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Why cryptocurrency is giving Blockchain an undeserved bad name
Until 2009, there were a grand total of 180 currencies in the world. Some of which have remained unchanged for over 900 years.
Everyone one of those currencies had one thing in common, they were all based on physical wealth. 2009 brought about the world's first digital currency, Bitcoin, and overnight, Cryptocurrency was born.
Fast forward 9 years and there are now 1,565 cryptocurrencies globally and the number keeps growing.
Given the bad press some have received and the incredibly complex platform they are all built on (Blockchain) that very few people still really understand, it’s hardly surprising that both crypto and blockchain often get a bit a bad rap.
Whilst much of the negative press around certain ‘dubious’ cryptocurrencies is undoubtedly deserved, Blockchain itself is very much the innocent party. This isn’t a techy article, I’m not going to delve into how it all works but I do want to set out to de-couple Blockchain from Cryptocurrency.
To start off with an analogy, thinking that because some cryptocurrencies are dubious and untrustworthy that Blockchain is also dubious and untrustworthy is akin to being taken in by a telephone scam and deciding that telephones themselves are to blame. It’s the people using it, and how they use it. The phone itself, is still a pretty remarkable devise. The same with Blockchain.
What is Cryptocurrency?
According to the Oxford England Dictionary, “A digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank.”
Some issues to start with.
“Independently of a central bank”. There are some people that are very excited about this. Why? Because banks make a lot of money. In Australia alone, a country of a meagre 24 million people, the major banks turned a profit last year of $31.5 billion. That’s $1,312 profit from every man woman and child in the country. Taking power away from these, quite frankly, greedy corporations is undoubtedly a good thing. There’s a ‘but’ though. Banks wealth has a basis. When you give someone a bank note, it is backed promise to honour the value depicted on that note. Banks wealth is based fundamentally on gold. Cryptocurrency value, for the overwhelming majority of cases, is based on quite literally nothing. It has only has value because people have decided it has value, and anything that shaky is susceptible to collapse.
The initial value of Bitcoin was more legitimately linked to the technology is was built on, which was at the time and still is, groundbreaking.
What is blockchain?
Blockchain is a way to structure data. It isn’t a programming language, or even a platform.
If you structure your data in such a way as to create a blockchain, it creates certain benefits.
- Every data transaction or record that happens is unique. The same piece of data cannot be replicated.
- Every transaction/record is validated and verified to guarantee it is authentic
- Every data transaction or record that happens is stored forever.
- You can never change original data.
- Only the recipient of a transaction can unlock and receive the details of that transaction
- It’s impossible to hack, so the data is incredibly secure
Finally, as no central administration is required, no independent body to validate the data, the long-term cost savings of using blockchain are huge.
All of the above explain the logic of why Blockchain is used as the backbone for Cryptocurrency, but the scope for other applications are enormous.
Medical records:
Turn up to any GP or hospital anywhere in the world and access your entire life’s medical history with an electronic access key
Legal transactions:
No more lengthy waits to exchange on property due to instant peer to peer transactions. No more long and costly legal disputes over publishing rights or copyright with immutable ownership.
Voting:
The end to electoral fraud. One person, one vote, and 100% authentication of who actually voted.
Smart contracts:
Agreements can be automatically validated, signed and enforced, eliminating the need for mediators and therefore saving companies time and money
Supply chain:
Through enhanced transparency and traceability, the tracking of goods and transfer of ownership becomes simpler and quicker.
Quality assurance:
Imagine being able to track the origin and movement of every ingredient or component for every product. Any irregularity could be almost instantly traced to its source.
The list goes on. Essentially, any type of record where personal details are included, and being able to store an authentic historical record is essential, will benefit from blockchain.
Blockchain could end up having a similar impact to the introduction of the world wide web back in January 1991. We’re 37 years on from that date now, and it may well take another 37 for Blockchain to be viewed in the same way, but it has the potential to change how all data is processed and stored on a global scale. Our reliance on banks, lawyers, physical money, personal ID, contracts and a thousand things beside that make up the part of the world we live in may all change due to Blockchain.
If you're interested in finding out more about what blockchain is, how it works and how it's being used then check out some of our other blogs on the subject: www.engaging.io/befuddled-blockchain
If you’re thinking of incorporating Blockchain into your business, or of building a new business based on Blockchain, then get in touch and talk to our team of tech wizards. We’ll walk you through the process so you can make more informed decisions about your investment, time frames and ROI.