i3 - May/June 2017 - 12

Tech

By Murray Slovick

A T EC H TO WATC H

 E  

very day the world
financial system is moving closer to a cashless
future, where money in coins
or notes is replaced with digital
currency such as Bitcoin.
When you spend money or make
a withdrawal from an ATM using the
traditional monetary system, it is
recorded as a transaction in your bank
account. Unlike fiat currencies that
central banks recognize as legal tender,
Bitcoins are not secured by a financial
group, but rather by public/private key
cryptography. (A public key is a long,
random string of numbers). Users,
known as "miners" are the decentralized authority enforcing the credibility
of the Bitcoin network.
There are no physical Bitcoins. With
Bitcoins your transaction is recorded in
a "block" once it's been verified. Bitcoins
sent across the network are recorded
as belonging to a given address, which
is generated once you install a Bitcoin
wallet on your mobile phone or computer.
This wallet can create more addresses
when needed and you can disclose your
addresses to others so that they can pay
you or vice versa.

Blockchain
The software platform that
powers Bitcoin, called Blockchain,
is a list of records (called blocks)
that represents a distributed
public ledger of all Bitcoin transactions that have been executed.
The Blockchain grows as "completed" blocks, meaning updates,
are added to it in chronological
order. Each block contains a timestamp and entries are permanent
and searchable.
Everyone using the system can
see what's going on, yet Blockchain
technology makes it difficult to
12

MAY/JUNE 2017

These public ledgers also can
hack into, doctor or destroy accounts.
record digitized renderings of virtually
Think of it as a wall under construction.
any documents of importance such
You place a block at the bottom and
as driver's licenses, passports, birth
each time a block gets completed, a new
certificates, Social Security cards,
block is generated so other blocks are
voter registration cards and records of
placed on top of the one representing your
the buying and selling of goods. A key
transaction. As a result, it is difficult to
advantage is you don't need to carry
tamper with your finances because of the
paper documents that can be stolen,
other blocks on top.
counterfeited or lost - helping to reduce
As a distributed ledger, Blockchain
identity theft. By storing data across
reduces the costs involved in verifying
its network, the Blockchain eliminates
transactions, and by removing the need
the risks that come with centrally
for trusted third parties such as banks
held data. Dish Network accepted its
to complete transactions, the technolfirst Bitcoin payment in 2014. Online
ogy also lowers the cost of financial
retailers like Newegg, Tigerdirect
networking. Bankers like the idea of
and Overstock.com accept Bitcoin
fast, efficient, digital money that does
as well as the Apple App Store, CVS,
not carry the cost of handling cash,
Dell, Expedia, Target,
and can be tracked.
Home Depot, Kmart,
Banks and governPayPal and Sears.
ments spend roughly
Blockchain
Blockchain
$200 billion each year
technology makes promises
to execute
to securely store cash.
it difficult to
monetary policy and
As a result, many
hack into,
bring greater efficiency
countries are examining how to mint their
doctor or destroy to global supply
chains. A January
own digital currencies
accounts.
2017 World Economic
and put money on
Forum report estimated
the Blockchain.
$20 billion worth of Bitcoin exists
now. By 2027 about 10 percent of
the entire global GDP will be stored
on Blockchains or Blockchainrelated technology. That said,
exactly when a move to
official digital currencies
might occur is hard
to predict. It could be in
10 years or decades before
central banks widely use
digital currencies. n

I T I S I N N O VAT I O N

Creativep/Alamy Stock Photo

The Rise of Digital Currency
http://www.Overstock.com
i3 - May/June 2017

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