The Cryptocurrency that made Blockchain take off

Experts agree that the emergence of the first cryptocurrency, Bitcoin, and its success is the direct result of the disenchantment and loss of credibility in the financial system after the September 2008 crisis. In fact, the Bitcoin concept appears on the market just a few weeks after the fall of Leman Brothers; in January 2009, the first Bitcoin was commercialized.

In its beginnings, this cryptocurrency was defined as “the sincere currency” or a “monetary revolution” by American economists. Years later, the popularity of Bitcoin has increased, though it still arouses certain reluctance.

How is the Bitcoin system different from the traditional monetary system?

Bitcoin, just like the money we usually handle, is a countable system that allows us to assign a figure to what we own and give value to products and services. Both are social conventions by which we accept that something (a banknote or a digital currency) has a certain value.

The big difference between is that, with Bitcoin, the intermediary entity that validates the currency or that intervenes in an operation, disappears. For example: to make an online purchase with the traditional system we need a bank or platforms such as PayPal. Bitcoin, however, offers us the possibility of making transactions without the help of a third party. It is the network itself that performs the function of validating the operation: Bitcoin gives control to those users who want to be part of their system.

Thus, Bitcoin can be defined as a decentralized system for the exchange of value:

The indelible story behind every Bitcoin: the blockchain

Bitcoin is a system based on encryption, which is why it is said to be a cryptocurrency. While Bitcoin is the most recognized cryptocurrency, others such as Ethereum, NEM or Litecoin are also very popular. All of them have very similar characteristics and management.

Behind every Bitcoin there is an indelible and unalterable journey, thanks to Blockchain technology (or chain of blocks), which allows the use of these cryptocurrencies as we know them today.

Blockchain is the technology that facilitates transaction information management. It can be defined as a virtual database or a large account book where the information is stored in a “chain of blocks”.

Each transaction is a new block that joins the previous one as a link, and together they form a chain that allows us to follow the trail of each Bitcoin.

The revolution of Blockchain technology

Blockchain technology is as a revolution in the way of doing transactions throughout the world. Undoubtedly, its use for cryptocurrency operations has put this technology on the map and has opened a world of possibilities for multiple sectors. ” This technology’s application will not be exclusive of a single sector, as more and more industries are exploring their full potential[1].”

For instance, Blockchain has great potential for the management of copyright and creative work licenses. With this system, authors and creators can manage their works using the chain of blocks, ensuring that nobody else can register their work as their own, modify it or avoid paying copyrights: “the blockchain could help musicians market their creations without the need to use cumbersome and poorly paid licensing contracts, creating applications that allow knowing in real time when, where and how much, a melody composed by them is played, automatically charging users for such use[2].”

The Inter-American Development Bank predicts that Blockchain will be a great simplifying mechanism for transactions, eliminating unreliable intermediaries. “The interesting thing is that it’s quite democratic, too: the decision to choose which mechanism to use to protect your transactions will be a choice of the participants themselves. And that is why this is the biggest disruption since Aristotle’s time… Perhaps this is the key for the Latin American region to overcome its low levels of social trust, which undoubtedly is a fundamental cause of some of its economic and social delays,” the entity points out in its blog.

---

[1] Blockchain. The Internet’s Industrial Revolution (La revolución industrial de Internet) Alex Preukscchat. 2017

[2] Interamerican Development Bank’s Blog. Blockchain: The Revolution of Encrpted Trust