Blockchain is set to dominate 2017 despite Bitcoin ETF delay
Digital currencies and exchanges are just the start.
For 4 years, investors Cameron and Tyler Winklevoss have regularly filed and amended their application with the U.S. Securities and Exchange Commission (SEC) for a Bitcoin ETF. And it looks like the wait is not yet over for the twins, who were told that their ETF would not receive approval.
Despite the response, Bitcoin’s price has remained relatively stable — showing its potential as an asset class. More importantly, Bitcoin’s resilience is another win for blockchain, its underlying technology.
What is blockchain?
In one word: Decentralization.
Instead of hosting data on a central node owned by a company or government, data is recorded and stored on machines across the entire network. Every computer on the network essentially acts like a gatekeeper, contributing to the “ledger’s” validation. This kind of decentralized data-keeping has many applications, the first having manifested as the cryptocurrency called Bitcoin.
A global blockchain revolution
The twins knew 4 years ago what we know today: the blockchain revolution is inevitable. Banks and governments across the globe are adopting the technology in an effort to create a financial system that is international, transparent, and nearly impossible to corrupt.
Recently, Japan’s Financial Services Agency has allowed the Japan Exchange Group, operator of the Tokyo Stock Exchange, to use financial technologies (FinTech) like blockchain as its core trading infrastructure.
Effort to adopt blockchain in Japan has been mirrored in real-world tests in other countries. The Australia Stock Exchange (ASX), for instance, has implemented a blockchain-based solution to run concurrently with its clearing system. To what end? ASX seeks to eventually replace its system with the blockchain version.
The Nasdaq exchange has also begun work on blockchain-based trading by launching its trading platform Linq. Linq allows private companies to trade shares over a distributed ledger. Meanwhile, Russia’s prime minister has asked his ministers to study blockchain’s role in the country’s new digital economy program.
Finally, Bitcoin has revealed blockchain’s ability to take regionally locked currencies into the global markets through digitization. China has quickly risen as one of the leaders in this area.
RMB, the first digital currency?
Before the end of 2016, the People’s Bank of China (the country’s central bank) successfully completed a trial of a blockchain-based digital currency prototype system. This achievement takes China a step closer to having the first central bank with its own digital currency. An electronic RMB would allow China to overcome some of the common shortcomings associated with physical currency.
Digital currency is cheaper to issue and circulate, offers improved convenience and transparency with transactions, reduces money laundering, cuts down on tax evasion, and improves distribution. Digital currency would also help bring more than 700 million Chinese Internet users to the global markets
The central bank is studying two possible operational directions for rolling out their digital currency. The first option has the central bank managing the currency directly, picking up the responsibility for issuing, circulating, and maintaining the digital tender. Or, they could issue the digital tender to commercial banks who would then be responsible for providing deposit and withdrawal services to the public — just as they do with physical currency. Choosing the second route makes sense as it would allow the central bank to ease the adoption of digital currency. China’s experimentation with digital currency is likely to spur blockchain development in other countries.
The first ETF
The Winklevoss ETF would’ve be the first Bitcoin ETF issued by a U.S. entity. Similar to the steps taken by governing bodies in Japan, Australia, China, and Russia, SEC approval of a Bitcoin ETF would’ve marked a step forward for blockchain-based financial systems.
With a regulated ETF, anyone could easily add Bitcoin assets to their diversified portfolio. With such access to public money, the price of Bitcoin could rise substantially. Ironically, the potential for such uncontrolled growth (and subsequent bubble) was one of the factors holding back the SEC from making a decision. Despite the outcome, the general sentiment across the Internet is that a Bitcoin ETF will eventually get approved.
As blockchain continues to take root in financial systems around the globe, our ability to understand this new technology becomes more valuable.
Understand the new language of finance and of the Internet
Blockchain is all about decentralization. Although it has been taken in initially by the financial sector, blockchain has an array of applications beyond money.
Why is learning blockchain useful? Because the way we store and interact with data is changing. As banks and governments continue to adopt the technology, financial systems and our entire socioeconomic structure will also change toward decentralization. Understanding how blockchain works and its capabilities will give you an edge as the Internet landscape continues to transform over the next decade.
Whether you are a programmer looking to break into FinTech, or someone looking to keep up with changing technologies, learning blockchain is a strategic way to position yourself for a future built on transparency and decentralized verification.
Looking for a place to learn about blockchain? Take a look at our course Blockchainium for beginners in Blockchain Technologies at Altcademy.
Our courses are delivered in a unique online learning experience that is hands-on and includes face-to-face time with your instructor, real-time communication for feedback, and a rich database of questions and answers from fellow students.
