The recent drop in the price of Bitcoin made tremendous noise and assured the widest public that Bitcoin is dying. Even if you missed the latest news, you’ve likely read about Bitcoin’s ups and downs in the past. Demand for Bitcoin is highly volatile, making the most capitalized virtual currency also the most unreliable store of value.
But is Blockchain dead? There’s good news. The blockchain, the technology behind Bitcoin, is thriving, and has every chance of becoming a game-changer for a wide range of FinTech companies not limited by cryptocurrency transactions. So let’s get to know what is blockchain technology and what bitcoin crash brings.
What is the blockchain and why will it survive the Bitcoin crash?
It’s time to untangle the terms Bitcoin and blockchain once and for all. A blockchain is a distributed public database of all transactions made by a network’s participants. The main point of this technology is that each transaction in the distributed ledger has to be approved by consensus. In other words, the majority of the database’s participants have to verify a transaction before it’s completed.
A blockchain is a distributed public database of all transactions made by a network’s participants. The main point of a blockchain is that each transaction in the distributed ledger has to be approved by consensus.
A blockchain allows strangers to exchange value in a transparent and trusted way without involving third parties like banks. And guess what? The blockchain isn’t all about money, let alone all about Bitcoin. The blockchain is primarily about decentralized records of events that are shared by all parties involved in the chain.
The interest of innovative leaders including Google and Facebook proves that the blockchain will be a top global technology of the coming decades. Mark Zuckerberg recently announced plans for Facebook to examine how blockchain services might optimize their network. The fact that some countries, including the UK, are even considering introducing official cryptocurrencies also proves that the markets for Initial Coin Offerings (ICOs) are no longer the sole interest of so-called miners and Bitcoin traders.
Why is Bitcoin dying and what is next for Blockchain?
Since its introduction in 2009, the price of Bitcoin has increased tremendously. Today, one Bitcoin is worth more than $16,000, but the currency’s real value remains rather insignificant. As long as the price of Bitcoin continues to increase, the ups and downs will become more drastic and unpredictable. From the very beginning, the most capitalized virtual currency has borne several substantial weaknesses by design, preventing Bitcoin from becoming real money.
Bitcoin may hardly be considered a viable and stable store of value due to its extreme volatility. Today, the cryptocurrency’s price is likely to go up or down more than 20% in one day. Bitcoin’s major – and almost only – real-life application is a relatively low-cost method of transferring value over long distances. But most buyers aren’t acquiring Bitcoin to use it in traditional monetary transactions. As a result, the current demand for Bitcoin is mostly artificial, and the price may drop drastically at any time.
Bitcoin may hardly be considered a viable and stable store of value due to its extreme volatility. Today, the cryptocurrency’s price is likely to go up or down more than 20% in one day.
On the other hand, we cannot be sure is cryptocurrency dead as a concept itself. Still, you can benefit from alternative cryptocurrencies or so-called altcoins. The majority of altcoins, including Litecoin and Ethereum, use the same technology as Bitcoin. Being designed differently than Bitcoin, however, these altcoins are much more secure, sustainable, and reliable as virtual money. For example, Litecoin takes substantially less time to add new blocks to the chain. And with Ethereum, you can easily create secure contracts that will hold the money until a specific goal or date is reached.
The blockchain turns legacy businesses into tech innovators
Imagine a not-so-distant future when you don’t need to use any centralized systems to complete transactions. Instead, we might pay for insurance or healthcare by means of peer-to-peer transactions, play online games and stream walkthroughs for a dollar, delegate retail ownership to third parties, receive money directly and invest in our children’s education without expensive banking services. The blockchain tech is already bringing these ideas to life.
Today, transactions still rely on banks, which provide a certain authority. While living life online and going through the casual routine of receiving and sending emails, updating software, or cleansing your system from viruses, you always get some assurance from a service provider. You see a pop-up message saying that your email has been delivered, that your system is safe, and that your software is up to date. You trust these messages just as you trust the bank that’s responsible for your financial payments.
However, you don’t see what happens on the backend. If something goes wrong, is the service provider lying or simply wrong? Payment security is weak because payments lack transparency; they’re hidden from the user’s eye. Nevertheless, we have no other choice than to trust banks or other authorities if we want to provide or receive some service.
Blockchain technology implementation can change this. A blockchain records past and present events, which cannot just be hidden or removed. The data about these events is transparent and recorded in real time which makes it almost impossible to be deleted at least if you don’t control more than a half of the entire network power. In terms of privacy, the blockchain is an anonymous transaction system in which individuals may reveal their identities as desired and as permitted by users themselves.
A blockchain records past and present events, which cannot just be hidden or removed. The data about these events is transparent and recorded in real time which makes it almost impossible to be deleted at least if you don’t control more than a half of the entire network power.
Every event has a precise record of successful completion. To commit fraud, therefore, it would be necessary to create a whole new chain of events that would prove the false event to be true. This is exceptionally difficult to do and requires much power and effort. With a blockchain system, you can forget about paper checks or signatures as proof for health insurance or tuition payments. Blockchain technology allows you to create your own digital token that can be used as a currency among app users. The technology also gives you free rein to implement transparent, secure, and nearly costless votes on corporate or even national issues.
Software developers are ready to implement blockchain solutions around the world
Even though the blockchain remains the most promising Internet of Transactions technology, it’s still far from widely used apart from cryptocurrency. Software developers play a key role in providing transparency and reliability to the ICO markets, so they are the main drivers bringing this technology to a wide range of industries.
There are already blockchain-powered applications enabling supply chain managers to track goods as they’re being transferred and make payments using hot and cold wallets. This technology will soon be everywhere, so developing an app based on blockchain technology can turn you into a leader in this fast-paced environment of secured decentralized systems with unalterable records of events.
There are already blockchain-powered applications enabling supply chain managers to track goods as they’re being transferred and make payments using hot and cold wallets.
Below, our blockchain experts share their ideas on how to implement this technology in different fields to solve problems we face every day.
Blockchain for verified and transparent customer reviews
One example of a potentially successful implementation of blockchain technology is for user reviews of products, services, and businesses. This could be a blockchain-based platform that rewards users for sharing feedback on items and helps users choose products based on a clear and trustworthy review.
The current problem with user reviews is that they can be manipulated or simply false. Customers can’t say for sure if a review was written by a real person who has experience with the product or if it’s just manipulation by the manufacturer or an interested third party. Who knows? Maybe it was written by an artificial intelligence system that provides short human-like reviews by the thousands.
A blockchain review platform could post feedback after it’s validated by most of the participants, just as it works with cryptocurrency transactions. In addition, the most valuable reviews could be rewarded by a platform for their high-rate among participants.
A blockchain review platform could post feedback after it’s validated by most of the participants, just as it works with cryptocurrency transactions.
Blockchain for trustworthy collective contracts
Another use of the technology might be in a platform that could solve the problem of consumers not being able to buy goods that are only sold in bulk. Let’s assume you want to buy one spare part for a car from an OEM, but they only sell this unit in batches of hundreds. You can’t afford such a huge purchase, and apart from that what would you do with the other 99 units?
With a blockchain platform for collective contracts, you could gather multiple customers who want to buy one or a few of the same unit. These customers could pay through the platform, knowing that their money won’t disappear and will be guaranteed to be returned if not enough buyers are found for the contract to be executed.
With a blockchain platform for collective contracts, you could gather multiple customers who want to buy one or a few of the same unit.
Blockchain for fraud-free ticket sales
One more example of the blockchain’s potential is in ticket sales. Have you ever had a situation when you were looking for a last-minute ticket to see your favorite star or sports team or to fly to your aunt for the holidays? You could still buy a ticket from a third-party platform, but for a crazy price.
Why does that happen? Because some sneaky middleman dealer buys all the tickets to sell them according to his own terms that are profitable only to him. To avoid such dealings, a blockchain-based platform could limit each customer’s ticket purchases based on the verified number of people who will attend an event or be on a flight. And a blockchain, with its collective approval, is the right fit to save you from paying twice for a service.
The business world finally can take a deep breath after the hype around Bitcoin and focus on what really matters. The technology that will rise from the Bitcoin crash is the blockchain. It could destroy outdated institutions and establish financial relations that are transparent, affordable, and safe. What would you prefer? To see exactly what happens when you make a transaction or to trust a third party that everything’s okay without knowing for sure? I bet you’d prefer the transparent and secure option based on blockchain technology.
Intellias is ready to help you find out how exactly the blockchain might work for your business. Contacting our experts is the first step toward your transparent, sustainable, and prosperous future.