{"id":279,"date":"2014-05-10T20:51:00","date_gmt":"2014-05-10T20:51:00","guid":{"rendered":"http:\/\/blog.holytransaction.com\/bitcoins-promise-goes-far-beyond\/"},"modified":"2023-01-10T03:31:50","modified_gmt":"2023-01-10T01:31:50","slug":"bitcoins-promise-goes-far-beyond","status":"publish","type":"post","link":"https:\/\/holytransaction.com\/blog\/2014\/05\/bitcoins-promise-goes-far-beyond.html","title":{"rendered":"Bitcoin\u2019s promise goes far beyond payments"},"content":{"rendered":"
\n
<\/a><\/div>\n

(HarvardBusinessReview<\/a>) Digital currencies like Bitcoin have captured the attention of
\nthe media, entrepreneurs, and regulators. The coverage has described
\nexchange meltdowns, price volatility, and government crackdowns.
\nHowever, the focus on Bitcoin as a currency may distract businesses and
\ngovernments from its disruptive impact: as a technology.
\nBitcoin is more than just a new way to make purchases. It is a
\nprotocol for exchanging value over the internet without an intermediary.
\nBitcoin is based on a public ledger system, known as the blockchain,
\nwhich uses cryptography to validate transactions. Bitcoin users gain
\naccess to their balance through a password known as a private key. As a
\nresult, Bitcoin is peer-to-peer and open, yet secure and nearly
\nfrictionless. Much has been written about the payment applications of
\nBitcoin, including remittances, micropayments, and donations.<\/a>
\nHowever, Bitcoin could disrupt other systems that rely on
\nintermediaries with a similarly open, peer-to-peer system, including
\nproperty, contracts, and identity management.
\nAnywhere a transaction between two parties has traditionally required
\nthird party validation, Bitcoin may be applicable. Consider these three
\ncommon actions:<\/p>\n

Transfer of property.\u00a0<\/b>The Bitcoin protocol could
\nsimplify complex asset transfers, revolutionizing the services that
\nsupport this industry. Currently, the transfer of large assets requires
\nsignificant time and resources. For example, in order to purchase a car
\nfrom an individual seller, one has to engage a third party to transfer
\nthe title. Additionally, one has to use services like Carfax to learn
\nabout the car\u2019s accident and inspection history. And who doesn\u2019t like to
\nspend a Saturday at the DMV updating a car registration?
\nThe blockchain could change all of this. Bitcoins can be qualified in
\nsuch a way that they represent real-world assets. Bitcoin entrepreneurs
\nat companies like Colored Coin<\/a>
\nare already working on ways to use small portions of Bitcoin to denote
\nphysical property. A fraction of a Bitcoin would publicly identify who
\ncurrently owns that property, and could include a record of both past
\nownership and other history about the property. When purchasing the car,
\none would be able to verify all accidents and inspections over the
\nblockchain and transfer the title on site. Similarly, real estate and
\nfinancial instrument transactions could all be executed over Bitcoin.
\nThis could soon create efficiencies and reduce friction by allowing
\nindividuals to directly transfer property without the use of a broker,
\nlawyer, or notary to sign-off on the transfer.<\/p>\n

Execution of contracts.\u00a0<\/b>Bitcoin could similarly be
\nused to structure contracts, bringing new efficiency and transparency.
\nContracts are typically developed by lawyers on a case-by-case basis
\nwith significant time and resources devoted to negotiation, development,
\nand enforcement. Additionally, markets based on contracts, including
\ncertain financial derivatives markets, lack transparency, which
\ncomplicates\u00a0regulation.
\nTraditional contracts could be replaced by code, executing themselves
\nwhen a triggering event occurs. In a simple example, a financial
\ninstrument, like an option, could be developed and executed over the
\nblockchain. In addition to reducing legal fees, this could bring new
\ntransparency to financial markets, as regulators could use the public
\nledger to understand the market without forcing individual actors to
\nreveal their specific positions. It is possible that new
\ncrypto-currencies will emerge to serve these niche purposes.
\nNew ventures, like Ethereum, are creating these capabilities today. Ethereum is developing a network<\/a> to serve as both the registry and escrow to execute the conditions of a contract automatically through checkable rules.<\/p>\n

Identity management.\u00a0<\/b>Bitcoin\u2019s cryptography could also transform identity management. Much of identity management, including passports, still operates on a paper-based system<\/a>.
\nThese documents are frequently forged and stolen. Interpol\u2019s database
\ncurrently lists 39 million stolen travel documents. Instead of carrying
\npaper documents, what if there was a way to create a unique, verifiable
\nkey that was impossible to forge?
\nA cryptographic network similar to but separate from Bitcoin could be
\nused to verify individuals\u2019 identities and monitor movement across
\nborders. When a person travels through a checkpoint at a border
\ncrossing, instead of showing and scanning a paper passport, she could
\npresent her private Bitcoin key. A network privately maintained by the
\ngovernment could verify the key and register the entry into the ledger.
\nThis system, based on cryptography instead of paper documents, would
\nsimultaneously increase mobility and security. If Bitcoin can be used
\nfor travel documents, it could also be used for other forms of identity
\nmanagement like social security numbers, tax identification numbers, or
\neven driver\u2019s licenses.
\nProperty, contracts, and identity management are only a few examples
\nof how a peer-to-peer, open, and frictionless system could change how we
\nconduct business in the future. In order to achieve this wider
\nadoption, Bitcoin will need to address significant questions around
\ntrust, ease of use, and operability. However, the Bitcoin community has
\nshown remarkable adaptability and is already working to mitigate these
\nproblems. In the next decade, we can expect significant innovation
\naround the Bitcoin network. Much of that will revolve around payments,
\nparticularly early on. The real value, though, lies beyond.<\/p>\n<\/div>\n

Open your free digital wallet here<\/a> to store your cryptocurrencies in a safe place.<\/p>\n","protected":false},"excerpt":{"rendered":"

(HarvardBusinessReview) Digital currencies like Bitcoin have captured the attention of the media, entrepreneurs, and regulators. The coverage has described exchange meltdowns, price volatility, and government crackdowns. However, the focus on Bitcoin as a currency may distract businesses and governments from its disruptive impact: as a technology. Bitcoin is more than just a new way to […]<\/p>\n","protected":false},"author":1,"featured_media":870,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[37,76,299,678],"tags":[764,975,1331],"yoast_head":"\nBitcoin\u2019s promise goes far beyond payments -<\/title>\n<meta name=\"description\" content=\"Learn about Bitcoin's potential to disrupt industries and revolutionize finance on HolyTransaction's blog. 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