Since its conception, Bitcoin and the mechanisms that make it work have been an object of both fascination and ridicule, with its enthusiasts insisting it is the way of the future and its detractors deriding it as a scheme doomed to fail. However, while debate over the future of this new type of currency continues, a new wave of thought is emerging on the potential impact that the “Blockchain,” the mechanism that validates bitcoin transactions in a decentralized and anonymous manner, could have on the world.
The origin of Bitcoin, and by extension the Blockchain, is shrouded in mystery, being the first in a long line of complexities in the digital currency. The founding of the coin is claimed by someone who calls himself Satoshi Nakamoto, but no record of this person seems to exist, and it is almost certainly a pseudonym. What is known is that the first “Block” in the Bitcoin Blockchain was created on January 3rd, 2009, and since then the currency has been growing exponentially. This lack of knowledge of who exactly is behind the coin fits with the overall values of privacy and direct access that the coin seeks to embody for its users, in opposition to the bureaucracy and seeming risks with investing money in a centrally regulated bank.
The Blockchain is the way Bitcoin transactions occur. Bitcoin has no central bank, and people who claim Bitcoin wealth do not actually own their Bitcoins. Instead, they own half of a “key,” the other half of which must be verified by other members of the Bitcoin network, who compete to validate the key to earn newly minted Bitcoins, creating a financial incentive for ensuring the safety of these transactions. In this system, no trust is needed as in a traditional financial model. Instead, anonymous individuals authorizing mathematical operations to validate cryptography are securing the legitimacy of the transaction, effectively cutting out the middleman of a bank. After a transaction is made, a new “Block” is added on the Blockchain, also updating all the other blocks that came before, adding an extra layer of security to the process, as a potential hacker would have to infiltrate the system before any new Blocks were added, as the structure of the Blockchain changes with every new transaction. The Blockchain is further secured by the fact that due to its multipolar structure, it is much harder to take down the network, since it does not have a single choke point. The direct nature of the Blockchain’s applications to currency makes it popular among those who distrust or despise central authority over something so important as money; however it has also invited criticism, as the Blockchain’s anonymity and lack of a central authority validating transactions has led it to become popular among criminals.
Though the Blockchain has thus far been largely relegated to the financial sector, mostly with Bitcoin and other cryptocurrencies such as Ethereum, many experts postulate that currency might be just the tip of the iceberg for use of this decentralized, incognito system of cooperation between strangers. A company called BitCongress is trying to use the Blockchain to create a platform for citizens to create laws and vote on them without fear of fraud or corruption, since the cryptographic nature of the blockchain can assure that no individual votes multiple times, and that no one tampers with the votes; both of these problems can occur in normal legislation-proposing electronic mechanisms, which are often dependent upon email addresses and other identifying mechanisms that are easy to exploit by those with the desire to. Another possible use of the Blockchain is in identity authentication. Many recent high-profile hacks that have leaked the identities of countless people have inspired many thought leaders in the technology industry to begin thinking of applying the Blockchain to the securing of an individual’s personal information. Today’s centralized databases compile massive amounts of personal information, that, when stolen, gives hackers great opportunities to do harm. A Blockchain-based authentication system would only need to have the correct cryptic address, and the user could have access to all the things they would want to use on a particular service, without fear that a hacker could steal their personal information, as their authentication would be reduced to a simple hash code. As we move deeper into the 21st century, it would be wise to pay close attention to cryptocurrency, for its relevance and impact aren’t going away anytime soon.
Sources:
https://finance.yahoo.com/news/bitcoin-pros-cons-consumers-merchants-140041526.html
https://thenextweb.com/insider/2015/03/29/a-brief-history-of-bitcoin-and-where-its-going-next/
https://blog.blockchain.com/2015/04/06/the-top-5-reasons-to-use-bitcoin/
https://www.youtube.com/watch?v=r43LhSUUGTQ
https://www.youtube.com/watch?v=M_zCjjy59cg
https://www.econotimes.com/BitCongress-The-Decentralized-Blockchain-Voting-Platform-183628