Over the past month, I’ve looked at blockchain vs bitcoin in depth, covering a range of viewpoints on both. It is a very interesting area. Blockchain technology, and cyber currencies such as bitcoin, capture our imagination. Imagine a completely online currency, not controlled by a bank or government. Imagine a way of recording transactions that can’t be hacked. With Bitcoin and Blockchain, you can.
In this blog, the last in this series, I’m going to look at both blockchain and bitcoin and hear from experts about what the future holds.
Differences between blockchain and bitcoin
To begin with, it is useful to outline the differences between blockchain and bitcoin.
- Bitcoin is a cyber currency. It exists only online. Users buy, sell and spend the currency using a bitcoin wallet, which keeps a record of all transactions. You can either buy bitcoin or mine it. Mining is where users give over some of the CPU on their computer to help maintain bitcoin’s decentralised blockchain ledger and are rewarded for this with bitcoin.
- Blockchain is the technology that makes bitcoin possible. Blockchain creates a decentralised record that can not be altered. Transactions on the blockchain are not recorded in one place and each record – each node – is attached to another to make it impossible to change. Blockchain is the technology that has made bitcoin and other cyber currencies possible. It has many other applications, as we will see later in this blog.
I’d like to thank everyone that I spoke to for this series of articles. It was a pleasure to reconnect with some of the people who have contributed to other blogs in this series and speak to them again about the future of blockchain vs bitcoin.
Will bitcoin be a universal currency in the future?
Most of the experts that I spoke to agree. Bitcoin is here to stay. Molly Spiers of CoinCorner comments:
‘Obviously, nobody knows what the future holds, but I do think that the future is bright for bitcoin. I think it’s unlikely that the digital currency will become a mainstream currency short term, however, I do think that in the mid to long term, it will become more of a common occurrence to see bitcoin alongside other payment options like credit cards and PayPal.’
Ben Ullrich of Protect Your Bitcoin agrees to state:
‘bitcoin will continue to grow in importance the same way the internet did.’ His perspective is that ‘the more people build on top of it the more use it will have.’ He sees a growing awareness of what bitcoin is and how it can be used as building on this. He goes on ‘people learn the brands they work with. Ask someone what the internet is today. The response is usually a roundabout way to say Facebook, YouTube etc.’
Certainly, this seems to be a universal these with the people I spoke to. Bitcoin will continue to develop and grow as more people use it. As more people use it, more places and apps will accept it as payment, and so the cycle continues.
Frederick Coleman, Manager of Media and Communications for Blockonomics, sees this going even further:
‘Bitcoin certainly has the potential for a promising future either as a tradeable asset or as a true currency; something you’d buy your coffee with. If it can achieve the latter then it certainly holds a very strong position, as it can replace state currencies in some places.’
The future starts right now
He points to Venezuela as an example of where this is happening a little already. When sky-high inflation hit the national currency, Venezuelan users of bitcoin rocketed. Some companies started to only accept bitcoin as it was more stable than the national currency. As there is no need for a bank account to buy bitcoin, just an internet connection, access was easy, making it a viable alternative.
Steve Schwartz of Global Cyber Consultants sees a future where bitcoin will continue to be one of many cyber currencies.
‘In my opinion, the long-term value lies in the ability to operate and trade value in a completely transparent and secure ecosystem. As such, we will continue to see a rise in more cryptocurrencies, as it’s been reported that there are now more than 900.’
It seems that Bitcoin is already the ‘brand’ we see when we talk about cyber currencies. It might be many people’s first cyber currency, but the signs are that it won’t be their last.
How will blockchain influence our lives in the future?
As we’ve said, blockchain is the technology that makes bitcoin possible. It is easy to confuse the two. Blockchain is a fully distributed ledger that records transactions in a decentralised way so they cannot be altered. So what does the future hold for blockchain? It is certainly popular and is currently being used for everything from currency to contracts.
With this in mind, Ben Ullrich sees the future question in a different way.
‘I like to ask myself what is important for the future. Not in the future. Because Blockchain tech is the backbone for a new generation of computing. Like Ethereum, a tool to allow for making these apps as decentralized as possible.’
Where blockchain excels is where trust is needed in a transaction. As Lanre Sarumi of Level Trading Field explains:
‘Blockchain shines when you need a database to be shared across a large group of users without the burden of trust resting on any one user or set of users. The database itself contains a proof of validity and authorization. With Blockchain, you no longer need to trust a single entity to validate the data. That was the magic that made it valuable to Bitcoin.’
This issue of trust was echoed throughout the conversations that I had. Molly Spiers notes that there are many stories around of blockchain being used for contracts such as marriage or registering a child but these ideas don’t progress any further. She sees the future utility of blockchain being in
‘concepts such as voting or proof of intellectual property – things that require authentication and/or validation. The fact that (public) blockchain technology is completely transparent and cannot be overwritten lends itself to these systems.’
The use for blockchain
Certainly, voting is a good example of an area where people don’t trust technology. That lack of trust is often rooted in the idea that technology can be hacked. Blockchain would be a great way to ensure that this isn’t an issue.
Ben is seeing this as a use for blockchain already. He comments ‘even today I consult with law firms on how they can make contracts. Businesses on how they can IPO without going through the big exchanges.’ There is a growing awareness that blockchain can provide a record of transactions that can’t be tampered with. This is appealing in so many areas.
Frederick echoes this. He is also seeing interest in the technology growing right now. ‘Companies and governments are already looking into and using blockchain technologies for financial management, and because of its decentralized nature it is useful in countries worried about corruption.’
So if we are seeing where blockchain is currently being used, what does the future hold? Steven Schwartz sees blockchain as something that will be universal but not straight away.
‘We will see blockchain technology implemented throughout almost every industry, however, many of the applications require a fundamental shift in the foundation of the very industries they are attempting to disrupt and this level of transformation will still take several years from both an IT and cultural perspective.’
Is it blockchain vs bitcoin? Or are they moving in separate directions?
As you can see from this range of views, there are so many possibilities for the future. Blockchain and bitcoin are, for the moment, tied up together. This will start to change though, as cyber currencies grow and more uses for blockchain are tried and tested.
With more users, and as both bitcoin and blockchain move into the mainstream, we will begin to see more understanding of the differences between these two as well as how they work together. This opens up more possibilities for technologies to use both to their full potential.