Bitcoin introduced the blockchain to the world, but you may not understand what that means yet because you still don’t understand how cryptocurrency works. Before you invest (and you probably should invest), learn more about the key takeaway points of this highly lauded technology.
What Is the Blockchain?
The blockchain is essentially a recorded history of every transaction within the protocol, and it’s virtually unable to be tampered with. It was originally conceived for Bitcoin, but the underlying concept is now used for all kinds of purposes.
Hacks from huge providers like Target and Anthem have cost untold resources, and so you can imagine why a technology that’s built to subvert hacks would be exceptionally valuable to…practically everybody in the world.
The blockchain also was meant to increase transaction times and decrease middle-man fees, so essentially you could transfer money within nanoseconds instead of 3 to 5 business days for the equivalent of fractions of a penny.
This makes micro-transactions a possibility too. Imagine being able to read an article without a flashing pop-up ad interrupting you every 30 seconds for a total of $.03. You wouldn’t be able to do that now since the credit card fees would outweigh that tiny cost.
However, with the blockchain, that could be the new reality. It’s also been introduced across a variety of industries from electronic home key applications to preserving family stories and ancestry.
Why Aren’t I Using Cryptocurrencies Then?
It’s important to understand this new technology in context. An over-simplified summation would be that people feel blockchain is the most amazing invention and cryptocoins should be abandoned as a failed project.
Cryptocurrencies like Bitcoin have either made negative impressions on people (e.g., Silk Road, terrorism accusations) or they’ve been entirely ignored by the public. In fact, a large percentage of people probably think there’s no use in paying attention anymore.
There’s a reason why Bitcoin hasn’t made more strides, and a lot of it has to do with the actual developers. Because Satoshi Nakamoto (the mysterious inventor) stepped away, it left the community without any real leadership.
In order for cryptocurrencies to actually work, they need to be able to scale to the amount of transactions made every day. Right now, it can’t handle that volume, though if those working to improve the protocol had more support from the community at large, it just might.
The fact of the matter is though, it’s still worth over $400 a coin, and just a few months ago, it was worth over $500 a coin. In the wake of Bitcoin’s inability to smooth everything out, a variety of cryptocoins have tried to step up to fill in the gaps. Their mission has been to make cryptocurrency (and thus, the blockchain) transactions faster, safer and cheaper.
What Does This Mean For Investment?
Essentially it means that the time to strike is now. The blockchain was recently introduced into companies like Wells Fargo, HSBC and Barclays through a start-up company, R3CEV, who worked with a company called Ethereum to make it a reality.
The blockchain links 11 major banks together for better communication and security measures. The banks aren’t going to promote crytocurrencies — it would likely put them out of business. However, they are happy to embrace the specific parts that would eliminate huge losses from wide-scale inefficiency.
Ethereum saw their coin increase from under $1 at the end of 2015 to close to $15 in mid-March of 2016 after the R3CEV announcement was made. It’s currently valued at over $10.
The technology can be used all over the world to start cutting down on fraud, while still keeping the actual people behind the transactions private.
While some have made the argument that the privacy feature will only attract criminals, cash is still hands-down the most anonymous way to pay for anything: there is literally no paper trail. While the blockchain may have been corrupted (and likely to be used again by criminals), the prices continue to climb for the companies invested in its future.
What About the Future?
Thinking long-term, there’s been a lot of chat about quantum computers coming out in about 5 years or so. Google has been working on them (of course), and they could promise to be a technology that’s immediately accepted for a variety of needs.
It would make the blockchain obsolete, while still keeping all of the original perks and advantages. It is something to keep in the back of your mind, and follow should you choose to invest in the blockchain.
However, for now, these are some of the best ways seen by both technology and business gurus alike to start making our money and online transactions much more efficient and far less likely to be infiltrated by criminals.
