The cryptocurrency’s price is soaring, but the fervor is about more than just an investment opportunity.
The BITCOIN phenomenon isn’t about a bunch of people who all believe the cryptocurrency is a good investment. That’s part of it. But for many, the belief in Bitcoin’s power to transform society runs much deeper: it’s almost an article of faith. Where does this fervor come from? To understand, it’s important to keep in mind that “the blockchain” is not really a thing.
A blockchain is a shared, permanent, encrypted data set, created by a network of computers according to a set of software rules. But there are different ways to set up those rules. The word “blockchain” is like the word “vehicle,” explains Peter Van Valkenburgh, director of research at Coin Center, a blockchain-focused think tank. Saying you are putting something on “the blockchain” is like saying you are going to use “the vehicle” to travel overseas. It makes more sense to talk about “cars, trains, boats, or rocket ships, depending on what it is about the vehicles that we are interested in,” Van Valkenburgh argues.
BITCOINis one type of vehicle that gets the most attention, and deservedly so. Its blockchain was the first, it’s been running the longest, and its network is the biggest. To many people, BITCOIN’s breakthrough is just as much about social innovation as it is technical. They believe the new model it represents can revolutionize how people share value and do business online.
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There’s a good reason for that. Bitcoin has shown that it is possible to use a network of computers, connected via the Internet, to build and maintain a set of valuable shared data—in this case a ledger of account balances that prevents counterfeiting—without the need for a trusted authority. Think about that: from a bunch of anonymous computers that have no reason to trust one another, an ironclad network has emerged that can support a whole currency. Literal money—what could be a more valuable target for hacking or compromise? And yet there it stands, unperturbed amid the chaos of the Internet.