What is all the Bitcoin cryptocurrency hype about?
There has been increasing media attention on crytocurrencies like Bitcoin, Etherium, Litecoin to name a few, this has been caused, in part, by two factors, firstly legitimate large businesses accepting cryptocurrencies as payment options and secondly the value of Bitcoin substantially increasing in recent months.
This article will aim to provide a brief explanation as to what Blockchain Technology is, how it was developed and how it is changing the way we trade through cryptocurrencies.
What is Blockchain Technology?
The short video below provides an explanation of what Blockchain Technology is and how the technology can be potentially used.
In 2008 the computer programmer using the pseudonym Santoshi Nakamoto is credited with inventing blockchain technology. It is an open-source (the code is open to public view), it is peer to peer (it does not require a third party intermediary such as Paypal or Visa) digital currency. In 2009 a paper was published online titled “Bitcoin: A Peer to Peer Electronic Cash System”, the paper described how the digital currency would work.
The release of the paper resulted on 12th January 2009, the inception of the software for the currency “Bitcoin”, block 0 was mined. In the years since, many other assets and forms of blockchain technology have been developed. Bitcoin has gained the most media attention and momentum due to its increase in value during 2017 (From around $900 in January 2017 to nearly $20,000 in November 2017 (Bitcoin Price Index (BPI))
The invention of the blockchain is an influential achievement in its own right as this technology uses a distributed ledger to record transactions between two parties in a verifiable and permanent way. The innovation of this technology is the potential in how it could influence and or change how we deliver services and use technology in the future.
A brief look at the history of currency
In the long history of money there have essentially been two types, the first are tangible commodities such as gold, the second is currency that are governed and regulated by governments. The proposition and surge of cryptocurrency is a third type of money, a potential market disrupter in the way goods and services are purchased and traded.
Around the globe there are many businesses who accept payment of services and goods through cryptocurrency, this includes tangible items from buying a cup of coffee to luxury real estate.
Crytocurrency is abstract, not tangible and is the creation of a computer genius with no power to compel anything, and yet has created the biggest shift of focus from the traditional structure of the leading creators of money since the inception of the Central banking system.
Blockchain is causing excitement as it is a system that is private and has no traditional financial institutions involved in the transactions, it is a completely decentralised network with all parts of the transaction performed by the users of the system.
The technology provides a secure system as it is based on a public record of transactions known as blockchain that minimises the opportunity of fraud and cyber crime issues as users require a public address of numbers and letters in order to receive payments, as a consequence, intelligence agencies can track the movement of funds when trying to cash out through regulated entities such as exchanges and banks.
Is Blockchain here to stay?
Blockchain technology and cryptocurrencies are an irreversible advancement that is disrupting established industries and the ways in which we interact financially. For this reason, I believe the blockchain technology will financially affect the majority in both underdeveloped and developed nations as it is implemented into our economy and daily lives.
Most importantly, the development of Blockchain technology in the legal services industry is a game changer, for instance, in litigation trials for storing of evidence or the development of a digital Land Registry are fundamentally changing human and economic realities in society and legal procedures and processes.
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Avinder Laroya is a Partner at Serenity Law LLP, she is an expert in International Dispute Resolution. If you enjoyed this article you can subscribe to my blog here
Serenity Law LLP is a boutique London commercial law firm providing commercial legal services such as company commercial, real estate, litigation and employment services to UK and international clients.