Mar 263 min
Updated: Apr 2
Liam Anderson takes a look into digital currencies. Where they are from and where they could be going.
Photo by: Moose photos
A blockchain network is primarily used in relation to cryptocurrency and can be best described as a decentralised, immutable ledger that records transactions made across a peer-to-peer network. Participants using the network can confirm transactions without requiring approval from a central clearing authority – e.g. a bank.
When a transaction is completed, it is recorded in the blockchain as a ‘block’ of data. This data contains lots of information about the transaction, and the asset itself. These blocks form a chain containing a cryptograph of the previous block, allowing users to have an open view of the transaction history of the asset.
As these blocks link up, the design makes it near impossible to alter past transactions without altering subsequent blocks in the chain, thus safeguarding the integrity of the data within the blockchain.
Did you know? In 2023, the market size of the Blockchain Technology market has been estimated at approximately USD 8.89 billion.
Blockchain can be traced back to 2008 when the enigmatic Satoshi Nakamoto introduced Bitcoin, the first cryptocurrency.
As the popularity of Bitcoin grew, developers began to explore the potential applications of blockchain beyond cryptocurrencies. Today, blockchain technology is used across a wide range of industries beyond finance.
Supply chain management, healthcare, real estate, voting systems, and intellectual property rights are just a few examples of sectors benefiting from blockchain's transparency, security, and efficiency.
Blockchain technology looks set to stay and will likely evolve and continue to grow.
One area of significant interest is decentralised finance, which aims to disrupt traditional financial services such as lending, borrowing, and trading by leveraging blockchain technology.
Blockchain's potential in addressing issues like identity theft, data breaches, and fraud is garnering attention from governments and businesses worldwide. By providing a secure and tamper-proof means of storing and verifying data, blockchain has the potential to revolutionise how we manage digital identities and protect sensitive information.
Furthermore, as environmental concerns become more pressing, the focus is shifting towards sustainable blockchain solutions.
Bitcoin activity alone is estimated to consume an average annual 176 Terawatt hours (TWh), more than the annual energy consumption of Poland in 2023.
Efforts are underway to develop eco-friendly consensus mechanisms and reduce the energy consumption associated with blockchain mining, making it more environmentally sustainable in the long run.
“There is a new technological institution that will fundamentally change how we exchange value, and it’s called the blockchain.” – Bettina Warburg
There have also been suggestions of developing a digital pound, built on blockchain technology that could be used alongside its established physical companion, the coin.
Such a digital currency, issued and regulated by the Bank of England, could offer numerous benefits, including faster and cheaper cross-border transactions, increased financial inclusion, and enhanced transparency in monetary policy.
While discussions surrounding the implementation of a digital pound are ongoing, several central banks worldwide are exploring the concept of central bank digital currencies (CBDCs) as a means of modernising financial systems and adapting to the digital age.
Nigeria, the Bahamas, and Jamaica are the only states to have an active state run blockchain cryptocurrency, and 36 states are currently in the pilot stage.
Blockchain technology has come a long way since its inception, transforming the digital landscape and reshaping industries across the globe. As we continue to explore its possibilities, the prospect of a digital pound serves as a compelling example of the transformative power of blockchain in shaping the future of finance and beyond.
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Researcher: Phoebe Agnew-Bass / Online Editor: Alison Poole