A Bit of the bit or a bit of the block?

Which would you prefer?

The highest market capitalized crypto currency which has disrupted the views of investors on a normal bull market rally, being priced at less than $1000 about a year ago, reaching the $20,000 mark this month. CME and CBOE have introduced bitcoin futures expiring next year, which were mostly priced above the $20000 mark. There is an undeniable rally in bitcoin and irrespective of volumes traded being on a decline, the bitcoin is still expected to be around the $16,000 to $18ooo mark conservatively. It is the best thing that ever happened to investors who are starved of yield due to low interest rates right?

I prefer to look more into the blockchain. which is the mechanism behind the bitcoin. As the email is to the internet, so is bitcoin to the blockchain system. The system allows digital information to be distributed but not copied, and it serves as a sort of distributed ledger wherein economic (not just financial) transactions are recorded in a decentralized manner and changes and additions affecting transactions occur in an open and instantaneous manner. Information held on the blockchain exists as a shared, and continuously reconciled database. To make it simple; imagine having the same spreadsheet duplicated a number of times across a network of computers (the blocks), and this network is designed to regularly update the spreadsheet.

The block chain is obviously revolutionary in many ways. William Mougayer explains that “the traditional way of sharing documents with collaboration is to send a Microsoft word document to another recipient and ask them to make revisions to it. The problem with that scenario is that you need to wait to receive copy before you can make or see other changes because you are locked out of editing it until the person is done with it. That’s how databases work today. Two owners can’t be messing with the same record at once. That’s how banks maintain money balances and transfers; they briefly lock access while they update a transfer, and update the other side, or re-open access. Imagine the number of legal documents that should be used that way, instead of passing them to each other and losing track of versions andnot being in sync with the other version, why can’t all business documents become shared instead of transferred back and forth? So many types of legal contracts would be ideal for that kind of workflow. You don’t need a blockchain to share documents, but the shared documents ideology is a powerful one”.

The fact that it cannot be controlled by a single entity and it guarantees the validity of a transaction by recording it on a distributed system of registers which are transparent and incorruptible makes it important in countries which are less developed and suffer from accountability and transparency in payment systems and transactions like we have in the third world, parts of the middle east and Russia.

With Nestle, Unilever foods amongst other giant retailers to join IBM’s project on exploring the blockchain technology and other companies trying to incorporate its technology, it remains to be seen how far this technology would change the face of financial and economic transactions.

So which do you prefer? A bit of the bit or a bit of the block?