We’ve mentioned blockchain’s potential for the sharing economy before – how it can revolutionize the sharing economy. What exactly is the blockchain? Where did it come from?
Blockchain’s mysterious origins are fitting for its decentralized design; no single user or institution controls a blockchain network. Blockchain was first utilized as an integral part of bitcoin- the most widely known cryptocurrency first described in a paper published by “Satoshi Nakamoto” on October 31, 2008. Nakamoto’s identity has been the subject of much speculation, and some have even theorized that Nakamoto represents a group of individuals rather than a single person.
Widespread distrust in banks and other large financial institutions in aftermath of the financial crisis in 2009 catalyzed bitcoin’s rise. Traditionally, banks and other financial intermediaries provide security for electronic transactions between users in order to make sure that a given unit of currency hasn’t been ‘double spent’. Since digital information is easily reproducible, it was necessary for banks to verify that a given unit of currency wasn’t fabricated and spent more than once.
Blockchain is a shared immutable ledger that records the transaction history of every bitcoin (or other units of digital currency being exchanged via blockchain) and is stored on every computer that uses bitcoin. The transaction record is publicly available, distributed throughout the bitcoin network, and constantly updates as new transactions occur – always choosing to adopt the longer blockchain. This way, no hacker can alter the record of transactions as they would only be able to change the blockchain of one computer at a time and not at a pace fast enough to alter the entire blockchain.
Digital wallets provide bitcoin users anonymity by representing a user’s identity as a random string of numbers and characters. In order to access their digital wallet users enter a password they created. Also, most digital wallets don’t require any personal information to create.
In addition to digital platforms like Reddit and WordPress, some brick-and-mortar businesses accept bitcoin. For instance, in one restaurant in Pennsylvania, USA, customers can buy a Subway sandwich using bitcoin.
As we’ve mentioned in previous posts, blockchain software has huge potential for use in the sharing economy. Who’s noticed it’s potential so far? What new trends have emerged in the sharing economy as a result of blockchain?