Late last year, we watched as cryptocurrency values plunged at unprecedented rates. The result triggered a domino-effect across cryptocurrency exchanges globally, making international headlines, and casting a paralyzing stillness for investors. While some cryptocurrency investors have moved on, others are still holding out, expecting the time has not yet come to cash in.
As the conversation of blockchain solutions moves its way into the mainstream, we must continue to invest in understanding this powerful technology—what it is, what it is not, and what it can be.
Blockchain is not the same as cryptocurrency
There will always be a debate surrounding the commercial value and legitimacy of tradable cryptocurrencies like bitcoin. While the rise in its popularity was critical to the development of blockchain technology, the two are not the same.
Blockchain is a growing list of records, called blocks. Each block contains a cryptographic hash block — a timestamp and transaction data. It is typically managed by a peer-to-peer network that adheres to a protocol for inter-node communication and validating new blocks.
Blockchain was originally developed for bitcoin; however, it is the base of other cryptocurrencies and is often used for other forms of data archiving. When users partake in a bitcoin transaction, their information leaves a digital signature that tracks the time, amount, and date — and is available to all other users. Confirmed transactions of bitcoin and other cryptocurrencies become part of the fabric of the blockchain data.
Blockchain, however, is bitcoin’s underlying technology platform and it also supports many other products and capabilities beyond tradable crypto. It is a decentralized digital currency that is a form of payment and tradable digital asset. Its longevity will be determined by its usefulness as a currency whereas blockchains will be shaped by how well it can realize it's virtually limitless potential for businesses.
No matter the future of Bitcoin, Blockchain technologies —and the ecosystems built for utilizing them— will without a doubt continue to impact existing and future of economies worldwide.
Blockchain is not a trend
When blockchain first appeared in 2008, it shattered both the technological and financial status quo. Its ability to efficiently decentralize and secure data has inspired a new generation of groundbreaking innovation on a global scale. Even as the industry saw massive volatility in crypto prices in 2018, the top financial decision makers have continued to invest in blockchain solutions.
For example, JP Morgan recently (hyperlink source) announced a trial of their “JPM Coin” as a business to business tool for JPM’s largest corporate clients. The product, processed on a blockchain platform, will allow clients to instantly settle transactions, making it far more efficient for both companies and the bank.
Blockchain is a business tool
The degree to which innovators adopt Blockchain as a tool to create relevant and useful business solutions will determine how fast and far the platform moves into our daily lives. As with any new technology, language is critical. ‘Cryptocurrency’, ‘tokens’, ‘digital assets’ are commonly interchanged but can mean very different things when applied to a business solution. There are limitless opportunities for the technology to define and shape future innovation in both the public and private sectors, but we must first accurately gain an understanding of its nature and capabilities.
What was once a platform built for anonymity now holds tremendous potential for everyday solutions, from the way we work, to how we pay, bank, travel, communicate, make decisions, and more. By leveraging Blockchain’s security and efficiency and bringing transparency to what the technology was once lacking, Blockchain will soon become an integral part of our day to day lives.
Daniel Cage is an American businessman and longtime leader in the fintech industry. He currently serves as the Managing Partner of The Cage Group, an advisory firm and incubator dedicated to serving highly impactful companies and government agencies focused on efficiency, lowering business costs and/or creating new revenue streams through the utilization of innovative technology – primarily applying commerce driven blockchain, A.I. and machine learning.