Author: Reuben Jackson / Source: Big Think
Cryptocurrencies have taken the world by storm. Between January 2017 and December 2017, the price of Bitcoin rose by over 2,000%—from $953 to $20,089.
Right now, the market cap of Bitcoin alone is over $120 billion. However, the most exciting part of blockchain technology isn’t Bitcoin rather, the way it can be applied to change the world we live in.
Useful crypto properties
There are a number of reasons that blockchain technology is playing an increasing role in our society. Perhaps the most obvious benefit of the blockchain and the core concept behind it is the fact that it is decentralized which means that there is no requirement for an intermediary or a third party to validate transactions. Instead, they can be carried out automatically using a consensus mechanism.
Because no third-party is required to validate transactions, this massively reduces overhead costs, making blockchain models cheaper and more efficient. In addition, blockchain is immutable, meaning that once data has been entered into it, it’s almost impossible to edit, which is a big advantage and increases people’s trust in the system.
Finally, one of the most vital properties of blockchain is its extremely high level of security. All transactions on the blockchain are cryptographically secured, making it extremely difficult for hackers to break into them.
Bitcoin 101, with Daniel Altman Daniel Altman
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Bitcoin 101, with Daniel Altman
Daniel Altman
Chief Economist, Big Think
02:43
Current barriers to crypto mass adoption
Despite these benefits, there are still a number of problems with blockchain that have yet to be solved which are preventing crypto from becoming mainstream. To help it along, we need to look for solutions to these issues.
Over the past couple of years, the price of cryptocurrencies has varied massively. In some cases, cryptocurrencies have lost as much as 50% of their value within a matter of days.
For instance, PayPal was one of the first platforms to accept cryptocurrencies in 2014. However, CFO, John Rainey, has stated that the volatility of crypto is one of the major things that keeps merchants from using them.
In an interview, he said, “If you’re a merchant and you have, let’s say, a 10 percent margin on a product that you sell and you accept Bitcoin, for example, and the very next day it moves 15 percent, you’re now underwater on that transaction… You could have something that appeals to consumers, but if merchants don’t accept it, it’s of little value. Right now, we don’t see a lot of interest from our merchants.”
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Security issues
As the value of cryptocurrencies has risen, so have the number of hackers targeting the most popular crypto exchanges and startups. Because of this, many exchanges have significantly increased their security precautions in order to protect their users. The downside of this is that the increased security has made it…
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