Overall, blockchain technology is expected to play a significant role in the future, driving innovation and transformation across various sectors. While challenges remain, the potential benefits of blockchain are driving significant investment and adoption, suggesting a future where this technology is deeply embedded in our digital world.
UNDERSTANDING THE NEED AND FUTURE OF CRYPTOCURRENCY
Even though Bitcoin and blockchain have been around for more than a decade, many people still don’t fully understand the technology. Could you give our readers a quick primer?
It’s impossible to do it justice in a short paragraph, but let’s try. Blockchain and Bitcoin are intertwined but not the same. Simply put, Bitcoin is a digital currency that is built on a technology called blockchain. Bitcoin and blockchain use math and computer science, particularly cryptography, to facilitate transactions of digital assets, and they do it through algorithms that establish indisputable trust. Because Bitcoin is maintained by a peer-to-peer network and does not rely on a central authority like a bank or a government, it is known as a decentralized currency.
In the Bitcoin network, transactions are processed in bundles called blocks, which are validated about every ten minutes. These blocks, which have recorded every Bitcoin transaction and every new Bitcoin created since the currency’s genesis, are chained together in an immutable, sequential, and irreversible fashion to collectively form a public ledger. Many thousands of computing devices, or nodes, work cohesively to verify and process those transactions and update the ledger. Embedded in this protocol is a math puzzle used to verify the integrity of transactions and blocks. Some node operators may decide to commit electricity and computational resources to try to solve this puzzle. If they are the first to succeed, then they will win rewards in the form of new Bitcoin. This is called “mining.”
But how can you have a currency that is based on computer code? It seems so intangible.
I know! But learning such intricacies is not out of reach of non-techies. Note that the inner workings of central banking and fiat currency — think dollars and euros — are also complex and intangible, but we trust and use them without fully understanding them.
What do you say to the argument that cryptocurrencies help money launderers and tax dodgers?
A tool is just a tool. The way it is used, intentionally or unintentionally, is what gives it moral and ethical meaning. Cryptocurrencies can be used for nefarious purposes, but hundred-dollar bills are also misused by criminals and others with malicious intent. Overall, the hope is that we will eventually create a balanced and well-defined regulatory framework to reduce unscrupulous activities without stifling responsible innovation. We have yet to see whether blockchain will live up to its potential or if it will degenerate into a system where the benefits will disproportionately favour only certain groups.
