When Satoshi Nakamoto published his academic paper in 2009, informing a cryptography mailing list of a newly invented decentralized digital currency, nobody could possibly imagine just how much publicity it would receive. Today, most people have at least heard of Bitcoin, and many use it every single day to transfer money across borders without the need for centralized financial services. In this article, we describe 10 ways Bitcoin has already changed the world so you can better understand how it will likely shape the future.
Traditional wires and bank-to-bank transfers are burdened by various checks and balances processes that banks must complete in order to make a deposit. As a result, they are often slow, costly, and inconvenient. Because Bitcoin doesn’t depend on any centralized financial institution with stringent rules and regulations to obey, it can provide a more efficient payment system to users from around the world. Thanks to Bitcoin’s blockchain, transfers are secure, non-reversible, and easily verifiable.
Traditional financial institutions have noticed that Bitcoin is providing a very compelling alternative to the very same services they depend on to remain profitable, which has incentivized them to improve the quality of their services and invest in modern technology to obtain a competitive advantage. Their customers, who may or may not be Bitcoin users, are those who profit the most at the end of the day, which only goes to show how Bitcoin impacts the entire financial industry.
Before Bitcoin, there was no compelling alternative to traditional fiat currency, which is no longer backed by any real commodity such as gold. The 2008 financial crisis showed the whole world just how fragile fiat money really is and how excessive risk-taking by banks such as Lehman Brothers can lead to a global economic downturn, the Great Recession.
Bitcoin gives people control over their own money, depriving banks and other financial institutions of the ability to play poker with people’s life savings. Should another global financial collapse take place in the future, there’s no doubt that people from around the world would flock to Bitcoin, seeing it as a trustworthy alternative to fiat money.
Entrepreneurs have been embracing crowdfunding, the practice of raising small amounts of money from a large number of people to fund various projects, for a long time and to great success. Some of the most successful crowdfunding campaigns in the world took place on IndieGoGo, Kickstarter, GoFundMe and other crowdfunding platforms. Even though such platforms make it much easier for entrepreneurs who are located outside major financial hubs of the world to secure funds, they’re not without their limitations and downsides, which include geographical barriers, rules and regulations, as well as insufficient transparency.
Initial coin offerings (ICOs) make it possible for entrepreneurs to secure funding using cryptocurrencies. Investors purchase various cryptocurrency tokens in exchange for Bitcoin, Ethereum, or some other major cryptocurrency, which then serve as a source of capital for the startup company. Because ICOs use cryptocurrencies instead of fiat money, they can avoid the hassle involved with achieving regulatory compliance and obeying the complicated rules of various intermediaries. The obvious downside that comes from the unregulated nature of ICOs is the fact that they give scammers an opportunity to prey on naïve investors.
Bitcoin’s blockchain has the ability to act as digital defense dust that can cover data and protect them from misuse and illegal practices. The obvious application of this digital defense dust is to protect financial transactions from fraud, but the possibilities are truly endless. For example, Estonia (PDF) has been embracing blockchain technology for more than a decade now, using it to protect national data, e-services, and smart devices both in the public and private sector.
Blockchain technology, which is behind cryptocurrencies like Bitcoin, could one day make government corruption a thing of the past, providing a secure and highly reliable mechanism for decisions to be publicly recorded in an immutable chain of data blocks. Blockchain could also make companies fully accountable for their actions, ensuring that each and every barrel of toxic waste ends up exactly where it belongs, and so on.
Over the last century, the rate at which humanity makes new scientific advancements has accelerated exponentially. We now live in the middle of the information technology era, and all aspects of our lives involve some use of digital technology. To continue our collective advancements, it’s paramount for critical data and information to be made public, instead of being kept secret by institutions and governments around the world.
Bitcoin’s blockchain technology seems to be the ideal technology to improve how knowledge spreads across the globe, eliminating the need for major institutions and corporations to act as intermediaries while acting with their own self-interest in mind. With alarming measles outbreaks happening worldwide, projects like Nano Vision, which is building a global, decentralized blockchain platform for healthcare researchers to share data, are exactly what humanity needs for the world to become a better place, and the best thing about them is that they are already here.
In November 2018, the annual inflation rate in Venezuela reached 1,300,000 percent, up from around 40 percent in 2012 when Nicolás Maduro was elected as the successor of Hugo Chávez. While struggling to afford basic items such as food and toiletries, Venezuelans have turned to Bitcoin as a relatively stable and far more trustworthy alternative to Venezuelan bolívar, the main currency of Venezuela. The Bitcoin trading volume in the broken country has quickly skyrocketed because it proved to be a great way for citizens to preserve their wealth.
Even though President Maduro’s government has noticed the competition in the form of Bitcoin and introduced a 15 percent fee on bitcoin remittances, Bitcoin’s decentralized nature makes it virtually impossible to enforce such rule. All that Venezuelans have to do to avoid it is trade on LocalBitcoins, which is a service that facilitates over-the-counter trading of local currency for Bitcoin.
Since the early days of Bitcoin, the entire e-commerce market has been attracted by its promises of seamless cross border payments, no chargebacks, better privacy, and fast transaction speed. These days, there are countless companies that accept Bitcoin, including KFC Canada, Overstock.com, Playboy, Subway, Microsoft, Reddit, OkCupid, Namecheap, Expedia.com, Wikipedia, and Virgin Galactic, just to name a few.
For some of these companies, Bitcoin makes a huge difference because it gives their customers the confidence they need to purchase certain goods and services online. Bitcoin-friendly companies enjoy this modern alternative to credit cards and cash payments because they don’t have to worry about fraudulent chargebacks or implement complicated systems just to safely store the personal information of their customers.
Bitcoin has created a plethora of investment opportunities, and there is now a total of 23,943 Bitcoin addresses globally that hold a million worth of Bitcoin, and three addresses that hold over a billion dollars in Bitcoin. The number of people who have become millionaires thanks to Bitcoin is most likely significantly higher.
Even though Bitcoin no longer trades at its all-time high of around $20,000, it still presents many lucrative investment opportunities to adventurous cryptocurrency traders. “What I love about Bitcoin is that instead of some rich old guy on Wall Street. Young, poor people are the ones getting rich,” wrote teenage bitcoin millionaire Erik Finman on Twitter, succinctly summarizing the very essence of Bitcoin investing.
By now, it should be clear that Bitcoin and its underlying blockchain technology have disrupted banking and financial services in general, but there are many other industries that have already embraced it. In the healthcare industry, blockchain is allowing doctors to securely store and access patient data. Because information stored in a blockchain can be accessed immediately, doctors can be much better informed during emergencies, when time to make the right decision is scarce. Estonia, which we’ve already mentioned in this article, is an excellent example of a country that uses blockchain to ensure healthcare data security.
Other industries that have been disrupted by Bitcoin and blockchain technology include real estate, legal industry, security, rentals, and education. In every single case, the disruption involves the replacement of traditional databases by a single decentralized database that is distributed across a large number of computers, which constantly verify its integrity.
“As far as I know, the blockchain is the only method to achieve a global consensus which isn't based on trust [of an external organization],” said Alex Mizrahi, founder and lead developer of ChromaWallet. “History shows that even entities which are seen as being trustworthy—banks, governments—can sometimes turn to deception as they have interests of their own or can fall victim to some kind of attack. So the blockchain can succeed where other approaches fail,” he added.
Thanks to Bitcoin and other cryptocurrencies that have followed, the concepts of Proof-Of-Work, Proof-of-Stake and Directed Acyclic Graphs have been battle-tested and proved worthy of being used to achieve global consensus. People can now make immutable digital contracts with auto-executing conditions, called smart contracts, as a faster, cheaper, and more secure to traditional paper contracts.
Bitcoin has already managed to change the world in at least 10 different ways, and everything indicates that it will keep bringing disruption across industries even in the future. With new Bitcoin-inspired cryptocurrency projects appearing almost every day, there are always new reasons to explore Bitcoin not only as an alternative to traditional financial services but also as a novel way of verifying information and storing data through cryptography and public distributed ledger called a blockchain.