Blockchain, Bitcoin and cryptocurrency in two minutes
An experiment is in progress that could have a huge impact on all our futures. Hopefully you’ll feel like this after reading:
What is Blockchain?
- Blockchain is a type of database.
- There can be thousands of copies of the data on computers around the world.
- The computers ensure that all the copies are identical.
Why is Blockchain important?
By having so many identical copies of the data around the world, it is almost impossible to tamper with or hack. You’d have to change them all at the same time.
This makes blockchain perfect when you need total confidence that your records are correct and secure.
We can use a blockchain to record and prove ownership of various things. For example money, stocks and shares, etc.
How will Blockchain affect me in future?
If you want to send someone money, you first put that money in your bank.
You ask your bank to send the money to the other person (or business) at a different bank. Both banks have to confirm that the correct amount was deducted from your account, and added to the other person’s.
This process is error-prone, expensive and slow. Even more so if the money is sent overseas.
Blockchain enables you to to send money directly to someone, no banks involved. You can be 100% sure that it’s gone to the right person, and the fees can be very low or even zero.
Bitcoin was the first example of this new type of money, which people have dubbed “cryptocurrency”.
This method of exchanging money is much better than anything else we have today.
And like traditional bank notes and coins, it is anonymous.
Really, it is digital cash. Sending someone Bitcoin (or another cryptocurrency) is like sending a bank note. To anyone. Anywhere in the world. Without meeting them.
Despite the financial crisis of 2008, in America and Europe, most of us trust that our money is safe in the bank.
But a huge number of people in the world don’t even have a bank. And if they do, the risk is real that it could collapse at any moment. Or their government could raid their savings. Or seize their assets.
Blockchain and cryptocurrencies provide strong protection from these risks. Because neither government nor anyone else is able to manipulate the record of ownership that is the blockchain.
The more people use anonymous, digital cash, the harder it will be for governments to raise the funds needed to provide services.
All of us may need to become more philanthropic and ethical. We may need to choose to pay taxes in some form. A solution to this could be a worldwide transaction tax.
Also there is a difference between “open / public” blockchains and “closed” or “private” blockchains.
I have just described the structures and benefits of open/public blockchains.
Closed/private blockchains can be manipulated. Because they are controlled by a cartel. That cartel may be a government, group of governments, company or group of companies. It is possible that governments will attempt to use this technology to stay in control.
Unless public blockchains gain wide acceptance and use.
Public blockchains include the Bitcoin blockchain and Ethereum.
It’s not just about money
This is where it gets really exciting. With blockchain, you’ll be able to prove ownership of way more than financial assets.
You’ll be able to prove who you are. For the majority of people in the world that is a huge deal. Prove education, work experience, skills and credit worthiness anywhere in the world.
I’d love to know if this was helpful. Please leave a comment!