6 Things Bitcoin Has Made Possible for the First Time
It may be cliché, but perhaps no single word sums up bitcoin quite as well as “disruptive”.
Computer scientists have been trying to create secure and sustainable digital cash since the earliest days of the Internet, and until Satoshi Nakamoto’s white paper introducing bitcoin was published in 2008, their efforts were in vain.
While the public may still be polarized by the digital currency, most people who take the time to learn about bitcoin and the block chain come to realize the significance of a decentralized, trustless network and the impacts it could potentially have in many areas of everyday life.
The use cases of such a technology are only beginning to be explored, but the bitcoin protocol has already proven to be a game-changer, allowing its users to do things that had previously been thought impractical or even impossible.
Here are six things bitcoin has made possible for the first time:
1. A currency that exists solely in digital space
Yes, it’s obvious, but it’s also perhaps bitcoin’s killer app.
Previous forays into online-based currencies have resulted in failures like e-Gold or centralized currencies often found in gaming communities, but bitcoin is the first digital-only currency that is completely decentralized to gain significant traction.
There are many implications of this, but one key value of a decentralized digital currency is that anyone can create a bitcoin wallet to hold their money, without needing to rely on a bank’s approval or their government’s issued currency.
2. Rapid and cheap international money transfer
It’s no secret that money transfer services like Western Union and Moneygram are flawed. These companies often take days to transfer money across the globe, and they charge a hefty service fee for their work.
Bitcoin, on the other hand, allows anybody with Internet access to send any amount of money anywhere in the world, have their transaction complete in minutes, and be charged only a small fraction of the aforementioned companies’ cost in transaction fees.
3. Decentralized smart contracts
The notion of smart contracts—contracts that can be digitally created and verified—has been around for years, but is now being approached in a whole new light in the face of bitcoin.
Projects like Ripple Lab’s Codius and Ethereum have brought decentralized smart contracts to center stage in the digital currency industry, and the future looks promising for “smart” asset management using block chain technology.
4. Decentralized domain name registration
A novel subset of smart contracts that is already providing value through the block chain is the ability to register domain names outside of the jurisdiction of the centralized group Internet Corporation for Assigned Names and Numbers (ICANN).
Namecoin has been the leader in this space, allowing users to register .bit domain names that are not subject to regulations and that centralized domain names may face. The major value in decentralized domain names, then, lies in their immunity to Internet censorship.
5. Online black markets
Just as some of the Internet’s first uses were for taboo purposes, someone along the way realized that bitcoin could be used to anonymously (or, more accurately, pseudonymously) transfer money online.
One result was a now-defunct robust marketplace called the Silk Road. When the FBI shut down the online black market, they seized (and subsequently auctioned) 27,000 BTC worth more than $14m at the time of writing.
6. Micropayments that make sense
Of course micropayments existed before bitcoin, but the idea of sending amounts less than $1 over the Internet was never taken too seriously, as credit card companies and services like Paypal often charge transaction fees that make micropayments inefficient.
While some of the kinks of transaction fees for bitcoin are still being worked out, there’s hope that a truly digital currency will allow people in the publishing industry and beyond to accept micropayments (or donations) for their services.
The Chicago Sun Times recently experimented with a paywall that accepted bitcoin micropayments in exchange for access to their website’s content, which led to more than 700 donations in a 24-hour period.
Society has seen many of our traditional institutions and operations move from analog to digital, and this shift shows no signs of slowing down.
As more innovators continue to explore all of the use cases of the bitcoin protocol, there’s no doubt that we can expect the list of things made possible by the digital currency to expand.
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