In 2017 Bitcoin gained a lot of attention for its incredible increase in value, with a range of around £650 at its lowest, to over £14,000 at its highest.
While this has attracted many professional and hobbyist investors looking to make some quick money, the underlying blockchain technology that supports Bitcoin, and other Cryptocurrencies could hold the real value to the future of tech.
It should also be noted here that although blockchain is a Distributed Ledger Technology (DLT) it isn’t the only one, however, we’ll keep it to blockchain here.
Who Holds the Keys
One of the key features of blockchain transactions is that only the ‘owner’ holds the private key needed to enable transactions to be made. This removes the need to ‘trust’ institutions such as banks with the keys to your Crypto Assets.
However, this also means that assets can be held anonymously, and this could make the technology attractive to criminal activity such as hacking, ransomware or worse.
While it’s possible to remain anonymous in the blockchain, I expect most every day activities will enable easy attribution back to an individual. For example, when using CryptoCurrency, you will have to provide your public key to enable payment, and this will likely create a traditional paper trail, for example settling an invoice.
While CryptoCurrencies are currently leading the charge with blockchain, there are many other applications for the technology, such as:
- Land Registry Records
- Wills, Real Estate & other Contracts
- Stock Control
- Asset Ownership
- Identity Verification
- Autonomous Vehicles
- Bots & AI Networks
Interested Parties & Protection
Individuals can hold the keys to their crypto-assets, rather than organisations, and this could be seen as both an advantage and a disadvantage.
Organisations, such as banks or governments, are obvious targets for hackers, and if they hold the keys to your assets, your assets could be lost.
However, not all individuals benefit from knowledge of security best practices, and where regulation exists often capital is underwritten by the state, for example the FSCS scheme which protects deposits in bank accounts.
The blockchain is a distributed ledger technology, which means a complete copy of the database is held on all machines that participate in the network. If one machine is lost or corrupted, this has no impact on the blockchain, and having many copies of the database means that integrity of the data can be maintained.
Cost of Transactions
Using tokens to transact within a global network, such as a cryptocurrency but also others, reduces the cost of making transactions within the network itself. Currency exchange happens on the edges of the network only.
What is the Future?
No one knows what the future holds for DLT. Governments around the world are taking different positions on cryptocurrencies, some moving to regulate while others applying bans.
There has been an increase in Initial Coin Offerings (ICO), different coins being released by tech companies, and this has the potential to produce a bubble.
However, there is a lot of investment in blockchain technology for a variety of reasons and a technical committee (ISO/TC 307) has been established by Standards Australia, the Australian member of ISO to look at standardising Blockchain and Distributed Ledger Technologies.
The area is developing rapidly.