After the crash in January story about Bitcoin became a bit quiet. But the course is not the only thing that matters: Behind the cryptocurrencies, Bitcoin could become the key technology of the next 20 years.
There is not only rollercoaster of Bitcoin, Ethereum & Co. there is also the technology behind it: so-called Blockchain, a database in which values and information can be exchanged decentrally over thousands of computers.
Blockchain is similar to the Internet of the 90s, before a boom. Philipp Sandner, Head of the Blockchain Center at the Frankfurt School of Finance and Management, says:
“Blockchain is the key technology of the next twenty years and will replace key parts of the financial system.”
Different aspects speak for the technology. For example, the pharmaceutical company Merck developed processes and database technologies to identify counterfeit medicines. With an app, the drug can be checked and this information is passed to Blockchain. Daimler, Bosch, and Commercial Bank are also working on various Blockchain pilot projects. “The entrepreneurial applications are very diverse,” says Sandner.
Cryptocurrency regulation also had a major impact on their prices. South Korea has recently come a long way and already banned some. It is against a complete ban, as it is currently being discussed, but probably speaks of technical progress. In addition, developers of Blockchain technologies could easily migrate to countries where there are no restrictions. Sandner expects that “innovative developments in Blockchain currencies will continue to emerge”.
Mediators and fees become superfluous
How fast crypto market changes are, shows Bitcoin itself. Cybermoney is still the largest cryptocurrency, but now technically obsolete. For example, calculations take much longer than with more innovative digital coins. In addition, the power consumption during “mining” is extremely high. With the slide, even the first server farms closed down.
But the potential of Blockchain does not detract. Decentralized database enables the direct exchange of information and values without middlemen. Many businesses can be automated. For example, loans can be settled automatically without a bank involved or a real estate purchase without a broker or notary.
The next step in development would be to link cryptocurrencies to paper currencies like USD or EUR. There are very different connections possible, but since such applications also affect the money supply, a regulatory authority must set the rules of the game. So far, according to Sandner, there are comparatively few activities on the part of regulators.
There is already a link between classical currencies and cyber money: Ripple. With cryptocurrency, foreign exchange can be transferred in real time around the globe. These can also be payments for bonds or shares. Unlike Bitcoin, new coins are not created by a power-hungry computational process, they are simply spent in creating the currency.
Ripple already gives a foretaste of a completely new financial system, should the regulation one day be clarified. By transferring values and currencies in real time without middlemen, Ripple is already a very own financial microcosm. Who needs stock exchanges in the future?
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Categories: Crypto Currency