Bitcoin really introduced blockchain technology to the world and is the largest blockchain today. The payment network uses peer-to-peer technology to operate outside traditional banking systems. It is considered to be the first widely used cryptocurrency.
Cryptocurrencies are only one of the potential of blockchain technology 1.
Blockchain represents a smarter way to automate cross-industry interactions and promises huge increases in efficiency and potential massive cost savings. The technology is going to change “escrow” transactions like buying and selling property, recording estates or managing trusts. Blockchain can be used for domain control and IP management. Even basic tasks like messaging can tap into the technology to create signed and unchangeable communications. Fully mobile and mobile payment systems powered by blockchain (i.e., WeChat) would remove the need for credit cards like Visa, Amex or MasterCard because blockchain systems are much faster, much cheaper.
Blockchain technology will also enable new transactions and collaboration scenarios that appear impractical or impossible today. For example, blockchain and smart contracts could create the financial instrument for collaborative manufacturing scenarios that are too costly to slow or too risky to function with today’s payment platforms. There are also exciting options to support innovation and IP creation structures for experts from different geographies and organizations.
We are already beginning to see is the impact of combining blockchain technology with peer to peer (P2P) networking. P2P computing or networking distributes tasks or workloads between peers. Peers make a portion of their resources, such as processing power, disk storage or network bandwidth, directly available to other network participants, without the need for central coordination by servers or stable hosts. P2P will create systems where the capacity of the system scales up at the same rate that new users join the system. It should also create systems that are easier to deploy and administer.
Blockchain application beyond Bitcoin – More than just cryptocurrencies highlight some of the applications organizations are developing today.
How “real” are cryptocurrencies?
When I talked with experts from both BitBank and Ethereum, I came away thinking that, while cryptocurrency is still in its early and somewhat experimental phase, it is very real. And, the longer it exists and grows, the stronger and more widespread it will become.
In some ways, blockchain is the final piece of the internet puzzle. The internet was created to exchange information and, using standardized international communication protocols—TCP/IP—developed over time, you can do this directly with anyone anywhere in the world. However, the internet has had no standardized international protocols to transfer “value.” To buy something, you use a third party to transfer money through traditional international payment systems that can’t talk to each other—the U.S. system cannot easily talk to the European system.
Think of it this way: whenever you do a transaction on the internet, you have to use dollars, yuan, euros, pounds, or whatever currency is accepted by the seller. Since the internet doesn’t have a form of money, you are always going through third parties, paying their fees, accepting their timelines for transfers and dealing with exchange rates if you buy stuff from different countries. Bitcoin (and other cryptocurrencies) does away with these issues. It allows you to send currency directly to someone else. Anywhere in the world. In (near) real time. For free or nearly free. Theoretically, in any amount from very small transactions to large amounts.2
Circular Economy And A Blockchain Driven Sharing Economy?
- Digital currencies are listed on CoinCap.io, but Bitcoin still dominates 78 percent of the market. ↩
- Feeling squeamish about the idea of “virtual” money? It is important to remember that except for the hard cash in your wallets or under your mattress, all assets are digital “zeros and ones”. They might be represented in “USD”, “EURO” or RMB”, but essentially they are database entries, managed by some institution (and can be relatively easily manipulated; as it happens very frequently even between (central) banks and on the SWIFT system). ↩