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In a nutshell, we’re living in an age of new theology. In the modern era, many religions have been replaced by something different–new belief systems that rely on technology and digital communities to organize. One such new technology is cryptocurrencies and blockchain: Bitcoin is one of many cryptocurrencies that are not controlled by any government or person (instead, the community votes for improvements).
Blockchain is a file system that records every change made to any document, so it’s nearly impossible to manipulate data. Both crypto and blockchain rely entirely on people working together through digital communities in order to maintain their integrity–no more one-man rule.
(Image Source: Euromoney)
Cryptocurrencies are used as money, and blockchain is used to create other things like contracts. Both have changed people’s lives–for better or for worse. In other words, this is a new development in human history that could change the world as we know it. And it’s absolutely crucial to understand how these systems work.
Here are five key points to make:
- Cryptocurrencies are not a replacement for fiat currencies; they’re just more convenient, especially for international transactions and sales. Essentially, they represent a modern form of gold (except without any physical properties).
- A blockchain is like a distributed ledger that has opened the avenue for smart contracts – such as your property deed or mortgage agreement–and automatically updates every time anyone makes changes or updates it digitally with new data (to prove that no one made changes after the fact). The term “blockchain” was given to this new technology because the data is automatically stored in blocks in chronological order, which makes it extremely secure.
- Cryptocurrencies are not used for everyday transactions (except for Bitcoin) but are used as an investment or store of value thanks to today’s innovative technology. For example, one can earn a return by holding the currency on an exchange and then selling it when more valuable – or one can even make a profit from mining cryptocurrencies, which turns raw energy into complex calculations and algorithms (the mining is done using computers that run 24/7). There are around 100 different coins on various exchanges today; by far the most well-known are Bitcoin, Ethereum and Ripple. Most other coins that are held by the public are used for speculation but not for everyday transactions (exchange rates vary widely).
- Cryptocurrencies are used in transactions and exchanges all over the world, on a daily basis. For example, Bitcoin is accepted as a currency in many places – at certain restaurants and even at some shops. All you need is a crypto wallet on your smartphone or a physical crypto card. But most importantly, it’s becoming easier for anyone using crypto to trade internationally (with no additional fees), which makes it more attractive than fiat currencies. This has been a boon for people all over the world who were traditionally excluded from global commerce, like refugees or people in developing nations who could previously only transact with large companies with price quotes in fiat currencies that they didn’t always have access to. Even people living in nations with corrupt governments or unstable economies can use cryptocurrency to send and receive money.
- Businesses are adopting blockchain technology in the finance industry, entertainment and the arts (such as music), shipping and logistics, retail, government, healthcare and various other industries. In each of these industries, blockchain makes it easier to create a digital community–with more transparency for customers and lower fees for businesses (because it cuts down on middlemen). Plus, it’s much more secure than current methods used for transactions; one need only look at the recent Equifax hack to realize how vulnerable current systems are (to the tune of 143 million people). The days of having financial institutions handle your money are numbered if you read this article.
It’s important to note that neither of these developments is a single technological breakthrough. Instead, they are the result of years of research and development–and both are still very new in terms of widespread adaptation. And, as with any new technology, there have been growing pains and fear (such as the extreme volatility in cryptocurrencies since their inception) along with excitement and a lot of opportunities. Still, one thing is clear: If you’re not paying attention to cryptocurrencies and blockchain, then your business could be missing out on enormous opportunities for growth by adopting these technologies early.
