Bitcoin and all altcoin are termed cryptocurrency and are broadly defined as virtual or digital money in the form of tokens or “coins”. It’s designed to work as a medium of exchange and largely remains intangible, with a few cryptocurrencies crossing into the physical world with debit cards.
The premise of the first cryptocurrency was for people to swap money directly with no middle-man involved; banks, building societies, governments or organisations.
The technology behind crypto is a decentralised, distributed ledger (or database) called blockchain. In its simplest, blockchain is a record of transactions made on, and secured by a network. Cryptocurrency transactions cannot be forged or reversed, and the fees are relatively low. Plus, there is a level of anonymity provided.
As a new form of cash, the cryptocurrency markets have been known to suddenly boom, and even rather small investments can become a large sum overnight. People who invested in Bitcoin 10 – 11 years ago could be sitting on millions of dollars today. The reality is though, cryptocurrency prices do go up and down, so equally it could be worth a lot less next week than one bought it for today.
Bitcoin: the original cryptocurrency
If we go back to where it all began. Around the time of the credit crunch of 2007 and the financial crash in 2008, where banks were messing-up big time and publicly for the first time, people realised banks had and were doing things they maybe shouldn’t be doing. The financial crash then brought around the big recession.
Under the presumed pseudonym of Satoshi Nakamoto, a rumoured group of computer programmers in 2007, came up with a simple concept based on the question, why do we need a bank or a third party in order for two people to digitally pay each other?
If a person bought an item from someone, why do we need to trust Barclays, NatWest, any bank for that matter, to pass that money between us? Why can’t we just do that ourselves?
The task was undertaken to be able to bypass any third party and pass “cash” to each other digitally.
On August 18 2008, Satoshi Nakamoto registered the domain name bitcoin.org.
Finally, a mechanism had been created to effectively cut out the third party, and the technology that was designed to underpin bitcoin, called blockchain, was a new network of ‘trust’ online.
If a person bought an item from someone, why do we need to trust Barclays, NatWest, any bank for that matter, to pass that money between us? Why can’t we just do that ourselves?
The task was undertaken to be able to bypass any third party and pass “cash” to each other digitally.
On 18 August 2008, Satoshi Nakamoto registered the domain name bitcoin.org.
Finally, a mechanism had been created to effectively cut out the third party, and the technology that was designed to underpin bitcoin, called blockchain, was a new network of ‘trust’ online.
So, is it cash?
Yes, inprinciple, it is a digital version of cash. Same way you canhand money to someone, it’s simply an online version of this.Up until this point in time, it always required a third party, such as a bank to do this transaction.
And this is why, then blockchain technology was created. It’s the super cool underpinning technology behind cryptocurrency.
What is blockchaintechnology?
Blockchain technology, is simplyblocks of information that are all digitally linked together in a chain – exactly what the name indicates. It’s been described that blockchain technology essentially digitalises human trust and removes human error from a transactional process.
Bitcoin was the first to use blockchain, so the way that blockchain works for bitcoin, which is a money transfer, is instead of there being a bank, it operates like a database that everyone can see, however, once a record has been put into the database it can never be changed. For example, if John sendsPaul 1 bitcoin, the blockchain record would show and log John’s address sending 1 bitcoin toPauls address and that is it, it’slogged forever.
What is Blockchain?
Blockchain is the new word for trust online
It’s very exciting what blockchain technology can be used for, while the first adopter, it doesn’t just underpin Bitcoin and other virtual currencies, it can also be used in other applications, industries and sectors.
1. Health Care
2. Elections and voting
3. Supply chain management
4. Banking
5. Property records
6. Mortgages
It’s often compared to the internet. Analogically speaking, if you looked at the internet as the super cool underpinning technology, and on top there isebay, e-commerce sites, facebook, microsoft all using it. Blockchain is simply the underpinning tech for bitcoin and virtual currencies, and in the future, with more Insurtech and Proptech companies starting up, blockchain tech could be the new innovative solution to many problems and delays in thissectors list. Blockchain start-ups are already transforming the healthcare sector
