Cryptocurrencies from Bitcoin to Ripple were hot topics in 2017, but how much do you understand how they work? Blockchain technology is a rapidly expanding industry that underpins these cryptocurrencies. As this data architecture grows, it may spread to transform how other sectors process and store data. This conversation on the blockchain was originally published in September 2016 but, given the meteoric rise of some cryptocurrencies in 2017, we decided to repost it.What is Blockchain?
A blockchain is a distributed public ledger of all transactions and items that are contained within a record. Every transaction is visible to all users in chronological order. It also allows access to any internet-connected device, making this technology accessible to billions of devices worldwide.
Bitcoin: A Digital Currency
The world’s most popular digital currency, Bitcoin, uses blockchain technology. Users execute financial transactions using anonymous accounts, with all transactions publicly recorded on the blockchain. To ensure validity and security of digital transactions, bitcoin pays “miners” a small sum to verify transactions.
Bitcoin users’ anonymity has presented problems to law enforcement. Bitcoin can be used as a platform to purchase illegal items or facilitate illicit activities (including terrorism) because there is no reliable way to track the users. This issue makes it difficult for traditional financial institutions looking to emulate its model.
The Future of Blockchain
Some companies are using blockchain for non-currency purposes.Bitfury is an IT company that develops and delivers software and hardware solutions to ensure its clients access to the blockchain. Specifically, it employs blockchain to give clients secure and efficient asset transfer capabilities.
Blockchain’s ability to execute and track transaction can be applied to several other functions. For instance, it could transform international aid monitoring by giving public access to where and when program money is being dispensed. Blockchain technology could revolutionize the internet as people find more ways to employ it.
Take a look at some of our favorite articles that we came across while researching this topic:
- How the Bitcoin protocol actually works, Michael Nielsen, Michael Nielsen blog
- Bitcoin and the Future of Blockchain in International Payments Systems, Frances Coppola, American Express
- CIO Explainer: What Is Blockchain?, Steven Norton, Wall Street Journal