Since SatoshoNakomoto introduced Bitcoin to the world in 2009, the world have had sharply divided opinions on the subject. Bitcoin proponents argue that the technology is a natural progression from fiat currencies, while opponents contend that Bitcoin has no real world utility, and its value is merely driven by speculation and hype (which would ultimately drop to zero).
However, it is important to understand that the success or failure of Bitcoin and other cryptocurrencies has no relevance to the future of the blockchain.
A blockchain is essentially a permanent record of transactions. Based on data derived from a blockchain, an observer can view all transactions which occurred on it, including all parties involved in the transactions. In a way, a blockchain is like a publicly accessible ledger on a peer to peer network.
The reason why blockhains are so highly valued is, they cannot be hacked since all transactions have to be verified a predetermined number of people. On top of that, there are currently no computing resource with sufficient power to break a typical security algorithm which protects a blockchain. The blockchain is one of the primary reasons behind the early appeal of Bitcoin. Transactions are absolutely secure and verifiable when using blockchains.
The use of blockchains are not limited to Bitcoins or cryptocurrency. They can be designed to include anything of value - identities, fiat transactions, grants and titles, tokens, etc.
The potential future applications of blockchains are virtually limitless. Of course, the number of participants in the network and the value of item on the blockchain will cap it usage. Nevertheless, some of its major use in the future includes:
With the increasing amount of transactions we conduct online, as well as the increasing number of hacking and data breaches, it makes sense to have a secure, unhackable online identity verification. Blockchains can provide such as platform, and the other peers on the network can provide the verification and protection for the identity.
Owing to the time it takes to confirm transactions and miners’ fees, payments using cryptocurrencies are still unpractical. However, payment authorisations inside closed or limited marketplaces are a very real possibility. Amazon, eBay or other online giants could conceivable create a closed market where customer are required to deposit money to their accounts. Whenever they make payment, they could just authorise and verify the transaction using blockchain instead of using middlemen such as credit card companies or payment providers.
Using blockchains, businesses no longer need to use letter of credits, letter of guarantees or manifests to manage and protect their sales and purchases. Even trading of commodities or shares can be performed using smart contracts on blockchains.
Ownership of land property, vehicles, equipment, stocks, etc. can be traded safely and securely on blockchains.
The current international monetary standard is based on the Bretton Woods system, which was enacted in 1944. Although the standard has tried to keep pace with technological advancements, it remains unnecessarily complicated and costly. Further, currencies are constantly open to manipulation by foreign governments and large hedge funds. Government backed virtual currencies, on the other hand, can streamline the entire process down to a single blockchain. International transfers could literally be completed in minutes, and central banks will no longer have to wage constant war against currency speculators.
Blockchain technology will eventually change the way we view and manage money. The only question is when.