Let us start with a brief history of money (short and not boring, trust me).
As a civilisation we started with the system of barter, where one commodity was exchanged for another. But this system had many problems like double coincidence of wants and lack of standard units of account. So we put our brains to work and came up with feathers and stones as measures and standards of value (the first form of currency). We soon realised the abundance of these materials and moved to precious metals like gold and silver, and during the same time monarchial societies rose. After years of using gold as currency we shifted to bank paper notes and coins made of not-so precious metals, then came about the plastic money, your credit/debit cards and now we see the 6th innovation in money, Bitcoin.
Bitcoin is a revolutionary technology based on, not only, but prominently, blockchain technology.
Why did I start with money of all things? That’s because I feel money is the single greatest innovation by mankind. Money is the most abstract yet purest expression of value of something. When we purchase a commodity we give up a certain amount of money, which is simply what we feel, the value of the product.
It shouldn’t be a surprise when I tell you the first and oldest form writing discovered is of a ledger made by an Egyptian oil trader!
Many people believe that cryptocurrency and blockchain are the same thing. Well, it is not so. Cryptocurrency consists of 4 major innovations, namely P2P network, proof-of-work/stake, cryptography and blockchain. Though, I wouldn’t hesitate to say that blockchain forms the skeleton of cryptocurrency.
Cryptocurrency gained the most traction out of all innovations based on blockchain because it removes the element of trust from the banking system and the governments which control the money. Whenever the Chinese government devalued their currency, value of bitcoin rose. When the Greek banks refused to give people their own money, the value of bitcoin rose. When the Indian government announced demonetisation, few people shifted to cryptocurrency and the value rose. The examples may never stop.
We can easily connect the dots and find that people are getting restless and tired of the experiments of governments and trust in the banking sphere, who control the people’s money. These enervated people found a way out of this system based on trust, to shift to a trust-less, transparent and secure system where they control their own money.
Bitcoin has been upsetting the government’s apple carts since the beginning, which is why they speak such ill about it.
Blockchain is a dynamic technology that can be used in each and every industry possible. Due to the simple reason that it is decentralised, immutable, trust-less and transparent. Cryptocurrencies are just the start. The applications are endless.
P.S. to know what exactly blockchain is, read my previous article by clicking here. Happy reading!