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What You Need to Know About Bitcoin Technology

What You Need to Know About Bitcoin Technology

By    |   Wednesday, 25 September 2019 09:07 AM

You still can’t walk into a mall, buy a new jacket, and pay with Bitcoins. You still can’t order a burger in a restaurant and tip the waitress with a few Satoshi. It’s still largely tech nerds and futurists who have cryptocurrency wallets filled with digital coins.

So why is there so much fuss about Bitcoin? Why is a digital currency that’s now more than decade old and still hasn’t won mainstream acceptance still the talk of the tech world?

The answer lies in the technology that underpins Bitcoin.

A digital coin was always going to be just one use of the blockchain, the digital ledger that keeps track of every movement of every coin. But the benefits of the blockchain mean that the technology will support a range of different industries.

The main attraction of the blockchain for finance is its security. The blockchain groups transactions together and adds them to the ledger in a single block. Each block generates a code that has to be used in the following block. Each copy of the ledger is spread across thousands of different nodes, which check each other constantly.

If anyone were to try to hack into the blockchain to change a transaction—to take their money back, for example—none of the codes in any of the following blocks in that single node would work. The change would be thrown out and that node would revert to the ledger in all the other nodes. That makes the blockchain valuable for the finance industry. There are still security issues surrounding the use of wallets—the technology used to hold digital coins—but the infrastructure itself is very secure. It’s no wonder that banks and financial institutions are experimenting with the blockchain as a way to record transactions in real time.

The blockchain also has the benefit of being automated.

This was the big breakthrough offered by Vitalik Buterin and his Ethereum network. Ethereum, a kind of digital token whose movements are tracked using the blockchain, allowed developers to write automatic contracts based on those movements. So a rental business, for example, could release a code as soon as it receives notification that its payment has been received on the blockchain. The client would pay and the seller would receive a notification but wouldn’t have to take any action.

The result would be a faster, more efficient, and more secure sharing economy. But the benefits could also revolutionize industries as large as shipping and manufacturing. Any industry that relies on checks and confirmations before moving onto the next stage of a process can benefit from a technology that conducts those checks, releases the confirmations automatically, and can’t be hacked. That’s why companies as big as Maersk are already experimenting with the blockchain to ease connections between shippers and regulators. Maersk is now using TradeLens, a system it built with IBM, to increase the speed of cargo clearance and improve the movement of goods across borders.

And that’s the other benefit of the blockchain to big companies. The blockchain has no borders. The records in its ledger aren’t located in any one country, vulnerable to that country’s regulations and data policies. They can be spread across the world and made accessible anywhere. For a world in which business is increasingly international, that makes the blockchain an ideal tool.

Bitcoin is the best-known use of the blockchain. It’s the one that’s attracted the most media attention but it might not turn out to be the most common use of the technology.

Quietly, the digital ledger is coming to underpin much of the modern economy. You might not be able to use it to buy a jacket in a store but that store might have used it to put the jacket on the shelves.

Joel Comm is New York Times best-selling author, blockchain enthusiast, professional keynote speaker, social media marketing strategist, live video expert, technologist, brand influencer, futurist and eternal 12-year old. His latest project is as co-host of The Bad Crypto Podcast, a top cryptocurrency show making the future of digital payments easy to understand.

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So why is there so much fuss about Bitcoin? Why is a digital currency that’s now more than decade old and still hasn’t won mainstream acceptance still the talk of the tech world?
bitcoin, technology. investor, crypto
Wednesday, 25 September 2019 09:07 AM
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