What makes crypto permissionless?
In today's world, we need permission to use the money we earn.
It might sound bizarre, but it's true. Most of the time, this central component of the traditional financial system goes completely unnoticed. Nobody really thinks about asking for permission to withdraw their own money, send it to somebody or even just to access it.
But the reality is that we require authorization from others nearly every time we interact with our own money.
This happens because we do not have full control of our own money — governments and banks do. Whenever we choose to use our money in any way, we must receive authorization from a bank to do so.
Governments issue our money and banks hold it. We, as the end users of that money, have very little influence over how that system operates.
This is where cryptocurrency is different.
Kraken let's you access the permissionless world of cryptocurrency. See what crypto can be by signing up for your Kraken account today — or keep reading to learn more.
What does permissionless even mean?
Broadly speaking, permissionless means not having to ask others to approve the decisions you wish to make.
It's all about having the freedom to do whatever you want with what is rightfully yours.
With cryptocurrencies, the term "permissionless" is often used to describe their underlying decentralized infrastructure.
Many view decentralization as the cornerstone of cryptocurrency, paving the way for a more transparent and inclusive financial world.
How are cryptocurrencies permissionless?
Cryptocurrencies operate on public, open-source blockchains. These distributed online ledgers are permissionless by design, meaning that there are no restrictions on who can join, manage or modify them.
Regardless of geography, documentation or income level, anyone with a smart device and internet connection can access cryptocurrencies.
Think of it as a financial system where the people themselves have full control over their own assets, and where no banks or governments need to be involved.
People can self custody their own cryptocurrency assets. In doing so, they have exclusive access to their digital wealth, without fear of censorship, confiscation or not being able to access their funds.
Volunteers spread across the world collectively help to manage these cryptocurrency protocols using their computers. Anyone can join these networks — there are no gatekeepers to decide who can or cannot participate.
How crypto payments compare to permissioned traditional payments
Traditional permissioned payments
- All payments must be authorized by a bank.
- Banks can set limits on how much people can send in a single transaction. These rates can vary depending on the customer, the bank, and the geography.
- Banks charge additional fees for international payments.
- Transaction data is privately managed and recorded by banks. No one outside the banking system has access to view or audit this information.
Crypto payments from a self-custodial wallet
- Anyone can purchase, sell, and send cryptocurrencies that they self custody. No authorization is required.
- There are no limits on how much or to whom you can transfer payments.
- No permission or additional charges are involved in sending cryptocurrency overseas. It's completely borderless.
- All cryptocurrency payments are completely transparent, trackable, and auditable. Anyone can view all payments happening in real-time using online tools called block explorers.
Why is it important that crypto is permissionless?
In an era where centralized institutions often wield significant power, permissionless cryptocurrencies offer financial autonomy, transparency and trustlessness.
By removing the need for intermediaries and granting individuals direct control over their financial assets, permissionless cryptocurrencies empower people worldwide, especially those currently excluded from traditional financial systems.
Get started with Kraken
Now that you have learned what makes crypto permissionless, are you ready to take the next step in your crypto journey?
Kraken lets you buy, sell and trade the leading cryptocurrencies that are reshaping the financial landscape.
Sign up for your Kraken account today to get started in the permissionless world of cryptocurrency.