Bitcoin and Blockchain: The Washington Post


When Bitcoin broke into public consciousness in 2013, it could not have been sexier: a digital currency used to buy everything from drugs to cupcakes. Even the unbridled rush of Bitcoin, which has risen towards the end of 2017 just to fall steadily downward this year, has also been quite exciting, even if the fluctuations have made its use as a daily currency less plausible. Another aspect of Bitcoin that is a little less sparkling has generated almost as much enthusiasm: public online registers. Blockchain – the technology used to verify and record transactions that is the core of Bitcoin – is seen as potentially capable of reshaping the global financial system and possibly other industries. Yet five years after the emergence of Bitcoin, blockchain remains more of an enticing concept than an instrument that is actually used – a bit like Bitcoin.

The situation

The total value of Bitcoin, which was approaching $ 300 billion at the end of 2017, stood at $ 112 billion at the end of October. Some in the industry thought that the introduction of Bitcoin futures contracts by Cboe Global Markets, CME Group Inc. and Nasdaq in late 2017 would help build legitimacy, but trading on both exchanges was minimal. The Bitcoin rollercoaster race was replicated by a series of new cryptocurrencies that raised over $ 21.5 billion through the first token offers. Their explosive growth drew the attention of regulators all over the world even before hackers stole nearly 500 million dollars from a digital token called NEM from a Japanese cryptocurrency exchange. The overwhelming majority of international product organizations lost substantial value in 2018. Blockchain also suffered a series of jokes, as a number of high profile initiatives were withdrawn or suspended, including an Australian stock exchange plan to start use technology to process stock transactions. But Wal-Mart Stores Inc. announced in September that, starting in 2019, it will require suppliers of fresh and leafy vegetables to track their products using a digital ledger developed by International Business Machines Corp., which has devoted much to the development of blockchain tools for businesses.


Virtual currencies are not new – online fantasy games have used them for a long time – but the development of a secure digital currency without a central broadcaster rightly turned heads. The person or people who created the Bitcoin system under the pseudonym Satoshi Nakamoto solved a central problem in any currency, preventing counterfeiting, and they did so without relying on the authority of a government. The software has also solved a specific obstacle for digital money: how to prevent users from spending the same currency unit twice. The revolutionary idea was blockchain, a publicly visible anonymous online ledger that records every single Bitcoin transaction. It is managed by a network of "miners" whose computers perform the calculations that validate each transaction, avoiding double spending. They earn a rebate of newly issued Bitcoins. The pace of creation is limited and no more than 21 million will ever be issued. Despite all its technical sophistication, Bitcoin's early reputation has been a tool to sell drugs and recycle money online.

L & # 39; topic

Leading economist Nouriel Roubini joined the investor Warren Buffett and Jamie Dimon, the CEO of JPMorgan Chase & Co., asking whether Bitcoin is simply a hype. Buffett said the coin was "probably a square, square poison," and Dimon called it "a fraud," though he later said he regretted making the comment and that the blockchain was a true technology. Goldman Sachs Group Inc. and Citigroup Inc. have both expressed their willingness to work with cryptocurrencies and Fidelity Investments offers the ability to manage digital resources for customers. Regulators are also paying attention. Several branches of the US government have opened investigations into possible criminal manipulation of cryptocurrency trading and possible fraud in other parts of the market. An increasing number of entrepreneurs in the industry are lobbying for regulation to help Bitcoin throw its lawless image and become a real asset class. In the blockchain world, a rift has broken out between those focused on creating business-specific tools and those pursuing the decentralized ideal of the early days of Bitcoin – freeing up money from the control of governments and established financial institutions. Some critics say that both types of blockchain are equivalent to a new type of database.

To contact the authors of this QuickTake: Olga Kharif in Portland at [email protected] Leising in Los Angeles at [email protected]

To contact the editor responsible for this QuickTake: John O & # 39; Neil on [email protected]

Published for the first time on 5 January 2015

© 2018 Bloomberg L.P.

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