Blockchain technology had enjoyed tremendous attention starting with the creation of Bitcoin, given its enormous applications in the real world. Combined with the latest technological developments, it could be used to optimize activities, and thus increase productivity. Since some of the core concepts surrounding blockchain had been poorly-understood, we’ll try to bring the light and clarify some of them.
Also, since the blockchain had been the building block of cryptocurrencies, we’ll explore the world of cryptocurrencies and see what might happen with them in the future.
What is the Blockchain Technology?
Online experts suggest that the blockchain technology had been invented by Satoshi Nakamoto, a pseudonym used for the creator of Bitcoin, but in fact, that claim is false. In reality, when we talk about blockchain we’re referring to a peer-to-peer network, a concept older than Bitcoin discovered in the 1990s.
A blockchain is a time-stamped series of an immutable record of data, as blockgeeks.com is stating. It is literally a chain of blocks managed by a big number of different computers not owned by a single entity.
The main characteristic of the blockchain is decentralization, with these blocks linked to each other using cryptographic principles. Widely-regarded as an option for democratizing our system, the blockchain comes as a new solution to the monopolized and centralized technological world we live in.
Some people draw a line between blockchain and cryptocurrency, which is entirely false. We’re talking about different things, and what’s even more important in some cases is that we don’t actually need a cryptocurrency in order to develop a blockchain-based solution. All cryptocurrencies use the blockchain technology in order to store securely a history of all financial transactions, but in reality, we could use the blockchain to develop a broader range of products.
There are many industries where we could use the blockchain technology, but given the size restraint, we’ll focus on just a few of them. The first and most important one is the financial industry, where we already have cryptocurrencies, but also companies that want to develop their private blockchains. It can be used for back-end clearing, settlements, cross-border payments, and many other areas where the financial sector is lagging behind.
Several applications are possible in the healthcare industry, since the blockchain can disrupt the current centralized operations by improving transparency, security, and efficiency. With smart contracts, all paper documents could disappear, because the system will operate automatically, and no third-party personnel will need to verify them. These applications will reduce bureaucracy and ensure that patients get access to the best healthcare services.
The Internet-of-Things (IoT) concept can thrive using the blockchain, since it will be the engine to power a new and connected world. The IoT market is expected to reach $1 trillion in a few years. With the blockchain, we will be able to track unique histories of billions of smart devices that will operate online.
Cryptocurrencies in a Turning Point
If the future ahead for the blockchain is very bright, we can’t say the same thing for cryptocurrencies. As we’ve already mentioned, the blockchain solutions that don’t use cryptocurrencies can be developed. However, cryptocurrencies could represent an alternative for the current monetary system, but as the present state, it’s an unregulated industry.
The latest news rumor that the People’s Bank of China (PBoC) will launch its own cryptocurrency before the end of 2019, and other nations are currently exploring this alternative. However, no country had any intention to use Bitcoin, Ethereum, or other tokens as a replacement for fiat money. Even though cryptocurrencies continue to develop, we can easily notice the reticence from the side of public entities.
The Future of Cryptocurrencies
Cryptocurrencies will mainly depend on how regulation will be developed. Facebook announcing the Libra coin had been the spark that ignited a new wave of regulatory scrutiny when it comes to digital money, and we should expect to see laws by 2020. What we can see at the present time is a fierce determination from regulators to stop any kind of digital money that may undermine the current monetary system.
According to an IMF guideline, cryptocurrencies are being labeled as goods, and the Central Bank of Brazil had already applied this methodology. It’s very unlikely we’ll see Bitcoin, Ethereum, and other tokens replacing the US Dollar and the Euro, but digital money may become an additional method used for buying and selling goods/services.
One thing’s certain: as we move deeper into a technological world, getting rid of paper is one of the main tendencies. Cryptocurrencies are likely to have a place in our future, but in what shape or context will be dependent on a series of unpredictable factors.