Chances are that you have heard the term “Cryptocurrency” in 2017, whether that be by walking down the street, watching the news, or talking to just about any person on the face of the planet. Bitcoin and alternative cryptocurrencies (Altcoins) have swept across the globe, bringing with them a new “gold rush”. Is this wealth only temporary? How do I use it, or even … what is it? Today we will be looking at the basics of cryptocurrency and the future of the fiat currency.
Most people will tell you that cryptocurrencies and Bitcoin is a “decentralized virtual currency”. For those of us not well-versed in economics and online technologies, this essentially means that it is not controlled by a foreign entity. As a fiat currency, like the paper U.S. Dollar, cryptocurrency utilizes supply and demand yet remains (relatively) fluid due to its global reach, room for growth, and the fact it is still in its infancy. It is subjected to the publicly known amount of “coins” left in circulation, and the populous’ continued interest in the currency.
What is a “Cryptocurrency”?
One of the large differences between Cryptocurrency and the U.S. Dollar is the fact that the government does not have the ability to manage and produce new units. This is largely because Cryptocurrencies, like Bitcoin and Altcoin, are based in Cryptography; which is “the practice and study of techniques for secure communication or transaction in the presence of third parties” 1 . Through cryptography’s unique encryption capability, Bitcoin and other cryptocurrencies are heavily protected against foreign interference. This is only part of the reason why Bitcoin and Altcoins have value.
The Technologies Behind Cryptocurrency.
The technology that allows Cryptocurrencies to exist is called “Block Chain”. It is challenging to completely comprehend the full extent of Block Chain technology, though the basic idea of it is easy enough to explain. Most consultants would describe Block Chain technology through a Google Drive document or a Google Sheet analogy. This is because they are open to those included in the document while actively updating any activity taking place on a “ledger” for all to see (on a 10 minute update loop for Block Chain).
Ian Khan, a TEDX Speaker and a CNN Technology Futurist, says that –
“…block chain (is) truly a mechanism to bring everyone to the highest degree of accountability. No more missed transactions, human or machine errors, or even an exchange that was not done with the consent of the parties involved … (this) helps guarantee the validity of a (Block Chain) transaction by recording it not only on a main register but a connected distributed system of registers …” 2
This differs from the “traditional” database, which is often compared to a Word document, as it is unable to have two owners working on the same item simultaneously. With Block Chain, all parties involved are given access to the “document” at the same time, as well as shown every logged alteration towards the document. In this shared document, every participant is held accountable for their actions and every other involved individual has the ability to see transaction history. It is a technology that places the power in the hands of the involved people, instead of blindly trusting a program or person.
Hopefully this piece has you asking questions! How safe is it? Is it worth my time and capital to invest? What is the next step in all of this? Much like the business sector, and virtually every aspect of life, the answer is subjective. Block chaining itself is incredibly safe, as it is often up to the people involved in the chain network to upkeep their word (which they do because their ROI depends on thoroughness) as well as any decisions needing unanimous agreement among the involved parties.
Block Chain technology, Cryptocurrency, Bitcoins, and Altcoins may seem like a hectic field and that’s because it still is. As a new emerging market it should be closely watched, not only to be cautious of market trends … but also to see where the future of the technology industry lies.
If you liked this content be sure to follow us on Facebook, Twitter, Instagram, and LinkedIn to get engaged in these sorts of discussions; we want to hear your opinions on cryptography!