Blockchain: Its Rela onship With Cryptocurrency And Beyond

BLOCKCHAIN: Its relationship with Cryptocurrency and beyond

Since its inception in 1983 by American cryptographer David Chaum, Cryptocurrency has been a major consideration in the world of technology and financial solu ons as the world began to make a move into a more digital existence. However it wasn’t un l 2009 following the inven on of the fi rst decentralised Cryptocurrency- Bitcoin by Japanese developer Satoshi Nakamoto that society really began to understand the true power of the currency transfer that exists within Blockchain and its ability to take back fi nancial power from the central systems and place it into the hands of the people. The issue remains, that even though it has long existed there is much confusion as to the rela onship between Cryptocurrency such as Bitcoin and the Blockchain system and the understanding of exactly what it means for not just the fi nancial markets, but the world as well. By Ma hew Meehan Since its major explosion over the last decade as its u lisa on drove up its value, Cryptocurrency has been long debated as to what its total func on consists of. Despite this, it is best understood as a value of exchange just like any modern paper based currency such as the pound, yet instead of relying on a physical manifesta on it instead exists digitally through the benefi ts of being protected by secure, online encryption techniques that determine the control over the actual crea on of it and to also serve as verifi ca on of the fund transfers than can take place between accounts. Bitcoin is the main example of such and serves as the only current form of cryptocurrency to actually be transferrable in the modern markets, with some businesses both domes cally and in Europe allowing for it to be used as a general payment method that mirrors the tradi onal bank card. Blockchain was created primarily to facilitate the use and existence of Bitcoin as the technology behind it is responsible for the movement and transfer of payment. In essence, Blockchain is a decentralised ledger of all of the transac ons across a network that is classifi ed as peer to peer and through this ability, all participants in the transac ons can confi rm it without the need for a ‘middleman’ or central authority to clear the ac vity such as is the role of the modern banking system. Processes available through the use of blockchain include fund transfer, se ling trades, the process of secure vo ng and many other issues that simply require the u lisa on of a discreet pathway to complete some form of exchange. The relationship between them is clear: Cryptocurrency is simply the fi rst form of Blockchain in the worlds existence, as Blockchain underpins the currency through its technological ability to become its own banking system or more specifi cally distributed ledger system which due to its digital advantages can also allow for the crea on of alterna ve offshoots to its tradi onal form, as the users also referred to as ‘miners’ can actually design an individual blockchain with one set of agreed parameters, whilst other users can change these rules in order to be er the nature of their transac ons or the interests of all involved par es. In order to use Blockchain for currency transfer all users must possess their own individual ‘cryptographic key’, which is much like a standard password although it u lises a personal string of data in order to allow account holders access to their wallets of value within the defi ned system. Once a transaction is agreed, it must also be approved/authorised before it becomes a block in the chain and this when occurring in a more common ‘public’ chain will mean that the decision to approve

will need to be decided by that specifi c chains other users also known as nodes who will then be incen vised through rewards in order to encourage the validation of the original transac on. This process is known as ‘ proof of work’ and o en will involve the need for every expensive computing equipment as they must solve an algorithm in order to obtain the fi nancial prize, and so this mining process can be very diffi cult to achieve and o en take a single computer a number of years to complete. Despite its conceptual purpose as a corridor for the utilisation of Cryptocurrency, there is a much wider and diverse future for the blockchain technology. In terms of business it is considered to be a next generation so ware with many applica ons into business management improvement, with large conglomerates and many diff erent industries all looking at it to improve areas such as vo ng, security, adver sing, secret documents, journalism and much more. The blank canvas it represents due to its transversality means that the scope to implement blockchain processes relies heavily on its distributed and far reaching nature that could be a crucial key into the advancement of society, with this giving players in different parts of the same process a single network within which to connect and therefore securing the integrity and immutability of the opera ons that are circulated. The existence of such a workstream is the equivalent of a common opera ng system and allows for the crea on of digital assets, therefore with all involved u lising an encrypted bank of verifi ed information the chance of mistakes being made are severely limited with the need intermediary par es becoming almost insignifi cant. This kind of improved efficiency is transferrable into just about any environment where their currently exists a need for secure and privately accessible informa on with the reduc on in security risk. Drawbacks do exist however in the adoption of Blockchain with such intricate and expansive architecture of individual branches of chain becoming diffi cult due to the regulatory challenges that are presented by being able to legally validate transac ons. To eff ec vely do this, you are faced with the responsibility of universalising a decentralised structure that thrives on its expansive nature and so without a clear pathway for legal standards to exist, the ques on of protec on both physically and by the law of possible hacking a empts is posed, which furthermore brings some doubt as to the legi macy of the global applica on of the Blockchain concept In its current form. With this in mind, while the rela onship with Cryptocurrency is apparent and clearly Bitcoin could not exist without it, time will tell whether there is longevity in this method or whether Satoshi Nakamoto’s vision of decentralised power will be lost due to the need for some kind legitimising standards in the name of fi nancial and data protec ons and the protec on of the technologies ever growing user base.