building block every ten minutes that would contain information about all the interactions the other little piggy banks had with each other. These blocks would be verified by all of the little piggy banks who wanted to participate in exchange for a chance to win a spot on the next block. The size of this spot would half in size every four years so that the size of the entire value space available on the blockchain would stay the same, regardless of how long the chain became. When the big bad wolf started to take notice, when he begun a-huffing and a-puffing and all that, the genius third little piggy bank had already disappeared. He had been working under a pseudonym the whole time and was nowhere to be found.
To be continued….