March 28, 2024
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What Bitcoin and Blockchain Are, and Why They Will Change Everything

Imagine 20 years ago someone asking, “What will the internet change?” Today we know the answer—“everything.” The better question would have been “What will the internet not change?” The widespread impact of the internet and its disruption of just about every industry was unprecedented. The technology that built the internet is extraordinarily complex. However, the underlying reason why the internet changed everything is simple. The internet provides the instantaneous transfer of information.

One person can send a friend a picture of their new car or a birthday message in seconds. There is no post office necessary—conserving both time and money.

But what about something of value? The transfer of information through the internet occurs instantaneously, so why not the transfer of value as well? Stock trades take three days, bank transfers take three to five days, and mortgages take 30 to 45 days. Third-party intermediaries such as banks and stock brokerages have been the only way to transfer these assets. If we live in a society that is based on value, then the transfer of value should inevitably catch up to that of information. The only problem is that if you want to give $10 to a friend you cannot simply send a picture of a ten-dollar bill because now both you and your friend have a copy. Nobody will know who truly owns the $10. This is what is called the double-spend problem and it was not solved until January 3, 2009. On this momentous day, a person or group of people referred to as Satoshi Nakamoto created the first blockchain application: Bitcoin.

Some people have heard of Bitcoin or blockchain, but few understand what its purpose is. Just like the early days of the internet, most people cannot see what blockchain and Bitcoin will change. Once again, the answer is everything. Blockchain is essentially the technology that Bitcoin operates on. In other words, Bitcoin is an application on the blockchain, like email is an application on the internet. The power of blockchain and Bitcoin is that value can be securely digitally transferred between two parties without the need of a third party. The third-party intermediaries such as banks have provided an essential role in facilitating the transfer of value for decades, but their work comes at a price. They require time, money and increased risk. Not only does it take multiple days and cost a fee for a bank transfer, but you risk being hacked as well. A third-party intermediary presents the perfect place for hackers to attack because millions of individuals’ information sits in their data siloes. A blockchain-based world decreases the time, nearly eliminates the cost and eliminates the risk. These three changes are part of the reason why blockchain and Bitcoin are a big deal. Just as big as the internet revolution that preceded it.

The internet’s network of information has evolved. Today the internet has applications that nobody could have even imagined 20 years ago. It would have been impossible to predict inventions like Uber and Airbnb. The same will occur in a blockchain world. There will be thousands of blockchain-native platforms created to fulfill purposes we can imagine, and ones we cannot yet envision. Many of these innovative projects have already emerged. In fact, this vision of a blockchain future is the reason why over a billion dollars (yes, that is billion with a “B”) has been invested in these blockchain projects during 2017—more than early-stage venture capital has raised during that time. Projects such as Tezos and Bancor have raised $232 million and $153 million, respectively.

The price of a single Bitcoin has gone from fractions of a cent to over $3,000 in the span of seven years. The current amount of money in Bitcoin at the moment is about $41 billion. These two statistics show the incredible acceleration and adoption of this new technology. On the other hand, it shows you how early we are in this revolution. Forty-one billion dollars is the same amount of money that the ninth-richest person in the world possesses. Many consider Bitcoin as the equivalent of digital gold. It is becoming an increasingly trusted and utilized currency, and will likely always be the primary cryptocurrency. However, the total value of gold, which has little utility, is $8.2 trillion—200 times that of Bitcoin.

Based on the current pace and adoption of this technology, blockchain has reached an escape velocity. A blockchain world and all the benefits that it brings, as well as some dangers that come along with any technology, are inevitable. It is impossible to know what the blockchain-based applications will look like in 20 years, but we can expect that they will be radically different. They will create opportunities we never would have known existed.

If this prediction holds true, the total value of Bitcoin will increase from the millions to the trillions. The Bitcoin protocols dictate that there will never be more than 21 million Bitcoins in circulation. With limited supply and increasing demand as Bitcoin continues to be the main cryptocurrency in a blockchain world, the price of Bitcoin will rise to once unimaginable heights.

That is why the window to invest in Bitcoin is far from closed. Here is a good way to look at it (though this isn’t official investment advice). Take one percent (just one percent) of your investable assets and go buy some Bitcoin. Put it away for five years. Don’t worry about day-to-day fluctuations. There is a 20 percent chance you have nothing because Bitcoin fails and other cryptocurrencies take its place (but it’s only one percent of your assets). There is an 80 percent chance you will see an appreciation of 10 times or 100 times and you will be very happy that you read this article.

By Coby Melkin and Jeremy Epstein

 Coby Melkin is a summer intern at Never Stop Marketing. Jeremy Epstein is the CEO of Never Stop Marketing. They can be reached at www.neverstopmarketing.com.

 

 

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