Bitcoin: Bigger than the Internet
Bitcoin, the world’s first peer-to-peer currency has made a tremendous leap into the mainstream since its release by an pseudonymous entity, Satoshi Nakamoto, in 2009. There is much talk about bitcoin the currency and what is its future in that regard. Bitcoin facilitates the transfer of value virtually instantaneously, for a fraction of a penny, to anywhere in the world. Only time will tell how bitcoin, the cryptocurrency, is integrated with our current financial systems. What is not discussed and is greatly misunderstood is Bitcoin and its blockchain, the technology that underlies it. The currency aspect of this technology is just one of endless uses that will move us closer and closer towards a decentralized world and economy.
The Blockchain is the world’s first decentralized ledger book. When I spend money from my Chase debit card at Chipotle, there is no physical money being sent. Chase Bank has a ledger book of all funds that their clients hold and as a central organization they update this ledger book, subtracting the about of money that I spent and adding money to Chipotle on the ledger book. Our fees that are being paid to these centralized organizations such as the bank are for this maintenance of the ledger book. This system and any other ones using a centralized ledger book are now systems of the past as we use Blockchain technology to securely and decentralized automate these ledger books.
Think now of our voting systems. Each person in the country is listed on the country census, a centralized ledger book, that tells us how many citizens there are in the country to vote. Then when these people vote the ledger book is updated with each person’s decision. Then the ledger book is recounted for each candidate and the winner is elected. Unfortunately, there is rampant fraud both in the original ledger book, as the census does not provide a true representation on the number of people, then on a greater level as the ledger book is updated fraudulently with the voters’ decisions. This is due to the centralized ledger book system where there is no current way to monitor the correct inputs onto the ledger. With the Blockchain every voter in the nation can receive a unique “Vote Coin” that serves as their validity as a citizen and their right to vote. Then they can send their coin to the candidate they choose on the Blockchain, which will then timestamp and record that vote for anyone in the world to see. The Blockchain is pseudonymous, hence the voter can be validated on the Blockchain though the voter’s true identity will stay encrypted to the public. This has the potential to bring true democratic elections for the first time. The Pirate Party in Europe has been the first political party to implement this technology as their voting system.
Through innovative, new platforms such as Counterparty, Storj, and Maidsafe the applications that can be built on the Blockchain expand each day. Counterparty, among other solutions, utilizes the concept of Smart Contracts. This refers to the concept of trading property and physical goods securely without a third party system. Patrick Byrne, CEO of Overstock, has just launched the first decentralized IPO on Counterparty, completely avoiding NASDAQ. Allowing people to buy stock options in Overstock directly from the company rather than paying percentages to a middleman who is now pointless.
An example of Smart Contract implementation, that I like to think of which will be applied very soon in the future is applying the concept to the idea of car sharing. Currently, if I rent a car from Zipcar, I sign up then wait 30 days for them to verify then add me to their Zipcar ledger book. My credit card is attached to their ledger book, thus when I choose to rent a car the centralized entity, Zipcar, processes that request and charges my credit card and in return I get the use the car for the agreed amount of time. Now let’s think about this using smart contracts. In the Middle East and part of Europe many cars feature a keypad that starts the car as a second factor authentication with your key. In a decentralized system cars to rent could be placed all over the city. Then imagine there is an app that tells you where all the cars are located around the city at any time. I then walk up to the car, pay online for however long I am using car, then a passcode for the keypad is texted to my phone and I have access to the car for the amount of time I paid for. When my time is done I park the car somewhere, the passcode is changed, and awaits the next person to rent the car. This can be an entire Zipcar system without having a centralized organization that adds additional fees for what is now an outdated system, ledger updates.
The purpose of the paper was to show the deeper concept behind Bitcoin, which is the Blockchain. Bitcoin is a global currency that transcends boundaries allowing money to be sent anywhere in the world instantly and without transaction fees. This is made possible through the Blockchain, which is the decentralized ledger book providing security and legitimacy to Bitcoin. The centralized ledger book system exists in all aspects of our lives from schooling, to gambling, to agriculture supply chains, to car rentals, and much more. The tools have been created to bring these platforms to the current era. The opportunity is yours to make this happen.
All the Best,
Daniel Bloch
Cofounder College Cryptocurrency Network
