Block Chain Is Changing Money: Bitcoin
Block Chain Is Changing Money: The next few decades, technology is likely to have the greatest impact and it’s not social media, or big data or robotics or not even AI. It is surprising to know that it’s the veiled digital technology of currencies like Bitcoin known as Block-chain.
Now is not the most booming word, it is believed to be the next generation of the internet. It is meant to hold the vast promise for every business, every society and above all, individually. For the past few decades, we have had the internet of information.
Whenever we receive an email or a PowerPoint file or something, we aren’t receiving it as original but a copy. This is called democratized information.
If you are sending someone 100 dollars and you don’t still have the money, this has been called the “double-spend” problem by cryptographers for a long time. As of now we are relying entirely on big intermediaries called The Middlemen like banks, government, big social media companies, credit card companies, and likewise – to establish in our economy.
The Middlemen perform all the business activities and transact every kind of commerce starting from the authentication, identification of people, and through to clearing, settling of the records. But there are growing problems of being centralized due to hacking.
Increasingly, there are major companies like JP Morgan, the US Federal Government, LinkedIn, Home Depot and others that found the hard way by excluding billions of people from the global economy, such as, people who don’t have enough money in their bank account.
This makes things slow down. Where It takes seconds for an email to go around the world, it also took days or weeks for the money to move through the banks across the cities. There is a big amount of work to be done here just to send money to another country that captures our data.
That means we do not have authority to monetize it or use it for ourselves when required. The privacy is being undermined with the largest of the digital age asymmetrically. We have grown with social inequality.
There is this vast, global, distributed ledger that runs on millions of computers available to everybody with not only an internet of information but an internet of value. And it is where every kind of asset, could be stored, moved, transacted, exchanged and managed, without any third party intervention.
What if there were a native medium for value? Back in 2008 when there was a major crash in financial industry perhaps propitiously, an unknown person, Satoshi Nakamoto, developed a protocol for digital cash that used a masked crypto-currency called Bitcoin.
This crypto-currency allows people to develop trust for doing the transactions without a third party. This set off a spark that instigates the world as they get excited and terrified as well in a way or interested otherwise. Now, Bitcoin is an asset that goes up and down, and that should be of interest to you if you are a speculator.
More broadly, it’s a crypto-currency and not a fiat currency controlled by a nation-state. But then here comes the Block-chain. People now, can trust each other and transacts without fear peer to peer, not through some intermediaries but by cryptography and coding.
Digital assets are now distributed across a global ledger using the highest level of cryptography rather getting stored at a central place. When a transaction is carried out, it is posted globally across millions of computers.
A group of people called ‘Bitcoin miners’, having massive computing power at their fingertips about100 times bigger than all of Google information. Every 10 minutes, a block gets created that has all the transactions and then the miners get to work, trying to solve some problems, competing and validating the block is rewarded in the digital currency.
That block is then linked with the previous block creating a chain of blocks. Each block is a kind f digital waxed seal, all secured with privacy features. And if a block is hacked, the entire history of commerce on that block-chain being watched across the millions of computers using the highest levels of encryption, simultaneously, considering the most powerful computing resource in the world, is definitely more secure than the today’s computing systems.
So with the Bitcoin Block-chain, there are many other being developed like the Ethereum block-chain, developed by a Canadian named Vitalik Buterin. This block-chain has extraordinary capabilities of building smart contracts. The contracts that self-executes, handles the enforcement, the management, performance and payment.
The contract has a bank account too of agreements between people. There are many projects underway today, on this new Ethereum Block-chain that does everything from creating a new replacement for the stock market to creating a new model of democracy to maintain transparency between the government and citizens.