The genesis of digital transactions and a digital economy cannot be pin pointed to a single date in time, but instead a progression which has been evolutionary. This can be seen in the evolution of trade, dating back to a barter system c.350 BC, to a commodity market, then a metal market, and soon after came paper money in the 11th century. Since then, credit cards and electronic payments have become the norm in our daily lives. But today we have a new era of currency; virtual money or ‘cryptocurrency’ which has been referred to as one of ‘the greatest technological breakthroughs, since the internet.’ This trend represents a shift to a digital and cashless economy, making way for innovative financial instruments, such as ‘cryptocurrency.’
“A cryptocurrency (or crypto currency) is a digital asset designed to work as a medium of exchange using cryptography to secure the transactions and to control the creation of additional units of the currency.”
The goal was to invent a digital cash entity without central entity, according to Satoshi Nakamoto, the creator of Bitcoin, first ever cryptocurrency developed in 2009. In his attempt to achieve this, he created a peer to peer electronic cash system using blockchain technology, which operates in a decentralized network, where there is no central server. The transactions which occur in this digital system are not secured by people or trust, but by math. The math is carried out by machines in a process known as mining where ‘miners’ are rewarded with coins for their effort in verifying transactions on the network to achieve consensus. This framework features make the system irreversible, pseudonymous, permissionless, secure and global.
Cryptocurrency transactions are:
• Fast and secure
• Free from central or government influence
• No third-party fees as transactions are peer to peer
Blockchain, the technology behind cryptocurrency, is a decentralized public ledger that keeps a record of all transactions that take place across the peer-to peer network. Information held on a blockchain exists as a shared, and continually reconciled database. The blockchain database isn’t stored in any single location, meaning the records it keeps are truly public and easily verifiable. No centralized version of this information exists for a hacker to corrupt
Blockchain, often referred to as ‘The New Internet’, is bringing widespread efficiency and some much-needed trust to otherwise grey processes. Blockchain is catapulting its way into supply chain, governance, finance, healthcare, data management and stock trading and here’s why;
- Disintermediated exchange
- Data integrity
- Cost efficiency
The ‘Digital Economy’ is disrupting conventional methods of how companies are structured, how businesses interact and how people consume. If we consider the driving forces behind this, big data, AI and blockchain are at the forefront of these new developments. The desire to be free from regulation, central governance and borders is altering how we do things.
Blockchain and cryptocurrency are making waves of epic proportion. Cryptocurrency has peaked interest among investors as a more liquid and borderless asset, with limited regulation and maximum potential. Bitcoin stands most noticeable achieving unimaginable growth rates particularly in the last twelve months. The shift in consumers and investors towards the crypto economy is evident and easy to understand why. In November this year, cryptocurrencies reached a record $185 billion in market value after the Bitcoin surge, which has a market cap itself of over $109 billion.