AndPlus acquired by expert technology adviser and managed service provider, Ensono. Read the full announcement

So... What's up With Crypto?

Aug 6, 2018 9:05:00 AM

shutterstock_674460637 medAt the end of 2017, speculators had run the value of a single Bitcoin to over $18,000—a far cry from the pennies that Bitcoins were trading for just a few years ago. But then the Bitcoin price fell back, almost as fast as it had risen, and at this writing has been trading in the $5,000–$10,000 range for several months. The buzz about cryptocurrencies in general and Bitcoin in particular has faded in tandem with Bitcoin’s trading price.

What Gives?

Most experts agree that Bitcoin’s spectacular rise during 2017 was a speculative bubble. As the price increased, more people piled on in hopes of making a quick buck. Eventually there were no more suckers investors who were interested, and the price crashed. Those who bought at the peak and held on lost half to two-thirds of their investments.

We’ve seen this before, of course. From the Dutch tulip mania of the 1600s to silver in the early 1980s to the bubbles in dot-com stocks and sub-prime mortgages in this century, speculative bubbles have always been a part of the investing landscape. Bitcoin is simply the latest example. It won’t be the last.

So Now What?

Perhaps now that the speculators have had their fun, Bitcoin can get back to the business of being an electronic currency. Bitcoin—and competing cryptocurrencies, such as Etherium and ZCash—have a long way to go before they can become more than a novelty. Here are some things holding them back:

  • Acceptance. Even if you own Bitcoins that you bought long ago, what good are they? Their real value lies in what you can exchange them for, besides other currencies. So far, there isn’t much you can actually buy with Bitcoins. That’s changing, but slowly.
  • Stability. When a currency, whether electronic or government-backed, undergoes wild swings in value, it ceases to be useful as a medium of exchange and becomes simply an object of speculative investment. People generally want the money they have to be worth tomorrow approximately what it was today, and yesterday; this makes it easier to plan and budget. Stability will drive acceptance.
  • Security. The Bitcoin paradigm, and the blockchain technology that supports it, is among the most secure electronic transaction methods ever devised. However, that doesn’t mean that your Bitcoins are 100% safe from hackers. In order to exchange Bitcoins for anything, you need a digital wallet. Digital wallets are third-party services, not owned or operated by the developers behind Bitcoin. Some digital wallets are more secure than others, and more than one has been hacked and drained of its customers’ Bitcoins. When that happens, it’s just like having your physical wallet stolen—the cash is gone and you won’t get it back. As long as these breaches continue to make headlines, people will hesitate to get on the Bitcoin bandwagon.

Meanwhile…

So much for your economics lesson for the day. Of greater interest to us as software developers is the technology that drives all cryptocurrencies: the blockchain.

A blockchain—an electronic, distributed ledger—is, by its design, virtually un-alterable. Once a transaction is recorded, it would take a vast conspiracy and a data center’s worth of computing power to change any aspect of the transaction. This makes blockchains extremely secure, and as such, they have piqued the interest of businesses, governments, and other entities who are keen on having automatic, secure, fraud-proof methods of recording transactions of any kind, not just financial. Here are some recent innovative blockchain application ideas:

  • The government of Malta has launched a pilot program that uses blockchain technology to record educational transcripts of its citizens. People who earn a degree, diploma, or certificate have unlimited, permanent, shareable access to their credentials—even if the institution that issued them closes down. A similar system could be imagined for other government records, such as birth certificates, marriage licenses, driver licenses, and contractor licenses.
  • A company called Everledger built a blockchain-based system to track diamonds from the moment they are mined and throughout the transactions they go through as they are traded, exported, imported, and processed. This eliminates the paper-based diamond certification process that has traditionally been vulnerable to fraud.
  • Walmart, in collaboration with its suppliers, is working on a blockchain-based system to make the food on its shelves immediately traceable all the way back to the farm or ranch that it came from, thereby increasing the safety of the food supply.

These ideas don’t make headlines the way $18,000 Bitcoins do, but ultimately, they may have a greater impact on our daily lives. At AndPlus, we want to explore ways blockchains can help your business or industry. Contact us today with your ideas.

Topics: Cryptocurrency

Abdul Dremali

Written by Abdul Dremali

Abdul Dremali is a key content author at AndPlus and a driving force in AndPlus marketing. He was also instrumental in creating the AndPlus Innovation Lab which paved the way for the company’s leadership in Artificial Intelligence, Machine Learning, and Augmented Reality application development.

Get in touch

LET’S BUILD SOMETHING AWESOME. TOGETHER.