Welcome back to our blog series: 11 Myths of Bitcoin. Continuing with Myth…
#6: Bitcoin is only a currency.
The basics of Bitcoin are often misunderstood. Bitcoin is simply a technology, a protocol which allows applications to be developed. The first application to be developed was bitcoin (with a lowercase b), the currency. While Bitcoin does meet currency characteristics, what really has the world excited are the other potential applications that Bitcoin can provide.
Bitcoin at the core is really just complex math and cryptographic based math problems, or algorithms. They are based on over 40 years of research into cryptography and 20 years of research into cryptographic based currencies by researchers around the globe. These algorithms enable Bitcoin to function as a public ledger. This public ledger records all transactions going across the network along with a time stamp. If this ledger were to fail, that would mean the entire Bitcoin technology had failed. This ledger cannot be interrupted, changed, or altered in anyway. Investors are now seeing the value in a system that can record data with a timestamp and not be altered or changed by a third party. These technologies are often called “Bitcoin 2.0”.
The following are examples of the potential of a public ledger which records data:
One of the first major companies to take a step towards integration of “bitcoin 2.0” was Overstock.com which is listed on the NYSE and has annual revenues in excess of $1 billion. In October of 2014, the CEO and founder Patrick Byrne announced his plans to develop a decentralized stock exchange which would take Overstock public and then offer the technology to other companies in order to do the same. This new form of stock market is in its infancy, however it is an example of the potential that Bitcoin 2.0 technology offers and how major brands are starting to use it.
Stay tuned for next week when we will publish myth #7 – Bitcoin has been hacked on several occasions.