Wolverton: Tech underlying Bitcoin could take off -- even if currency doesn'tYou may never use Bitcoin, but there's a decent chance that you'll eventually benefit from the technology underlying the virtual currency.
The designers of Bitcoin didn't just create a new kind of money. They essentially created a way of transmitting, recording and verifying information about ownership over the Internet. That system, called the blockchain, is in some ways comparable to the protocols used to send Web pages or email messages and could have similarly wide-ranging implications with the potential to impact everything from real estate transactions to voting.
At the Future of Money and Technology conference in San Francisco last week, investors, analysts, artists, Bitcoin backers, entrepreneurs and technologists discussed and enthused about the potential uses of blockchain technology. Bill Tai, a venture investor and board member of BitFury, which helps maintain and distribute the Bitcoin blockchain, compared the state of blockchain technology to the Internet in the early 1990s.
"It's crazy to see what evolved over next 15 to 20 years. I feel like we're at the front of the same thing," he said. "When you're looking at the applications of the blockchain, it's a crazily exciting time."
You can think of a blockchain as a kind of accounting ledger that's open to the public and widely distributed. Every Bitcoin transaction is tallied on the Bitcoin ledger. Each one is time stamped, encrypted, validated and recorded by multiple computers -- and permanent.
In essence, the Bitcoin blockchain is a history of all the transactions that have ever taken place with the digital money. You could use the blockchain to trace back how a particular Bitcoin has changed hands over time to when it was created.
The blockchain technology was designed to ensure trust among Bitcoin transactions. The system prevents Bitcoin users from spending the same coins in multiple places or illegitimately creating new money out of thin air. It was also designed to work quickly, at least compared to the traditional means of transmitting money. New lines -- or blocks, which represent collections of new transactions -- are added to the blockchain ledger every 10 minutes.
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