Decoding bitcoin, blockchain and cryptocurrencies

Cryptocurrencies, and particularly bitcoin – or “digital gold” as some experts have labelled it – is a hot topic as many believe it represents the future of money.

So what is bitcoin? Launched in 2009 by Satoshi Nakamoto – the alias given to the unknown person (or persons) who created it – bitcoin is the world’s first decentralised digital currency. Interest in cryptocurrencies has grown with the rise of bitcoin and the hundreds of other cryptoassets the mainstream cryptocurrency has spawned since it was launched in 2009. The digital currency isn’t regulated by a central authority (i.e. no banks) and is free from governmental control.

A very important and exciting element in the crypto space is the blockchain technology that underpins cryptocurrency, which has been around for almost 30 years. Bitcoin is the first successful application of blockchain technology and it has become integral to the popularity of the ever-expanding cryptoasset world. The relationship between blockchain and cryptoassets is similar to the one between the internet and email. Email is just one use case of the internet, and the first cryptocurrency – namely bitcoin – is the original use case of blockchain technology.

Blockchain stands to revolutionise the way we interact with each other and because it is a type of technology (and not a single network), it can be implemented in many ways that could benefit society as a whole. It is an advancement that could have wide-ranging reverberations that will not only transform the financial services but countless other organisations and industries, including healthcare, security, and manufacturing. Why? Because of the way it allows information to be tracked and stored in a trustworthy and transparent way.

While the blockchain is often associated with bitcoin, it looks set to be an important part of the technological framework throughout the next decade.

Cryptocurrencies can fluctuate widely in price and are, therefore, not appropriate for all investors. Trading cryptocurrencies is not supervised by any EU regulatory framework. Past performance is not an indication of future results. This is not investment advice. Your capital is at risk.

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