Intermediaries play a critical role in the traditional financial sector because they validate and process transaction requests. When transactions are fast, reliable, and affordable, individuals and businesses can more easily exchange goods and services – resulting in increased economic growth and prosperity. Financial intermediaries like credit cards are accepted at millions of merchants globally, and they possess various security features to protect against fraud. If someone steals a credit card and makes unauthorized transactions, there is a resolution mechanism so that the cardholder is not responsible for the fraudulent charges.

These financial intermediaries however wield enormous power, as they control the flow of money. There is always the possibility, and temptation, of transaction censorship and monitoring. For example, the Chinese government closely monitors financial transactions through its central bank, the People's Bank of China. Its government uses technical measures such as firewalls, filters, and censorship tools to control the flow of information and restrict access to certain websites and online financial services. It closely monitors online payment platforms such as Alipay and WeChat Pay. The Chinese government also restricts cross-border financial transactions to limit capital outflows and maintain control over its currency. This includes restrictions on exchanging the yuan for foreign currencies.

In addition, incompetence and corruption by central banks that control a country’s money supply can lead to hyper-inflation. For example, Venezuela experienced one of the worst cases of hyperinflation in recent history, with inflation rates reaching over 1 million percent in 2018. Argentina experienced high inflation for much of the past century, with inflation rates reaching over 1,000% in the late 1990s.

The problems with intermediaries are not limited to central banks. YouTube acts as an intermediary to distribute content from the video creator to the consumer. It records the number of views for the content and settles payments. While intermediaries certainly create value, they can also use their power to extract significant financial value from creators. Many content creators have expressed that it is very difficult to make a living from the monetization of YouTube content.

Blockchain technology offers a solution to many of the problems with intermediaries. To be successful though, this type of technology must be resilient. That is, it must have the ability to recover from failures or disruptions and maintain its functionality for its users. It must also be trusted by users, and the technology of value transfer must operate as intended. Finally, the technology must be economically viable. Incentives have to exist in order to encourage transactions to be processed, maintained, and protected against attacks.

Blockchain technology is frequently described as distributed ledger technology. "distributed" refers to the decentralized architecture of the network, which allows it to operate without the need for a central authority or intermediary. Every participant maintains a copy of the transactions, and all transactions are verified and processed by the network as a whole. By being distributed, it also operates as a peer-to-peer network, where users can interact directly with one another without the need for intermediaries. This distributed network is transparent, allowing all participants to have equal access to the ledger’s transactions. Those who possess a deep understanding of how blockchain technology works possess a level of crypto literacy that is needed to safely explore, operate, and invest in the future of the digital economy.