What if there's a technological advancement so powerful that it transforms the basic pillars of our society. A technology that fundamentally influences the way that our economy, government systems. and businesses function and could change our conceptual understanding of trade, ownership and trust.
This technology already exists and it's called cryptocurrency.
Game Changing Technology
People often think of bitcoin as only virtual money or a transaction system, but if you look closer you'll see that the monetary aspect is just the tip of the iceberg.
That's because Bitcoin is a groundbreaking internet technology for which money is only one of the possible applications.
Money exists to facilitate trade. Through the centuries, trade has become incredibly complex. Everyone trades with everyone worldwide. Trade is recorded in bookkeeping and this information is often isolated and closed to the public. For this reason, we use third parties and middlemen we trust to facilitate and approve our transactions.
Think of governments, banks accountants, notaries and the paper money in your wallet. We call theses, trusted third parties. This brings us to the essence of Bitcoin.
Bitcoin software enables a network of computers to maintain a collective bookkeeping via the internet. This bookkeeping in neither closed nor in control by one party, rather, it is public and available in one digital ledger which is fully distributed across the network. We call this the blockchain.
In the blockchain all transactions are logged including information on the time, date, participants and amount of every single transaction. Each node in the network owns a full copy of the blockchain.
On the basis of complicated, state of the art mathematical principles, the transactions are verified by the so-called bitcoin miners, who maintain the ledger. The mathematical principle also insures that these nodes automatically and continuously agree about the current state of the ledger and every transaction in it.
If anyone attempts to corrupt a transaction, the nodes will not arrive at a consensus and hence will refuse to incorporate the transaction in the blockchain.
So every transaction is public and thousands of nodes unanimously agree that a transaction has occurred at date X at time Y. It's almost as if there is a notary present at every transaction, this way everyone has access to a shared, single source of truth. This is why we can always trust the blockchain.
The ledger doesn't care whether a bitcoin represents a certain amount of euros or dollars or anything else of value or property for that matter. Users can decide for themselves what a unit of bitcoin represents.
A bitcoin is divisible into a hundred-million units and each unit is both individually identifiable and programmable. This means that users can assign properties to each unit. Users can program a unit to represent a euro cent or a share in a company, a kilowatt hour of energy or a digital certificate of ownership.
Bitcoin Is More Than Money
Because of this bitcoin is much more than simply money and payments. A bitcoin can represent many kinds of property. A thousand barrels of oil, award credits, or a vote during an election for example. Moreover, bitcoin allows us to make our currency smarter. and to automize our cash and money flows.
Imagine a health care allowance in dollars or euros that can only be used to pay for health care at certified parties. In this case, whether someone actually follows the rules is no longer verified in bureaucratic process afterward. You simply program these rules into the money, ergo, compliance upfront.
The unit can even be programmed in such a way that it will automatically return to the provider if the receiver doesn't use it after a certain amount of time. This way the provider can ensure that allowances are not hoarded.
A company can control its spending in the same way by programming budgets for salaries, machinery, materials, and maintenance so the respective money is specified and cannot be spent on other things.
Automizing such matters leads to a considerable decrease in bureaucracy which saves accountants, controllers and the organization in general, an incredible amount of time.
The programmable, open character of bitcoin allows us to completely rebuild and innovate our financial sector and our administrative processes, make the more efficient and transparent and significantly decrease bureaucracy. But there's more.
In the internet of things, our economy will be dealing with machines that actively participate in the economic traffic. In fact, they're already here.
Think of a vending machine or drones delivering packages. These machines are unfamiliar with the concept of trust, but Bitcoin is not. Because of bitcoin, the drone can be 100% certain that it will deliver the package to the right recipient and know for sure that it has been paid for. And we can program the vending machine in such a way that it will automatically keep track of its supplies, order new supplies from the supplier and pay for them automatically.
Conclusion
Of course, you'll understand that this is only the beginning. Internet technology is disruptive and breaks the status quo. It opens markets and breaks the positions of middlemen all the time.
Bitcoin and cryptocurrencies have caused a paradigm shift. It's time to explore this new technology constructively and critically and openly discuss potential applications.
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