Bitcoin Future: Year 2022
It’s been 2 years since government of India legalized bitcoin and the world has moved on to the platform of Blockchain. Bitcoin has replaced the conventional dollar. World trade has never been so safe and less cumbersome. India itself has adopted blockchain rapidly and all the systems responsible for maintaining ledger of taxes have moved on to blockchain. Overall the inter country trade transactions have moved on blockchain platform resulting in transparent and flexible movement of digital money. The apprehensions about crypto-currency are no more there. A simple idea in 2008 has led to digital transformation of the world.
Beginning of the Revolution: Year 2008
On 31st October 2008 Satoshi Nakamoto released a whitepaper “Bitcoin: A Peer-to-Peer Electronic Cash System” . This was the first time when anyone came up with an idea of Blockchain. There are several theories about Satoshi’s existence but till date no one has been able to find the real Satoshi. Interestingly the word Satoshi means “Wisdom” and Nakamoto means “Central source”. Thus some people believe that Satoshi Nakamoto is a virtual character just like currency Bitcoin.
Breaking down Blockchain Technology
From 50,000 feet altitude, a blockchain might not look any different from Google Sheets. Descending to the ground level, however, there are many differences that makes blockchain unique in every aspect. According to Don & Alex Tapscott, “The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value”.
Blockchain can be considered as a spreadsheet that is present on all the nodes present in the chain. The blockchain database isn’t stored in any single location, thus all the records stored are completely verifiable. More importantly no centralized version of this information exists for a hacker to corrupt.
As represented in the diagram above, constantly growing blocks are recorded and appended to the existing chain of transactions in chronological order. Each node i.e. a computer connected in the network gets a copy of blockchain, which is downloaded automatically. Every block contains a hash of the previous block. This hash represents information about various user addresses. It also contains the balances right from the genesis block to the recent block. One block may contain multiple transactions. Miners validate each block using certain algorithms. In return miners are rewarded with bitcoins for the successful validation.
Innovation Trigger: Years 2009 to 2015
Mining of first bitcoin took place in January 2009. One could buy 1309 bitcoins for 1 USD at that time . The first bitcoin real world transaction took place in year 2010 which involved 10,000 bitcoins being exchanged for $25 worth of pizza. Bitcoin popularity grew at a rapid speed but no one knew the underlying principles of the technology. Within 2-3 years bitcoin value inflated exponentially. Bitcoin price hit $700 when Federal Reserve Chairman said that bitcoin “may hold long-term promise, particularly if the innovations promote a faster, more secure and more efficient payment system. Many countries and organizations started testing bitcoin. Bloomberg began to test bitcoin on its terminal. Germany’s finance ministry declared financial instrument with legal and tax implications. Overstock.com became the first major online retailer to accept bitcoin in 2014.
Unfortunately the gain in Bitcoin did not signify the power of blockchain. Bitcoin became a pseudo name for blockchain. People started associating blockchain with mere currency exchange. Creation of numerous currency exchange apps took place in this period as well. With more exchanges, came more thefts. Hackers stole 25000 BTC valued at $375,000 in June 2013 from one of the exchange. Many people lost lot of money due to closing of some of the exchanges such as Flex-coin. The turbulent ride of bitcoin continued with lot of hiccups until people started realizing the true use of blockchain.
Benefits of Blockchain
More and more countries started realizing the potential of blockchain technologies. In 2016 Japan recognized virtual currency having a function similar to real money. Multiple crypto-currencies came into existence such as Ethereum, Ripple, Dash Coin, Lite Coin etc. As of today there are 1172 crypto-currencies available in the market. Every cryptocurrency comes with its own use case and benefits. Some of the benefits across industries are:
- Smart Contracts
- The Sharing Economy
- Supply Chain Auditing
- File Storage
- Protection of Intellectual Property
- AML & KYC
- Land Title Registration
With so much to offer, Blockchain has gradually reached the phase of adaptation. Big firms such as Accenture, IBM, KPMG, and Ernst & Young have created a different division to test the feasibility of blockchain across various industries. Bitcoin price rising to $8000 in November demonstrates the popularity gained by blockchain. Other coins have also grown rapidly and are catching up with bitcoin, thus providing a positive outlook for crypto-currencies.
While Blockchain theory achieved general acceptance in year 2016, the big players played wait n watch game to implement it. In year 2017, well-considered and well-funded proof of concept have come into light. As the year comes to an end, blockchain technology is temptingly close to turning the corner and entering the realm of small-scale commercial ability.