Where does the real value lie? In Bitcoin and other cryptocurrencies, or Blockchain technology?
Many market watchers believe that the value lies in the currency, however, the reality of the performance is plain for all to see. (Click on graph to enlarge).
Let’s start with the fundamentals. What is Blockchain technology?
- It is a digital ledger maintained on a peer-to-peer network that provides a secure method of making and recording transactions, agreements and contracts and allows the parties to transact, trade or exchange information with each other directly.
- It also allows each party to see all new updates or changes to the transaction or information simultaneously. An example would be an agreement between two parties. The document would be available simultaneously to both parties so both can amend, update and validate immediately.
- Unlike with the intermediation of banks, with Blockchain both parties simultaneously agree and validate the transfer of funds with each other (potentially) removing the need for the intermediary bank.
- It is this decentralisation and removal of the requirement for an intermediary or third party that makes Blockchain so potentially attractive.
The current challenge is that these capabilities remain potential capabilities, and the only seriously adopted application has been with cryptocurrencies like Bitcoin. Because of this, Bitcoin and Blockchain have largely been synonymous with each other, in much the same way that e-mail and the internet were often perceived as being the same thing in the early days of the internet revolution.
Whether or not Bitcoin becomes a stable and widely used currency remains to be seen – the volatility shown in the earlier graph suggests that we are a long way from achieving that. Yet what is clear is that Blockchain development is gathering a huge amount of momentum around the world.
Arguably, it may only be a question of time before Blockchain becomes the solution for a number of problems in the business and social spheres…