The term 'cryptocurrency' does sound like a word coming from the latest James Bond movie. But Bitcoin-the largest and most popular digital currency in the world-is not a fantasy. In fact, the technology behind Bitcoin can change the way government works.
Bitcoin has spawned a unique method of recording all financial transactions that occur without the need to rely on the existing banking system. The technology is known as 'Blockchain'. No matter how successful the digital currency is, the technology that drives it is very important. One minister in the world even states that Blockchain can make the central bank regarded as something old or no longer needed.
GovInsider writes a brief explanation of four important things about Blockchain that government officials need to know.
1. What is Blockchain?
The Bank records all of their financial transactions in a 'ledger' (or 'ledger'). Decades ago, this ledger might have been in the form of hundreds of dusty old books. Each new sentence that appears in the ledger is a record of the new transaction. These records are now digitized, but the ledger is still owned and controlled by a bank.
Blockchain is unique because this ledger is not managed by a single organization or party. Instead, the general ledger record is publicly distributed and managed by thousands of computers in the world at the same time. You can see all the transaction notes here-check it, it's amazing.
This public accessible and public ledger is the main force of Blockchain. Every computer on the network can make new notes about new transactions, said Oscar Darmawan, President Director of Bitcoin Indonesia. When a transaction is recorded in this global ledger, it is impossible for anyone to delete the transaction records.
2. Why is this important?
Blockchain makes payment transactions possible and recorded without using a ledger managed by a bank. Initially, this is important for Bitcoin (the first currency in circulation using the technology), but now the ledger technology is beginning to be used and applied to anything.
As the famous capitalist venture Marc Andreessen wrote: "For the first time, Blockchain gives an Internet user the opportunity to send a unique digital property to other Internet users. The transaction can be guaranteed to be safe, and everyone can know that a transaction has taken place and no one can resist the facts. "
Oscar Darmawan even recorded his wedding day in Blockchain's big book by putting his marriage promise into the many transactions that took place in the technology, to show that their promise will be forever recorded in a digital book that will not be changed by anyone.
3. How can Blockchain impact the government?
Maybe say goodbye to the central bank of the United States, the Federal Reserve?
If a government uses Blockchain to record all forms of agreements or transactions, it would be impossible for someone to commit acts of corruption, Oscar Darmawan said. No single computer is capable of altering transactions already recorded in Blockchain, so "smart contracts" using this technology can pinpoint and pinpoint where their money flows-which will be a much better form of accountability than they are today . A company will not be able to falsify its account. All remittance transactions from government agencies will be recorded.
This system can also have an impact on the central bank system that exists today, said a minister from the British government. Speaking to Wired Magazine, Minister Matthew Hancock said that "in a country where a currency needs a central bank to regulate its circulation in order to manage the country's economy, the central bank is definitely needed ... But most importantly, when people are able to pay each other in currency Which are not connected and fixated on the geographic location of a particular country, then the need for central banks will also be reduced. "
4. What is happening in the region about this?
There are three sectors that are interesting enough to be discussed. The first is the startup sector (new company). The Singapore government has a big goal to make its country the center of 'FinTech' (Financial Technology) in Asia. For example, the IDA has provided substantial capital to support Toast-a company that helps foreign workers to send interstate money using their EZLink train application and cards. All transactions are guaranteed to run securely because they are registered in Blockchain.
The second sector is the government. The Singapore Financial Authority has just finished building a FinTech laboratory that will monitor the latest developments of payments technologies and consider their utilities.
The third sector, and most obviously, is the banking institutions themselves. Many of them have their own laboratories, and many have invested in new startups that have sprung up in FinTech.
Blockchain is a new technology, so the real potential of the new technology will emerge over time. When the new Internet was first discovered, who could predict that its impact to the global world would be this big? Much of its development has been aided by international support for the World Wide Web.
The debate over how the government can use and adapt to this new payment system is just beginning. To date, no government has emerged to regulate blockchain or Bitcoin, although there are some countries that prohibit the digital currency to circulate in their country. But with just one click, Blockchain can change how the government does business with itself or with others. Try to beat it, James Bond.
Source: "Four Things You Should Know about Blockchain" by Joshua Chambers