Why Bitcoin Is Important For Your Business
Recently, a luxury hotel called the Seehotel Jagerwirt in Turrach, Austria found that all of its electronic doors were locked by hackers and could not be opened unless the hotel made a bitcoin payment to the hackers. As hackers become more sophisticated, we’ll see the constant battle between legitimate businesses and criminals, each one trying to leapfrog the other’s technology. Bitcoin is useful for criminals and people involved with them. So far, it’s not useful for much more other than that.
In spite of its dark character, bitcoin is important because of the technology that makes it work. That technology is called blockchain computing and you’ll be hearing more about it. The effect of blockchain computing is similar to the internet’s effect on traditional computer networks. Where pre-internet networks had a central hub with spokes that communicated only through the hub, the internet allows every node on a network to communicate directly with every other node. That change is profound.
I recently sat down with blockchain legal expert Joshua Klayman of the law firm of Morrison Foerster to learn more about where this can go. Here’s what I learned:
What is Blockchain Computing?
Blockchain computing is a system that can securely contain an entire set of records within it, referred to as blocks. What makes blockchain computing unique is that copies of the entire system can be kept simultaneously on millions of computers located anywhere. Just as the internet obsoleted the hub and spoke nature of a network, blockchain technology does away with the idea that information is stored in a limited number of locations. Blockchain allows information to reside on multiple systems, even millions of them, simultaneously. When a new entry is made into the blockchain, the entire system updates in every location, instantly. An unlimited number of copies of the entire system, updated right to the present moment, is maintained everywhere in the world. Anyone can add a new record to the system but changing an old one would require the consent of every computer on which the data resides, it’s virtually impossible. And that means the records are completely reliable.
One of the things that intermediaries like banks, insurance companies, property title companies, traders and many other intermediaries count on to collect fees is their reputation for integrity. You send money through a bank because you know it will get there and their recordkeeping is accurate. But if you and a stranger could exchange money without needing a bank or having to pay fees to Paypal or another intermediary, you would. With blockchain, you can. Because a blockchain’s records can be stored on millions of computers around the world, you can always be comfortable that the records are accurate and trustworthy. That means you can use the blockchain instead of an intermediary to send and receive money from strangers and do many other things.