Whether you’re immersed in the tech world or not, it’s likely you’ve heard the term blockchain before.
Blockchain is the technology behind bitcoin and other cryptocurrencies. It is a permanent, decentralized, digital keeper of records.
“You can envision different blockchains as different types of computer software: similar to how Microsoft has Windows, Word, Outlook, Excel, etc. to perform different functions, there are different types of blockchains which provide different use-cases,” said Sung Woo Choi, vice president of corporate development at Coinme, a licensed Bitcoin ATM company with ATM locations across the South Sound and beyond.
And while cryptocurrencies are associated with some risks, blockchain technology can be a useful addition to a business’ operations in more ways than one.
1. Accepting payments
“Cryptocurrencies aim to provide a quick and frictionless payment experience for businesses,” Choi said. The benefits of accepting cryptocurrencies as a form of payment for goods or services include lower transaction costs, immediately available funds, the elimination of chargebacks (or bank-initiated refunds), and expanding a company’s customer base.
“There are millions of potential new customers a business could reach merely by publicizing that they accept (cryptocurrency),” Choi said.
Sites like coinmap.org allow customers to find local businesses that accept cryptocurrencies as payment.
2. Keeping “perfect and open” records
Blockchain technology, by definition, is a digital ledger. It makes sense then that one of the most helpful uses of blockchain is what Choi called “perfect and open” record-keeping.
For example, companies can use blockchain technology as a way to track supply-chain logistics, including keeping tabs on where products come from, where products are located at all times, and where any issues might result along the way. Title insurance companies can take advantage of the technology as well, by using it to keep permanent records of property titles, Choi said.
The way blockchain technology works means it also can help keep public information, including government data, open, accurate, and available to the public.
“Blockchain technology is essentially a system of record, one that happens to be the world’s first permanent, decentralized, global ledger of records. Mutual trust in institutions is not necessary because it’s based on transparent computer code that anyone can audit,” Choi said. “It’s as if Bank of America one day decided to open up all of its books to the public and operated as a non-profit.”
3. Ensuring digital security
As more and more of our data is stored online, including payment information, online security grows even more important.
Due to the technology’s decentralized nature, a blockchain is extremely difficult to hack. Even if someone were able to tamper with one digital “block” in a blockchain, that block is linked to all the others in the system, meaning the breach would be identified quickly and the records, which are protected by cryptography, would likely be safe.
More specifically, Choi said, blockchain technology can create unique digital identities that can’t be duplicated. “In the future, all of our login-ins to online services will be on the blockchain,” he said.
4. Creating smart contracts
Blockchain technology can be utilized to achieve what Choi calls “a disruption of the legal industry.”
“A smart contract can allow businesses to memorialize a transaction on the blockchain, and automatically execute parts of the agreement as conditions are met,” he explained. “The conditions and requirements can obviously become much more complex … but the basic implication is that parts of contracts can be written, executed, and settled on the blockchain.”
Risks associated with cryptocurrencies
Two major risks are understandably linked to cryptocurrencies: the volatility of prices and the difficulty of the technology.
However, Coinme and other similar companies are working to minimize those risks for business who want to accept bitcoin and other cryptocurrencies as payment, Choi said.
“For example, we can allow retailers to accept and instantly convert a bitcoin payment into USD, which eliminates the volatility risk. And for those businesses who believe that bitcoin prices will rebound and continue to grow, we can help them hold their bitcoin in a Coinme wallet, which they can access, hold, and transmit/receive from via coinmewallet.com.”
The future of cryptocurrency and blockchain technology
The concept of cryptocurrency is a hot-button topic that can inspire wildly differing, firmly-held beliefs. Some may be convinced of its impending doom, while others are certain of its staying power.
For Choi, it’s more about the technology behind cryptocurrency.
“A comparison I like to make is that bitcoin on the blockchain is like email on the internet. Bitcoin was the first obvious use-case of the technology (and in fact, blockchain technology was invented for bitcoin), but there are so many additional uses for the underlying technology that it can never go away,” he said.