Beyond Bitcoin’s Wild Spikes: The Enduring Value of Blockchain and Sidechain technologies

by: Matthew Gardiner

Twitter: @Matwg

Few innovations depict the rapid pace and wide scale of change which technology has introduced to finance as succinctly as Bitcoin,

Moving from a standing start to 106,000 transactions per day in just under 5 years, there are now 14,127,450 notoriously volatile Bitcoins in circulation which peaked in value at US $1,240 each in late 2013.

The crypto currency has since embarked on a series of dramatic swings that bear more resemblance to the bio data generated by a banker’s Apple Watch during an ice bucket challenge than that of the S&P 500 it’s currently flickering around US $235.

What is more, Bitcoin’s popularity in China was the key driver in its surge in value from US$200 — $1,200 in November — December 2013 and the Yuan currently accounts for 80% of transactions. In Europe, the ESMA has this April issued an open call to investors to share their intelligence on crypto currencies.

Apple, British Airways & Dell headline the 100,000 strong roster of companies which accept Bitcoin, albeit through the sensible buffer of processing partners which limit their exposure.

It’s the stability of the underlying digital ledger technology, Blockchain however which has secured the attention of financial institutions, investors and regulators alike.

This April Goldman Sachs co-led a $50m round with China based IDG Partners in New York’s Blockchain developer Circle shortly after UBS invested in a Blockchain innovation lab at London’s Level 39

In brief, Blockchain and Sidechain technologies enable the secure and rapid settlement of transactions through a decentralised structure which minimises counterparty risk.

Their applications are diverse and reach far beyond the financial services sector as they provide much needed secure multi-factor authentication protocols.

Furthermore they also have the potential to make personal data truly portable, and thereby pose dynamic challenges to the data-centric business models which are the lifeblood of Google and Facebook.

Editors Notes: This entry has been submitted to the FINTECH Book, the world’s 1st globally crowd-sourced book on FINTECH. Readers that enjoyed this initial abstract are invited to share and like it so that it may be featured in a longer version.

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