There has been a lot of hype in the last year over Cryptocurrency, going from nothing to a stellar US$20,000 + and back down again.
Not many people know what it is and what it’s for. Here’s my 2 cents worth.
Blockchain as the name implies is a “block of information relating to a transaction” chained to previous blocks of information relating to other transactions in the past (or chronologically)“.
Cryptocurrency is a subset of blockchain, e.g. Bitcoin, Ethereum, Ripple, Dash etc. are all virtual currencies that uses blockchain technology.
The blockchain technology was created to provide “transparency” in the transactions i.e. You will know who last owned or had this currency before it got into your hands, and scouring back through the digital ledger in the chain, you will be able to see where it originated from.
In layman’s terms… It is basically a method of “tracking the movement of wealth or currency transactions“.
Now that we know the meaning of blockchain and where Cryptocurrency sits within it…
Heres a fact that a lot of people do not understand or haven’t considered…
Because the blockchain is a tracking method that shows information about previous owners of the “currency” (be it Bitcoin, Ethereum, Ripple, Dash or any other cryptocurrency), it allows the history of the transaction to be seen and it can literally be traced back to its original owner, or who initiated (or started) the transaction.
The information held within the blockchain transaction, is extremely valuable information to the governments and it’s authorities.
The blockchain information will allow them to know where you’ve “hidden your wealth” or who you’ve dealt with to obtain your wealth (whether legally or illegally).
This is why some (if not most) governments are interested in the blockchain technology. They’re not particularly interested in Bitcoin, Ethereum, Ripple, Dash or any other cryptocurrency, but in the blockchain technology itself.
So, why would this be the case?
Governments lose a lot of taxes out of the cash trade and “creative accounting” practices. But if they manage to adopt the blockchain technology and replace cash, with a “pay pass”, “tap/tag & pay” or any other virtual payment system, it will allow them to track your earnings, payments and wealth movements.
This can also be used to divulge your tastes and habits i.e. If you like eating at McDonald’s or luxury dining, or if you like betting on horses, gambling, or pokies. Or if you’ve visited certain places or questionable establishments etc. etc. The blockchain can hold sufficient information to keep these transactions “transparent”.
A classic example of this, actually appears in “Back to the Future 2”, when Marty “paid his share” by swiping his card, and was in with “Needles” plan. Immediately after, “Fujitsu san” appears on screen and announces that he was “monitoring the transaction” and fires Marty.
Watch the YouTube video snippet from “Back to the Future 2” below…
Marty McFly gets fired over “Cryptocurrency” type transaction
Imagine you’re Marty, and Fujitsu was the taxman, CIA, FBI or other authority…
In a similar scenario, this will allow governments or authorities to effectively monitor you, and make sure whatever you earn is legal and properly taxed, and whatever you claim from taxes can be justified as well. All the information will be held in the blockchain i.e. Who paid you… Who you bought goods or services from… What they used it for…etc etc… With each transaction the block of information grows and is chained together.
This is good because it helps in fighting corruption, money laundering and terrorism as well, because authorities will be able to trace the original transactions back to its source and perhaps capture the “bad guys” or freeze their assets, or figure out where they’ve stashed or hidden their wealth.
Technically…with a press of a button, all linked transactions within the blockchain can be traced, including all associates (or members) who have been included, or “had a hand”, in the deal or transaction.
That being said, will cryptocurrency survive?
Yes, it probably will.
But personally, I doubt it will be in its current forms or names. It is more likely that governments adopt the blockchain technology and create their own cryptocurrency, or just replace cash with blockchain transactions making it easier for “big brother” to keep an eye on you.