Can Bitcoin replace currency as we know it?
In late 2008, an electronic payment system called Bitcoin made its way into the world. Created by an unidentified programmer (or group of programmers) under the pseudonym Satoshi Nakamoto. Bitcoin’s main purpose was to allow the secure move of the cryptocurrency 'bitcoin', without utilising a central bank or third-party.
The technology behind Bitcoin is called blockchain; a distributed database that maintains a continuously growing list of ordered records called blocks. The blockchains are stored across a decentralised, distributed network of personal computers (nodes), creating several benefits:
- No single point of failure
- Not easily hacked or corrupted
- Cannot be controlled by a single person, entity, or company
Due to the rise and success of Bitcoin over the last several years, blockchain technology is being researched and evaluated by a wide range of government entities, corporations, and industries to improve efficiencies and security.
The Chamber of Digital Commerce, along with the US Department of Health and Human Services recently co-hosted a blockchain Code-a-thon, looking to the public to create ideas on how blockchain could be used to address the challenges of managing electronic health records, such as;
It was the first ever blockchain hackathon hosted by a government entity. Last year, the US Postal Service conducted a study to better understand the technology and identify potential areas of interest.
At the beginning of 2017, McKinsey & Company, a global management consulting firm for governments and NGOs, submitted a report regarding blockchain technology.
They surveyed over 200 companies and discovered that out of at least 80 promising opportunities to apply blockchain technology without bitcoin, nearly a quarter of them exist within the insurance industry, followed by the payments industry at 13 per cent.
In general, the Financial Services industry made up 50 percent of the total mix. Blockchain technology has the potential to disrupt this industry by removing the “middleman” and creating efficiencies through various parts of the value chain, such as payments, pricing, transfers, smart contracts, identity fraud, and investments.
The future of blockchain
Looking further into the future, experts and researchers are predicting that blockchain will allow companies to be run only by algorithms, improve artificial intelligence, and track and manage IoT devices.
Blockchain is essentially a ledger of encrypted data exchanges between it and other devices, web services, and human users, so it would also provide a way to track the unique history of your individual device. Imagine having smart appliances that communicate and set priority with one another to run at the most opportune time, minimising electricity costs and keeping your appliances in good working condition.
The potential applications and benefits of blockchain are seemingly unlimited, but like any technology, there are still disadvantages and questions that need to be answered.
One major disadvantage is that it requires constant power from several sources to run. For example, one article found that every bitcoin transaction requires the equivalent energy to power 1.57 US households for a day. There are still uncertainties within financial industries on how to regulate and adopt blockchain policies. Bitcoin was unprecedented and modern currencies have always been created and regulated by governments. Nevertheless, blockchain seems to be on pace to become one the most powerful, game-changing technologies to date, disrupting industries and making processes more efficient, transparent, and secure.
Want more information about the new IT Landscape? Why not check out our blog about 10 new terms you need know.