October 23, 2017
The most famous cryptocurrency, Bitcoin (BTC), has surpassed a $5k USD market value on October 12th. People who boarded the bandwagon early are now rejoicing on their fruitful intuition. After several years of unfulfilled promises, the cryptocurrency market has shown huge growth in the past couple of months.
To fully grasp the implications of this event, it is very important to understand what is cryptocurrency and the technology behind it, Blockchain. For those individuals interested in deep comprehension, the book “Blockchain Revolution” by Don and Alex Tapscott is a good way to start. For now, to put the matter into perspective, this technology could potentially lead to a decentralized society, one where banks are non-existent and every transaction is public record.
Blockchain is an ingenious way of storing and distributing records. As the name suggests, it consists of several “blocks” of information “chained” one after the other. Every ten minutes all transactions that occurred within that interval are verified and given a unique identifier, which constitutes a new block in the chain. Each new block also includes the unique identifier of the previous one, which means every block and transaction is easily traceable, up to the very first one ever made. What makes Blockchain distinct is that information is not only stored in one place but distributed across all the devices on the underlying network. This makes it impossible for anyone to forge corrupt data into any block of the chain, as all devices can easily confirm the validity of the information in question; likewise eliminating the need of a supervising entity, thus becoming decentralized. As Marc Kenigsberg, the founder of BitcoinChaser.com, put it, “Blockchain is the tech. Bitcoin is merely the first mainstream manifestation of its potential.”
Digital money like Bitcoin that employs cryptographic techniques to withhold a high level of security is referred to as cryptocurrency. All cryptocurrencies use Blockchain as their ledger, which is publicly available to everyone. Even though every transaction is traceable, the owners and the contents pertaining to each one remain anonymous, as cryptography keeps prying eyes from looking where they are not supposed to.
The first and most famous decentralized cryptocurrency now in circulation is Bitcoin. Thanks to the underlying technology, transactions made with it are anonymous, require no governing entity (such as banks), have no usage fees, and can be used by virtually anyone.
The fact that Bitcoin has reached an all-time high level of worth may prove that a new restructuration of the money system is bound to happen. Bitcoin has paved the way for what is to come, but that does not mean it will end up as the sole conqueror. There are many skeptics who believe this is all a bubble waiting to burst, but only time will give a definitive answer. In the meantime, one can only hope.
Trace Mayer, a monetary scientist, has spoken glowingly about the potential of Bitcoin. “Instant transactions, no waiting for checks to clear, no chargebacks (merchants will like this), no account freezes (look out Paypal), no international wire transfer fee, no fees of any kind, no minimum balance, no maximum balance, worldwide access, always open, no waiting for business hours to make transactions, no waiting for an account to be approved before transacting, open an account in a few seconds, as easy as email, no bank account needed, extremely poor people can use it, extremely wealthy people can use it, no printing press, no hyperinflation, no debt limit votes, no bank bailouts, completely voluntary. This sounds like the best payment system in the world!” Of course, Mayer should be taken with a grain of salt, given that he is an early investor in Bitcoin, and stand to gain from its’ success.