By: Ann Cuisia-Lindayag
Bitcoin has been hitting the headlines in the past months, sadly because of the scammers who ride on bitcoin’s popularity to defraud the public. Part of these fraudsters’ success stems from the fact that most Filipinos do not understand how bitcoin works.
For this reason, let’s start with an introduction to bitcoin and cryptocurrencies.
Two Divergent Sentiments
Of today’s 1,639 cryptocurrencies, bitcoin—a digital currency that is not controlled by any central authority such as the central bank (thus the term “decentralized”)— is undoubtedly the most popular. The rise in its price ever since it was created in 2009 by a person using the pseudonym Satoshi Nakamoto partly explains its popularity (this, despite the equally significant dips in its price).
Not all people, however, have the same sentiments toward bitcoin (or cryptocurrencies in general).
On one corner are the brave and the bold who have jumped in and bought bitcoin, driven either by FOMO (or Fear of Missing Out) kind of investing, or because they see cryptocurrencies as the future of money.
The other group either flag bitcoin as an outright bubble; prefer to stand on the sidelines for now, wanting to see first how it will play out in the future; or are uncomfortable with price volatilities. After all, bitcoin’s price does not depend on any fundamentals the way prices of common stocks do.
The price of a common stock depends on the expected cash flow that will be generated by the business as well as the expected number of shares outstanding in the future. Cryptocurrencies, meanwhile, do not have a fundamental price to fall back on. Unlike stocks of companies, bitcoin does not generate a return. Rather, its price is driven by demand. Despite such sentiments, though, it is worthy to mention that bitcoin’s market capitalization hit a high of $237 billion in the fourth quarter of 2017.
The Innovation That Is Blockchain
However, what I am more excited about is the technology behind the coin: blockchain.
For one, it is blockchain that allows transactions among peers who do not know each other to remain secure through cryptography.
Because of blockchain’s “decentralized and distributed” feature, bitcoin can be acquired, used to buy goods, or sent to another individual anonymously and without the need for middlemen.
Blockchain continues to be an evolving technology. If bitcoin exemplified blockchain 1.0, there have been some “evolutions” soon after. Ethereum, for instance, introduced a platform where distributed applications (Dapps) can be built for the blockchain network. In addition, while bitcoin has a permission-less blockchain network, big corporate names such as IBM and Microsoft are now experimenting with the technology, this time within a permissioned network.
And Yes, blockchain is not merely for cryptocurrencies. Today, it is being applied in various industries such as finance, healthcare, the Internet of Things, banking, technology, manufacturing, and aeronautics.
Ann Cuisia-Lindayag is the CEO of Traxion.Tech. She is passionate about social impact and leads her startup’s direction on blockchain for the common good. You may reach her at [email protected]