What is cryptocurrency?
Interview with Gavin Marshall*
Bank Windhoek will be hosting an information session on cryptocurrencies on 15 February 2018 at the National Theatre of Namibia.
Herewith an extract from an interview with Marshall, where the public can glean more knowledge on the topic.
Q: Where did cryptocurrency technology originate?
Cryptocurrency originated with the cypherpunk movement in the late 1990s experimenting with using various cryptographic technologies to create alternate ways for people to transact with each other without needing a trusted third party to safeguard the ledger. Nick Szabo, Adam Back, Hal Finney and Wei Dai were all pioneers in this field, with the Bitcoin whitepaper being released in October 2008 by someone (or a group of people) with the pseudonym of Satoshi Nakamoto. The first version of Bitcoin was released early in 2009.
Q: What is the difference between cryptocurrencies and blockchain technology?
The blockchain is one part of a suite of technologies that enable us to secure a decentralized, distributed ledger. Cryptocurrency creates the incentive to secure the ledger (a process known as mining). In order to have a permissionless decentralised ledger without needing a trusted third party, a blockchain needs an incentive - namely a cryptocurrency. There have been a number of experiments to separate 'blockchain' from needing a cryptocurrency, but all of these need trusted, permissioned entities to safeguard the ledger.
Q: What is the current state of cryptocurrencies as we have seen a decline in its value since December?
It really depends on how one defines value. In terms of USD, we've seen a correction in the market - the massive rise in December was unrealistic and generally driven by hype and FOMO (Fear of missing out).
In terms of utility value - this is continuously growing as the technology becomes more scalable etc. As an example, Lightning Network (a 2nd layer technology in the Bitcoin space) is revolutionary in terms of being able to eventually handle millions of (micro) transactions per second very little transaction fee, without compromising security or decentralisation. Personally, I think we're only seeing the tip of the iceberg in terms of value.
Q: In you view, what is the future of blockchain tech?
I think initially the reaction has been to try and separate blockchain tech from cryptocurrencies and build a number of essentially centralized and permissioned versions - i.e. private blockchains. This is a usual response to a new technology. As we start learning to understand and trust the decentralized permission less systems (Bitcoin, Ethereum) they will become a technology layer very similar to the internet where we start building tech on top of this 'trustware', rather than reinventing the wheel with 'our own' blockchains.
At the moment this technology is still very new. I would compare it to the internet shortly after the browser had been developed. As it evolves it will have a similar, or even greater impact on how we operate as humans (and interact with machines) as the internet had. Unlike the economist Paul Krugman, who predicted that the internet would have no more impact on the economy than the fax machine, I believe it's not unrealistic to predict that this technology will revolutionize how we trade, raise funds, store value and even govern ourselves as human beings. The impact will be massive.
* Marshall is a consultant training instructor at the Blockchain Academy. He is a well-known speaker on cryptocurrencies and blockchain technology at conferences and events worldwide. As the founder and creator of Sharebit, a blockchain-based application which allows individuals to register, manage, track and transfer shares in both legal and informal entities, he has a thorough knowledge and understanding of the subject.