If you’ve been following any cryptocurrency news this year, you’ve seen that Bitcoin hit an all-time high at $41k. Cryptocurrency is an electronic form of money that takes advantage of the distributed and decentralized nature of the blockchain. Bitcoin was invented in 2008 by an anonymous creator who went by the name Satoshi Nakamoto. Unlike paper money, there is no ability to create more bitcoin, so there will only ever be 21 million bitcoins.
Many experts believe Bitcoin and other cryptocurrencies are the solution to inflation, the double spend problem, and issues associated with a system of money controlled by the government. Instead, Bitcoin is ruled by mathematics and code with full transparency.
Bitcoin exists on the backbone of the technology that powers it – the blockchain. While Bitcoin receives a significant amount of press, it is the technology behind it that will shape the world in the coming years.
Blockchain is a technology that allows for something digital to exist in only one place. Unlike current banking payments, cryptocurrencies use the blockchain, so the money only exists in one place. For example, when you make a credit card payment, it takes your bank 1-3 days to process the payment, and for a brief amount of time that money exists in your bank account and as a credit on your statement. With blockchain technology, the money can only exist in one place at any given moment in time.
The blockchain achieves this by combining multiple technologies, from cryptography to peer-to-peer networks, to achieve a decentralized and distributed public ledger of who owns and has access to something. The chain of ownership is public and accessible to anyone and copies of the chain are kept at thousands of locations around the world by different participants.
Blockchain preserves the accuracy of data through miners who are financially incentivized to maintain the integrity of the system. The inherent sense of fairness and transparency is one of the most important aspects of the blockchain and why we are already seeing several companies deploy blockchain initiatives.
While bitcoin and blockchain technology are still on the forefront of what’s to come, there is no doubt we will continue to see cryptocurrency and the technology that powers it to be regularly in the news.