In an earlier article, Wealth Authority discussed the growth in value of Bitcoin, and speculated upon its future potential. Right now, this electronic currency has a market capitalization of about $100 billion, which as CNBC pointed out, is larger than that of Morgan Stanley, Goldman Sachs, or Netflix. If Bitcoin were some kind of equity that got traded on a stock exchange, it would certainly be regarded as a blue chip stock right now.
At the same time, one Harvard Business Review article pointed out that only focusing on Bitcoin or other electronic currencies misses the true elephant in the room. The article started out by reminding readers about the first popular app during the early days of the web. Most people started logging into the internet to check their email, and that’s the application that actually drove more investment.
It did not take that long for the internet to bloom and disrupt banking, publishing, entertainment, retail, and many other industries. Email served as a driver app behind internet development. Similarly, Bitcoin and other digital currencies may serve as drivers behind the evolution of blockchain tech.
While JP Morgan’s Jamie Dimon called Bitcoin stupid, his bank also started investing heavily in blockchain. Other banks and many high-profile tech companies are also putting money into the technology.
The Basics of Blockchain Technology
The simplest way to think of blockchain is as a distributed ledger or database. Instead of simply residing in once central location, the system spreads copies of it around to many different locations, which are referred to as nodes. If you’re not familiar with databases, it’s fine to visualize it as hundreds of ledger books that maintain identical information and are all kept in different places.
When a transaction occurs, information about that transaction gets sent through the system to the various ledgers. These independent systems all verify it for accuracy, agree it’s legitimate, and then make a note of the change in their ledgers. This distributed system authorizes and records every transaction, but the parties involved can choose to remain anonymous because they use their blockchain credentials for validation.
However, the fact that many copies of this ledger are kept in many different places also enforces security. For instance, a dishonest person might try to change a copy of his own records to make it appear as if he had more Bitcoin than he actually possessed. Any transactions would be rejected by the other nodes. In a way, it’s like all of these distributed copies of the database serve as reliable witnesses to keep any of the other ones from cheating.
How Can Companies Profit from Blockchain?
Banks have discovered that they can use this same kind of technology to speed up financial transactions. Other companies have explored uses that range from sharing and signing contracts to exchanging off-grid energy. You don’t have to transact currency to use blockchain because the technology can be used for all kinds of transactions. Even NASDAQ, the second-ranked stock exchange, announced that they had been experimenting with blockchain tech for years.
Some other examples of large companies that are betting on blockchain include IBM, Walmart, and Cisco. They all believe they have found ways to use it to process transactions more efficiently while maintaining data integrity. They need speed and security, and they hope this emerging technology can deliver it.
How Can You Make Money With Blockchain?
How can predictions about the disruptive and transformative power of blockchain help you? If you want to profit from Blockchain and aren’t ready to found your own tech business, you still have options.
You might consider investing in the companies that are either investing in this new tech, or in startups that are developing innovative uses for it.
Companies are also finding that trained or experienced blockchain developers are scarce all over the world. You could also profit from investing in companies that offer training or rerouting for this in-demand skill.
Of course, you could also consider investing in yourself by learning more about how blockchain works. Companies will need people with all sorts of professional backgrounds, including software, accounting, and legal professionals, in order to develop their applications. If you wish you could go back and predict the growth of the internet, blockchain may give you a second chance.
Regards,
Ethan Warrick
Editor
Wealth Authority