As with any disruptive technology in its early moments, there are some skeptics (myself included) whose first reaction is to question the value proposition. And if we also consider that such technology expects to change the money, the skeptics will quickly grow in numbers. Luckily, that is beneficial and if you are a Bitcoin skeptic reading this article, welcome!
In the financial space, anything unregulated and unregistered would cause doubts and uneasiness. In the case of cryptocurrencies, such as bitcoin, financial regulators all over the world have started to find ways to oversee the blockchain, or the record of all cryptocurrency transactions, as well as to address the irregularities presented by these virtual currencies that mostly bypass financial firms, exchanges, and regulated banks. The most popular of all cryptocurrencies, bitcoin, chiefly operates outside of the conventions of a financial system; and this worries regulators as it has the potential to be linked to money laundering, tax evasion, fraud, and terrorist funding.
Bitcoin and other cryptocurrencies are gaining more attention as days pass. Aside from the advantages that cryptocurrencies have like anonymity and easy international transactions, people are enticed by the fact that it can become a good investment. Apart from trading bitcoins for cash, you can also use bitcoins to buy gift cards, book flights, and hotels, buy furniture, or even buy real estate properties. Bitcoin purchases are not taxed at the moment since there is no way for third parties to identify, track, or intercept transactions that use.
Blockchain (and Bitcoin first, of course) is often described as a technology that allows peers to transfer value between each other in a trustless way. However, “trustless” is not entirely accurate, but more like a convenient and short way of describing it. Truth is, there is still a lot of trust involved… but with a twist. Let me ramble on about that for a few minutes.
You might have heard that Blockchain is immutable, but that is a lie!... well not quite, but the ledger is technically modifiable.
One of the many things I found very interesting about the concept of Blockchain introduced by Bitcoin, is how the Proof of Work model works, and how it makes the blockchain immutable (among other things). Specially when you consider that digital data can always be modified, no matter what. The blockchain technology deals with it, and thinks ahead. That’s an important aspect when you are trying to build a system for transferring value in a trustless* way.