Financial technology has advanced at a rapid pace, effectively disrupting the industry in ways many experts could not have anticipated. The innovation that has swiftly become a household name is, of course, cryptocurrency — or, more specifically, Bitcoin.
Although this technology received little to no media attention when it was officially launched in 2009, it skyrocketed to popularity earlier this year when it surged to $2,000 in value. The subsequent headlines caught the attention of investors and everyday consumers alike, piquing their interest and sparking worldwide curiosity.
While the public may have become more familiar with cryptocurrency over the past year, it seems as though many lingering questions remain largely unanswered about this technology. This should come as no surprise, however, as the process of investing in and utilizing cryptocurrency is rather complex.
With that in mind, it may be helpful to review an element of cryptocurrency: blockchain technology.
What is blockchain technology?
To put it simply, blockchain technology is a digital wallet of sorts, which stores and protects one’s cryptocurrency. According to Ameer Rosic, a writer for the tech-focused website BlockGeeks, blockchain can be best visualized as an infinite spreadsheet that is regularly updated across a network of connected computers.
This system acts as a ledger for cryptocurrency, tracking the ownership and exchange of units, thus holding all parties accountable for their transactions. Essentially, blockchain acts as a trusted intermediary that eliminates missed transactions, machine and human errors, and even unauthorized transactions.
Additionally, since these records are not stored in any one centralized location, they are truly public and verifiable — meaning it is more difficult for hackers to access or corrupt the blockchain.
What is the future of blockchain?
As time has progressed, it has become apparent that blockchain can be utilized for more than just tracking and storing units of cryptocurrency; it can be effectively transformed into the backbone of the next generation of the internet — a Web 3.0 of sorts.
Such rumblings have surfaced as long-standing industries, namely business and real estate, have contemplated integrating blockchain into their existing practices, such as sending simple contracts, participating in crowdfunding initiatives, funding escrow accounts and even the safeguarding of intellectual property and one’s identity.
This development would be low-hanging fruit of sorts, particularly in the wake of the Equifax breach that exposed the Social Security numbers of over 140 million Americans. If such personal information and data could be stored using blockchain, it would be held at a much higher level of security.
Evidently, blockchain has the potential to become the next great technological breakthrough. Although it may take some time for the full extent of blockchain technology to be realized, it will be intriguing to see the ways in which blockchain continues to develop, especially as various industries find new applications for this technology.