By Luis Durani*
Bitcoin and cryptocurrency has forever changed how the financial industry will operate. The finance industry currently requires a middle man in every transaction. The cryptocurrency innovation has helped revolutionize this practice by removing the bank from the process. Recently, Bitcoin reached another pivotal moment in its history; the fork. The recent interest in Bitcoin after the fork event has created more interest.
Unlike the status quo, transactions are carried out digitally and made P2P, peer to peer, in a method regulated by the blockchain technology. This is a decentralized database that records each transaction. When a transaction takes place, the process is validated by group of Bitcoin miners. Each one of them is competing to authenticate the transaction in the network because in return they are awarded in Bitcoins. The affirmed transaction is added to the blockchain database.
Bitcoin has been steadily going up with almost 550% gains in the past year. As a result of this exponential growth, Bitcoin’s network has become overwhelmed and the transaction began to languish. August 1st was the fork in the road for Bitcoin. A new potential solution was implemented, one that could quadruple the number of transactions Bitcoin can handle. The majority of miners have been signaling their support for the new approach to scaling. The addition of this solution will not only allow for more transactions per second but the path for further scaling is now possible. This would make Bitcoin and by extension other cryptocurrencies on par with major payment platforms such Visa and Paypal.
In addition to the transactional changes to Bitcoin, the cryptocurrencies have not only changed how banking works but contain with it the potential to change how the political, economic, and social landscapes of current societies function.
Politically, cryptocurrencies can help reset how political power is distributed in governments. The ability to control the printing press will go out and with it accountability will be returned to nations with cryptocurrencies as a national currency. Through the lack of being able to print currency at will, governments will be required to be more fiscal responsible. Furthermore, as cryptocurrencies become mainstream and receive more capital injection, their market valuation will stabilize. As a result, if adopted as a national reserve, countries will have more stable economic situations. Nations such as Venezuela, Zimbabwe and others can see to benefit from such cryptocurrency implementation. Socially, cryptocurrency will not only create more responsible governments but it can help restore power back to the people. The currency democratizes institutions, facets of governments, and means of monetary itself.
If the Bitcoin fork is successful, this could be the catalyst that makes the virtual currency go mainstream. Once the fickleness surrounding this change passes by, large scale investment can began to find its way towards Bitcoin and all other cryptocurrencies. Despite the exponential growth in the past year, cryptocurrencies can see even more growth in the next year as its popularity rises, but even more so with the changes it can bring to different societal aspects will fundamentally alter the way people live and view the world they are in.
About the author:
*Luis Durani is currently employed in the oil and gas industry. He previously worked in the nuclear energy industry. He has a M.A. in international affairs with a focus on Chinese foreign policy and the South China Sea, MBA, M.S. in nuclear engineering, B.S. in mechanical engineering and B.A. in political science. He is also author of “Afghanistan: It’s No Nebraska – How to do Deal with a Tribal State” and “China and the South China Sea: The Emergence of the Huaqing Doctrine.” Follow him for other articles on Instagram: @Luis_Durani
This article was published at Modern Diplomacy
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