Transformative Power of Bitcoin
Let’s concentrate our attention on two major stories of recent few decades to gain full vision of events and understand potential of the processes that we are experiencing right now. With this first blog I will try to build baseline for thinking for our readers and introduce step by step different concepts and ideas that this space is inhabited with. I’m hope that it will be very excited journey and sure that together we will see how deep the rabbit hole goes.
The power of internet
The 21 century is a century of tech renaissance. World society and economies are turning digital every day. Digitalization is pervasive not just in a small set of sectors, everything is gradually penetrated by information technology. One of the main pillars of this revolution is the Internet. Society experiences radical changes that the Internet triggers in all spheres of life as it reshapes our patterns of life, the way how humans do business, interact with each other and etc. Governments, businesses and other institutions are more and more depending on this public good. The Internet democratizes information industries and makes publishing, transferring and accessing of information to near zero marginal cost (Jeremy Rifkin, 2015). New emerging business models that internet is bringing, disrupting existing economical and power structures and carrying exponential changes, which is unpredictable with our linear way of thinking. For existing moment internet is connecting almost half of world population, resulting in the uniting of humans around the globe in an unfathomably complex web of relationships. With the internet, realization of vision of the humanity as a technically integrated spices becomes inevitably real.
But back in 1990s when commercial internet was making first steps, there was a lot of criticism it was just a mean to send an email and people was skeptical toward this new type of informational technology. They even do not imagine emergence of Google, Skype, Facebook, Uber, Airbnb and other disruptive models made possible by internet revolution.
Story of bitcoin and blockchain technology
In 2008 one important event happened. The white paper describing peer to peer electronic cash, named Bitcoin was published in cryptography mail list. The white paper presented the design of open source payment system, which is completely decentralized, with no central server or central authority. Author of this paper referred himself as a Satoshi Nakamoto. We know that this name is pseudonym and real person behind Satoshi Nakamoto is unknown, but it really does not matter, because this white paper initiated birth of new groundbreaking technology, which is capable of comprehend almost the same societal impact that Internet have done.
Bitcoin is unique by its nature because it’s monetary system is defined by open source software. It means that everyone with sufficient knowledge can check the code and proof that it’s correct in comparison with central banks policies that are managed way not so transparently in a closed cabinets and private conversations.
Bitcoin is a first attempt of democratisation of money. It is an experiment how community will manage and govern currency that is not controlled by the state. That is the most excited part in this story and if we as a society can manage this, it will be the beginning of something very interesting and hugely transformative for everyone. Bitcoin is nothing without a blockchain, ledger were all bitcoin transactions are recorded and stored publicly and immutably, so no one can manipulate them. Think of bitcoin as a digital certificate that currently reflects monetary transactions between party A and party B, but you can represent with this digital certificate everything that party A and party B consider as a sourse of value. Blockchain have different names The blockchain (bitcoin blockchain), public ledger, permissionless and permissioned ledgers, corporates have rebranded it and are calling distributed ledger technology or DLT. In its core blockchain is a decentralized database that is managed by community and its security model is based on cryptography and market incentive principles. Blockchain technology is radically new approach to traditional database architecture and to established computer systems security models, but it only captured public attention after bitcoin have become mainstream.
For existing moment we are witnessing large movements from big financial institutions, major multinational banks, corporations and governments in direction to explore and find ways of implementing blockchain technology in their ICT systems. Twenty three countries already have their blockchain technology startups. California and especially Silicon Valley are in forefront of this revolution in terms of harmonizing and adjusting legislation frameworks. Major developed countries in Europe, Canada, Australia, Singapore, China, Russia and others around the world are rigorously researching potential of this technological innovation in order to not to miss opportunities and bring the benefits of this innovation on a public and private level.
The 1960’s gave birth to the Internet as a protocol that governed communication rules and regulations for transmitting information over networks and the blockchain technology is doing same, but for transferring of value and when we say value we imply all types of value: currency, any form of tangible or untenable asset, commodity or anything that people put value upon.
The most amazing thing that excites a lot of people about bitcoin, blockchain and emerging space is the idea that first time society have the possibility to explore and develop open source financial systems, which are based on integrity, inclusion, privacy and in a same time transparency and security. First time society can play with open monetary policy and adjust it on their specific purposes. First time they have possibility to replace and unite existing financial infrastructure with is segmented, non inclusive, full of gatekeepers charges exorbitant fees and generally broken. Broken because in the era of information sending information from A to B should be simple as sending email.
Powerful ideas that dissolve boundaries are in the air and ideas are like living organisms they live from brain to brain, compete for limited resources of our attention, they are infective and have spreading power and when they hit critical mass they can change dominant cultural operating system.
The disruption race between new and old technology is started. We don’t know what will be the financial landscape in 5 or 10 years, but for sure there are huge demand for technologies that are much more efficient, transparent and inclusive and bitcoin and blockchain are one of them.
