It has been very popular to discuss how bitcoin is going to change the remittance industry or that FIs will embrace block chain to revolutionize their business. But a recent survey by Deloitte indicated the 39% of senior executives at large companies have no idea what blockchain is, let alone how to utilize it in their business. And many people use BitCoin and blockchain interchangeably.
So here is a short overview to introduce you to these terms that will at least get you through you next strategy meeting with IT.
What is Bitcoin?
Bitcoin is an open source digital currency that is peer to peer focused. What exactly does that mean? With Bitcoin, provides a unit of value that has no government or central figure controlling things like interest rates or inflation. It is meant to gIve the “people" control over their currency. Bitcoin transactions can’t be reversed, so users can receive payments without having to worry about chargebacks and the fees associated with them that would would encounter in credit or debit transactions. At the same time, this feature means that you do not have the protections the payment networks like Visa and MasterCard provide. Be careful with your coins; if you lose them, you can’t get them back. Because Bitcoin is peer to peer, fees for transactions are extremely minimal or even free.
Bitcoin is the antithesis to institutions like the Federal Reserve, There will never be a time when they “run the printing presses” and flood the market with new currency. Only 21 million bitcoins are ever going to exist. There are no replacements, so lost coins are gone forever, making the supply even more scarce. This means that bitcoins will actually increase in value over time, unlike fiat currency that lose more and more value every year. Even so, Bitcoin has proved very volatile since it’s inception with valuation swings of several hundred dollars.
Bitcoin is actually a cryptocurrency, and while it is the most well known, it is by no means the only one. Many fail to realize that there are actually hundreds, if not thousands, of cryptocurrencies out there – and some of these are gaining too much traction on the market to ignore. Now let’s not get side tracked with a new technology term like cryptocurrency. At it’s core, it is a digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank. This definition applies to Bitcoin or any of it’s competitors like BitCrystals, Dash or Ripple.
What is Blockchain?