LONDON: A year ago, bitcoin was widely dismissed as little more than a way for drug-dealers and terrorists to move money around anonymously. Now, some of the world’s biggest banks and companies are buying into the technology behind it.
Underlying the controversial web-based “cryptocurrency” is the blockchain – a massive ledger of every bitcoin transaction ever made that is verified and shared by a global network of computers.
But the data that can be secured by the blockchain is not restricted to bitcoin transactions. Any two parties could use it to exchange other information, including stock deals, legal contracts and property records, within minutes and with no need for a third party to verify it.
Backers say it could cut out the middleman and help fight corruption, as the process by which the data is secured makes it virtually impossible to tamper with. Banks reckon it could save them money by making their operations faster, more efficient and more transparent.
But these are early days – bitcoin was invented just six years ago – and the blockchain is still being experimented with. As is often the case with new technology, as when Apple released the iPad, it is not clear what problem it solves.
Peter Kirby, chief executive officer of Texas blockchain-focused start-up Factom, likened the technology’s stage of development to that of the Internet in the early 1990s, when it was seen as little more than a way to send e-mails.
“Here we are again in the e-mail for the Internet era, and everyone’s like, ‘Oh, it’s all about moving money through the world.’ No. It’s about a giant distributed ledger that you can write anything to and never unwrite it.”
Factom is using the blockchain to build a permanent and secure land title record in Honduras, one of the poorest countries in Latin America, where