Will the blockchain outgrow Bitcoin?

Yesterday, 22 May, was Bitcoin Pizza Day, the fifth anniversary of the first cryptocurrency purchase. Back in 2010, when Laszlo Hanyecz bought his dinner, there was growing excitement about the possibilities presented by Bitcoin.

Now, there is developing fascination in the opportunities presented by the blockchain that forms the infrastructure that underpins transactions by Bitcoin.

  • What is the blockchain?
  • Transactions of Bitcoin, or other information, is recorded on a ledger, known as the blockchain. Unlike other ledgers, however, the blockchain cannot be edited so it offers security.

All the early excitement was focused on the idea of cryptocurrencies in line with Bitcoin’s supposed inventor Satoshi Nakamoto‘s concept of a “truly peer-to-peer electronic cash system”, supported by the blockchain.

Stories were swapped of the huge profits being made as Bitcoin’s value soared in 2013. Meanwhile, the idea of anonymous transactions generated as many hopes for libertarians and fears for the establishment.

Since then, the price of Bitcoin has slumped and remains wildly volatile. The media has filled with stories that tied the new currency with illegality from the sale of illegal items and the theft of money.

Bitcoin continues to be tainted with poor PR and its price has yet to recover its highs.

Ganador77 on Reddit responded to my question about whether blockchain would outshine Bitcoin in the future:

The volatility of bitcoin makes it really hard to use it in business, so I believe blockchain and the technology behind bitcoins is much more interesting than bitcoins as a currency.

The blockchain, meanwhile, has made something of a Cinderella-like transformation to prominence from hard-working back-room support.

ErisianBuddhist on Reddit said:

Blockchain as a data structure will be found to have greater applicability than had first been envisioned, like most discoveries.

Any information can be passed along the blockchain so the limits of its applications are yet to be imagined. Duke University economist Campbell Harvey told The Street:

It’s different than a database, where you can edit. There’s no editing of the entries into the ledger. Blockchain technology has the potential to replace stock exchanges as we know them.

The Nasdaq stock exchange, for instance, plans to trial blockchain technology in a new pre-IPO private market platform.

The growing success of the blockchain need not have a detrimental effect on Bitcoin. The Nasdaq is not the only stock exchange to dip a toe in into the new opportunities presented by Nakamoto’s creation. The Intercontinental Exchange (ICE) has put its money via its subsidiary, the New York Stock Exchange, into Coinbase, a Bitcoin wallet and platform.

Some early adopters of Bitcoin were excited by a currency that exists outside of government control and had no centralizing authority. This is being challenged in New York where the regulator wants to impose a “Bitlicense” to regulate virtual currencies. The belief that the sale of items can be anonymously bought and sold along the blockchain has proved to be false.

Whether Bitcoin or the blockchain is the most important by the 10th Pizza Day, it is clear that the destinies of both will be more complicated than had been original conceived.

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