As far as Bitcoin’s price has decreased over the last year, critical minds were fast to announce this cryptocurrency defunct. Still, they say that Bitcoin’s true value might be not in the currency itself but in its core which makes it possible.
Bitcoin was started as a way to make payments directly, anonymously and outside government control. Its engine is represented by the block chain, a decentralized database driven by cryptography.
“This technology allows us to get that data and store it in a way that is retrievable and noncorruptible.”
Actually, it’s not so easy even for Bitcoin enthusiasts to explain how the block chain works. Wanting to explain its methods, most resort to metaphors or diagrams. Basically, the block chain is a searchable ledger where all transactions are confirmed, within a few minutes, by a network of computers put together to run complex algorithms.
Each part of the network maintains a copy of the ledger. A new block, as a group of accepted transactions, is created about six times an hour. It is added to the chain and broadcast to the other parts of the network. So, all transactions are recorded and linked and thus can be traced. To modify past blocks in the chain is almost impossible.
As for statistics regarding the most discussed cryptocurrency, there are 13,882,100 bitcoins today. Moreover, there will be 20,343,750 bitcoins on January 1, 2025, and there will never be more than 21,000,000 bitcoins.
According to TechCrunch, about 10 million people own bitcoins. In the next two decades, 1 or 2 billion people are expected to have this cryptocurrency, if bitcoin is successful. But still, these people will have their 21 million coins, if the cost of bitcoin increases.
“If bitcoin is successful, it will not replace any country’s local currency,” writes Wences Casares on TechCrunch. “Bitcoin is poised to become not the currency of any particular country but the global, digital currency of the Internet, by the people and for the people.”
Again, the famous cryptocurrency’s success depends on the block chain. Entrepreneurs worldwide are now trying to use that technology not only for Bitcoin transactions. It’s said that the block chain is able either to change the traditional financial system or to give the opportunity to transfer and record financial assets like patents, stocks, property titles, contracts, etc. In a nutshell, anything that needs a trusted middleman for verification. And even your wedding vows may be registered and stored, why not?
“There’s a race going on to extend the block chain’s capabilities,” said Adam Ludwin, a co-founder of Chain.com, a start-up that seeks to help developers build Bitcoin applications.
Nowadays, Bitcoin community discusses the next generation of applications built on block chain technology. According to The New York Times, in February, so-called Bitcoin 2.0 projects were the main topic at the Satoshi Roundtable, a retreat for Bitcoin enthusiasts at a resort in the Dominican Republic.
In addition, multinational telecommunication firms and banks are also interested to benefit from the block chain. Investors are starting to bet on the technology.
“Through the end of February, Bitcoin companies had raised $550 million in venture capital, according to Wedbush Securities, a financial services firm. And although much of that financing has been directed to trading platforms, exchanges and digital-wallet start-ups — $106 million alone has gone to Coinbase, a popular provider of Bitcoin wallets — companies working on block-chain applications are beginning to secure chunks of financing,” reports The New York Times.