There has been quite a lot of hype about Cryptocurrency, Blockchain, and Bitcoin etc. these days, around the world. So, one is inclined to think what these technologies are and why are they suddenly so popular. Is the hype worth it or is it misleading like the Black-hole theories as many claim. So if the following questions pop up in your mind, you can the find their respective answers right here 😆
What is Blockchain technology?
As we are now a modernized society, always looking for ways to get efficient and quick results from most of our daily activities, organizations, providers of different services are also finding out ways in which they can give their services to the users and the market in a quick, well organized and secure manner. This was the basis of the development of the idea of “Blockchain”. The Blockchain technology was developed and introduced around 2009 by someone named Satoshi Nakamoto, explained concisely and intelligently in his Bitcoin in his white paper, and it has become extremely famous since its advent. It was used to send and receive money between two groups or clients without any third-party interfering in the way. The aim was to make the transfer of Bitcoin and CryptoCurrencies relatively easy, anonymous, and to authorize and log it as well.
How would it help?
The exchange of digital currencies and information was made very easy by the Blockchain technology and some say that it laid the foundations for a new type of internet. Now, not only the king of digital currency Bitcoin uses it, but other technologies have also declared it diverse and progressive enough to be used by them. The technology is hailed as a digital decentralized ledger, it can keep all the information of exchanged money, or even files, among different networks, whether peer-to-peer networks or local networks. It is helpful in the business sector as well and can improve and speed up the processes in a company. It enables collaboration and thus trusts level that are not disturbed. In traditional investment techniques, the involvement of other parties can certainly affect the revenue generated, but Blockchain minimizes such hurdles and hence, the returns are relatively higher than those gained through other methods. This makes it a favorite tool in the business community. In organizations dealing with financial matters, this could help in arranging settlements and clearing insurance issues. Another reason why it had gained popularity was the anonymity factor, which was a leading cause for bitcoin being dubbed as the criminal’s currency of choice. Bitcoin was heavily traded on platforms on the dark web such as Silk road and AlphaBay to obtain illegal products and services.
Blockchain holds the information like a database and this has its own benefits. The information is not saved at one location but instead distributed across all nodes on world wide web making the records easily accessible and verifiable by those wishing to earn digital currencies as a mining (which will be discussed later) fee. A central location can make it an easy target for the hackers, but as it is controlled by many networks at once, hacking the blockchain data is near impossible.
What is CryptoCurrency?
In layman terms, this is a type of digital currency, which uses encryption techniques to operate like normal money and enable its generation and transfer in a secure, fast and coded way, independent of any other party like a bank.
One such example is “Bitcoin”, which has become insanely huge during the past few years and is being hailed as the “digital gold”. But make no mistakes, it is not only named so because of its amazing qualities making it savored by tech giants and young intellectual minds alike, but also due to the fact that they were first movers to the crypto market, hence the boom of other rival cryptocurrencies, labelled today as Altcoins. The Bitcoin total market cap value is estimated to be somewhere near $9 billion (US). It is generated through the Blockchain, giving it a revolutionary repute.
Difference between the two
Like their name suggests, Blockchain works like a computerized ledger, like a collection of many Spreadsheets, whereas Cryptocurrency is a coded form of digital money and both of them sort of combine to form the distributed ledger technology.
Initially, these two were more or less the same. But as the Blockchain technology grew and progressed, its uses were also diversified and it just did not remain a technology with monetary uses only. New ideas were brought up like that of decentralized name registry. Information was delivered to different networks easily and securely. Its uses kept on expanding. But Cryptocurrency, on the other hand, remained under the Blockchain technology from the start and had a limited use of the ledger technology based on tokens, Trading, buying, selling or other forms of exchanging were dealt through a token to it and then to the Blockchain. Transactions were done through conventional methods and it never became independent. CryptoCurrencies are just a medium of exchange.
Mining and issues
The CryptoCurrencies like Bitcoin, Ethereum are not that pure. They come with their own problems and to obtain them, work is required. That kind of work is what technologists have named ‘mining’. The founder of Bitcoin was very confident and assured about the fact that the total circulating supply of bitcoins will always remain in a quantity around 21 million. People will come to get the specific amounts of money every day, by following different methods. It has been found, that every four years, the number of released Bitcoins are reduced by 50% as compared to the preceding years, as well as the miners who search for and find new blocks to mmine. At this time period, the value is 12.5 Bitcoins for discovering mines of the money. So, as the amount keeps on increasing and decreasing at a steady rate and is thus equalized, the total amount of 21 million will never be reached.
But here comes the downside. Mining is done on extremely powerful computer rather than a simple personal computer. This requires a high amount of energy in the form of electrical power. It is said, that Bitcoin almost uses the equal amount of energy as the country of Singapore. Other than this issue, extracting money or receiving it is also very slow. In Blockchain, the transfer of money is faster than those requiring a middleman and third parties, however with time, CryptoCurrency transfers have become a lot slower, almost 10 minutes for Bitcoin, making it less useful for domestic use such as grocery shopping. Any cyber-attack or hack could be dreadful to it, as the worth of the money will be erased and stabilizing or normalizing the original stock values would be extremely difficult.
Miners have to solve complex problems and equations and the reward for that comes in the form of Bitcoins or whatever digital currency they are decrypting, and without them, verification and a secure transaction would not be possible. As the technology keeps on developing, it becomes harder to mine. Early on, miners could mine high numbers during two or three days. But now, according to a report, for one mine, 98 miners are required. There are companies established to support miners and to lessen the mining load. Groups of miners are made and their pay is split among them.
Blockchain – A favorite tool for Corporations
It is very likely, when you find tech-companies that have formed partnerships recently, that they are using the aid of Blockchain. Whether a client or a provider, it has become a major tool in almost all type of corporations.
One such example is the very famous company: IBM. It has established a blockchain relation and connections with other companies that supply food and groceries like Nestle, Walmart, and Dole among others. And the business has been very successful.
- Property Records
Blockchain also brings companies and contractors or clients through property records. For example, in the US, there are many counties giving specified records about their materials in their inventories. A company called Property Records wanted to digitize it and store the information in Blockchains. The data could be entered and checked whenever required. The clerks saw the benefits and adopted the system which is decentralized and can be shared with others. The price of facilitated sales can go to the company and the purchaser’s cost will also be reduced at the same time, which also leads to cutting the high insurance prices.
- Token Technology in Brave Software
The token made by a company Brave Software uses the blockchain technology for advertisement and commercial product placements with the publishers or advertisers, or those who are a part of the company itself. The online advertising system is very much improved by it and the token used by them is named as the basic attention token (BAT), which can enable direct payments through the use of Cryptocurrency. The need for a subscription or one-off payments is eliminated. Having the characteristic of transparency, anyone will be able to oversee the payments and transactions.
With every successful thing, criticism is always there, and it could be constructive and destructive. Some say that now it has become so great and extensive that it is allowing and expanding dishonest activities. A code, not written with much care, can serve as a poor foundation and will ultimately destroy the building it supports. Sometimes inflation can occur to a great extent, unexpectedly, and shake the market, diminishing the worth of cryptocurrency. Projects that start with a great aim and reason can really prove futile and expensive. Blockchain can really fall out of the expectations. Slower processes can prove a threat to the fast pace of the modern technology and the era. These are all worries voiced by the critics of blockchain and bitcoin. Now, companies are searching for ways to establish independent blockchains and shun the use of local ones, available extensively in the market, because they have lost trust in them. Transparency is a huge problem, as everyone doesn’t appreciate it as you think. Buying any product through online currency may be easier for you but you cannot possibly suggest solutions of your own when there is a glitch or trouble.
So, we can say that it not a completely perfect technology but it is still very impressive and immersive in its own way. It has opened new paths for other technological developments as well and no one can deny that it has proven to be a landmark in modern financial applications. Cryptocurrencies are a developing and expanding field and big companies are making improvements to it and are ready to welcome it as well.
Is the Hype Worth It?
So, finally one asks that is all the furor about Blockchain and CryptoCurrencies, any good, or are we being made a fool by tech-geeks. The truth is, that even though the Blockchain and Cryptocurrencies come with its flaws, it has proven to be a major leap in the financial technological revolution. Bitcoin recently reached to a record-breaking value and this is now not limited to corporate agencies only. Anyone with a good amount of knowledge regarding the field, can try their luck with Bitcoin and make a living out of it, whether it is through long-term investments or short-term swing trading and futures. Orthodox thinkers are not much of a fan but the rest of the world sure is. No one knows how far it will go and how much it will spread, but productive efforts and work on this technology would prove really beneficial for economies and can generate another revolution.