What Does Permission-less Mean - Crypto Whiteboard 101

What Does Permission-less Mean - Crypto Whiteboard 101


When introducing cryptocurrency to people, my first instinct is to launch right into the spiel that "cryptocurrencies are a decentralized, peer to peer, permission-less, medium of digital exchange." Although I can usually catch myself before I scare people off with the overly technical jargon, I am sure that many people, unfortunately, have had crypto described to them in such a way. For all of those confused newbies, I'd like to write this article describing what "permission-less" means and why it is important. 

Permission vs Permission-less

The basic definition of permission is "authorization granted to do something". As children, we dread having to ask permission to be done eating dinner and to go hang out with our friends. As we become adults, we don't outgrow the need to ask permission. Specifically, our financial lives are governed by strict rules and permissions. We need permission from a loan officer if we want a loan to buy a house, and we need the permission of the bank to make withdraws from an account. Even sending payment to an online merchant requires permission in the sense that a third party payment processor must agree to transfer the funds from our account to the merchant. 

Whereas the vast majority of traditional financial services can be thought of as permissioned, cryptocurrencies are "permission-less" in the sense that anyone can participate in the crypto ecosystem without needing "official approval."

Examples

Let's go back to our example of taking a loan. Under the traditional system, I must talk to a loan officer, fill out paperwork, and hope it gets accepted. With cryptocurrency, I can simply log into Compound finance, deposit my crypto collateral and receive a loan. 

When sending funds to a merchant with traditional finance, I must hope that there is a third party payment processor willing to facilitate the transaction. While this is usually the case, there are times when payment processors will refuse to process transactions for certain merchants. With crypto, I don't need a third party processor, I can simply pay the going rate for a transaction fee, and the funds will be sent directly to the other party's crypto wallet. 

Summary

In summary, permissionless is simply a term that cryptocurrency advocates use to describe the fact that cryptos allow people to transact and engage in commerce without having to get official approval. Anyone can create a crypto wallet and become involved in the crypto ecosystem without having to receive a charter, letter of acceptance, or blessing from either a company or a government. 

 

References

https://www.dictionary.com/browse/permission


The Part Time Economist
The Part Time Economist

Hi everyone. I'm just a simple man trying to make my way in the universe. I am passionate about cryptocurrency and hope that I can make at least some small contribution towards promoting wider crypto adoption and understanding.


The Part Time Economist
The Part Time Economist

Hi everyone. This is just a place for me to post some of my thoughts and analysis. I hope that someone finds them useful.

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