In November 2008, a paper was posted to a cryptography mailing list under the name ‘Satoshi Nakamoto’ titled Bitcoin: A Peer-to-Peer Electronic Cash System. This paper detailed methods of using a peer-to-peer network to generate what was described as “a system for electronic transactions without relying on trust”. In January 2009, the bitcoin network came into existence with the release of the first open source bitcoin client and the issuance of the first bitcoins. [Wikipedia]
Fast forward 9 years, Bitcoin is now legal to use in Japan. Norway has banks that accept bitcoin accounts. It has passed the price of one ounce of gold. Price reached its maximum in the history of bitcoin. Reaching an all-time high of $3,000 on June 12, 2017 and is oscillating around $2,500 since then. As of July 20, 2017, the price is $2637.82. All of this running on Blockchain technology.
What is Blockchain?
A distributed database that is used to maintain a continuously growing list of records, called blocks. Each block contains a timestamp and a link to a previous block. A blockchain is typically managed by a peer-to-peer network collectively adhering to a protocol for validating new blocks. By design, Blockchains are inherently resistant to modification of the data. Once recorded, the data in any given block cannot be altered retroactively without the alteration of all subsequent blocks and a collusion of the network majority (76%). Functionally, a Blockchain can serve as “an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way. The ledger itself can also be programmed to trigger transactions automatically.”
The Blockchain Promise
Blockchain has the potential to solve many limitations of databases while working over the internet. It can authenticate identities and create verifiable transactions history. Blockchain can reduce the overhead of transactions by eliminating many costs to a company and it can increase the speed in which transactions can get done. It can save money on international trade and avoid certain taxes*. But this is only the start. Blockchain will enable completely new types of entities that operate without central authority and support interactions between machines that streamline processes that can eliminate the need for humans to monitor.
Thus far working with Bitcoin or Ethereum Blockchains do have a high risk associated with it, especially for investors. Hackers are constantly stealing millions from companies. Also other companies are promising certain technology and not delivering them. The loser in the end are the investors. We forget that most startups have a 90% failure rating, but this does not represent everyone. It is high risk, high reward investment. Hopefully it will pay off in the end.
There are many other issues with Blockchain that are currently being discussed in the community. Many people are split on where the future should go. Bitcoin’s Blockchain future will be decided on August 1st, 2017.
I am excited for Blockchain technology, it will be the future! I recommend that you should be excited too but don’t go throwing all your money into this and be very careful if you plan on investing.