Here is an overview of Cryptocurrency and its implications in the cloud services industry
What is “Bitcoin”? What is Cryptocurrency?
A “bit” is the smallest, most basic unit of information for computers and information theory. It is also used as a reference to any small coin.
A “coin” is a physical disc or piece used as money resulting from its inherent value (e.g. made from a precious metal) and/or it’s rarity (e.g. being difficult to replicate or acquire).
Bitcoin was named to describe bits of data as a form of money rather than physical currency. Bitcoin was the first “cryptocurrency”. “Cryptocurrency” is the generic name for “Bitcoin", just as “Kleenex” is synonymous with “tissue paper.” It is the first, most dominant cryptocurrency in the market.
Bitcoin (“cryptocurrency") is a technology that enables the secure exchange of value using data. Cryptocurrency can function reliably as a secure exchange of value because of several interdependent components. Many of these components are specific to cryptocurrency and have resulted from the emergence of cryptocurrency.
Blockchain technology is behind the key technology supporting cryptocurrency as well as the overall reliability of a cryptocurrency system. Bitcoin and all cryptocurrencies or “Alt-Coins” (e.g. lite-Coin, KryptKoin) are made with Blockchain Technology.
What is The “Blockchain”?
Blockchain technology uses a distributed network of computers to perform verifiable tasks in a transparent and secure environment. Normal data can be forged, copied or distributed easily. Blockchain data cannot be copied or falsified and its distribution is carefully controlled by the verification methods of the system.
The blockchain contains the transaction records occurring within the cryptocurrency network. Transactions are recorded in the blockchain as data and then secured through cryptography by the network participants. This record of transactions is a data exchange secured with encryption combined with verification through peer-to-peer networking.
Before blockchain technology, any data could be infinitely replicated. The blockchain makes it possible to exchange unique units of data because data within the blockchain cannot be freely duplicated it is possible to assign value to that data as a result of its rarity.
Blockchain is a decentralized technology. It uses a distributed network to achieve its desired functionality. It is dependent on several types of advanced systems working seamlessly together. The ability to exchange unique data value in a decentralized manner is now possible because of blockchain technology.
Why is Blockchain Technology Important?
Blockchain technology is not just a method for exchanging value, it is the foundation for the next disruptive computing paradigm. Blockchain technology creates an environment where unique data can be verifiably and irreversibly exchanged. This has major ramifications in many large technology verticals.
Cryptocurrency has moved beyond the early adopters and enthusiastic technologists and gained the attention of the technology industry, financial industry, retail industry, governments and many others. Although Bitcoin is by far the most popular cryptocurrency, there are hundreds of different cryptocurrencies in existence now and more being created regularly. Blockchain technology use is also expanding beyond the exchange of monetary value and is gaining recognition as a broader solution.
Cryptocurrency is often referred to as digital money or electronic currency. A more useful analogy for Cryptocurrency may be to describe it as a commodity. Cryptocurrencies can be exchanged for money but their use is more accurately described as a method for exchanging value. Although value can be monetary, value can be represented in many ways using blockchain technology.
Value of Money
Money is most commonly described in dollars (or Euros, Pounds, etc.). Money value can be attached to commodities such as gold, silver, oil, corn, etc. Money can now be valued through data since it is possible to securely commoditize data as a consequence Blockchain technology.
Value of Objects
The value of objects can be measured using money but can also be exchanged directly (E.g. the barter system). As money can turn digital so too can the value of objects and their exchange. As objects become easier to create or more distributed in their creation so too does their assessment of value. Exchange of that value can be better facilitated using technologies emerging from Blockchain technology.
Value of Media
Media is the most familiar of intangible items that possess value. Free content and paid content currently share a troubled existence since data can be freely replicated. Blockchain technology can help redefine content interaction with its efficiencies and ability to facilitate small transactions.
Value of Communications
Communication value is measured in bandwidth and minutes. Blockchain technology is revealing new ways to communicate securely using purely digital means. Redefining communication technology has consistently shown massive opportunities for change. Blockchain technology is creating the foundation for many of those new opportunities with communications technology taking a central role.
New ways of interacting with client/server systems as well as new methods for storing data have been created and are expanding but many more are still needed. This is creating many opportunities for companies to improve or streamline the development of solutions related to blockchain technology and cryptocurrencies.
How can Cloud Service Providers benefit?
Cryptocurrency is an abstract concept that is supported by a complex system of combined technologies and is still difficult to use due to its complex technological and procedural nature. Although rapidly improving, the overall consumer experience in using cryptocurrency is limited and cumbersome. It is difficult for the average consumer to interact directly with cryptocurrencies and there are many ways for the consumer experience to be improved.
This is a definitive time in the progression of the Internet and cryptocurrencies are the beginning of a new frontier in exchanging data and value. Bitcoin related services and organizations have had their share of trials and tribulations (e.g. hacking, fraud, etc.) but have still continued forward in their progression. These efforts have produced strengthened security in addition to the creation of ancillary and related technologies. These technologies and techniques continue to develop and mature revealing opportunities for those looking to create an advantage for their business.
Cryptocurrency has benefitted from an extremely rapid progression. Not only are cryptocurrencies a new way to exchange value using data, they are also revealing many new solutions to problems that have gone long unsolved. Ignoring this technology leaves you at risk of falling behind on a technological trend that has gained significant momentum. There are many new opportunities that to come in the future.
As more companies and individuals continue to explore the benefits of cryptocurrency and blockchain technology, the need for additional computing resources in many forms will expand. The extensive use of distributed computing resources has created new categories and layers of infrastructure requiring different configurations than typical computing environments. This is leading to an exponential growth in requisite computing resources that can come from the cloud services industry.
Handling blockchain data and the associated transactions have created many challenges that have lead to even greater rewards. The leaders and innovators in this space have the potential to be the technology and business champions of the future. Cryptocurrency has revealed a completely new way for interacting with distributed data. Cloud service providers should strive be the experts in this area while reaping the rewards in the process.
Jeff Dryall: Founder, Cloud Computer Company
For More info : info@CloudComputerCompany.com
Andrew Dick: Co-Founder, Coineer Magazine and Confluent Technologies Inc.
For More info : info@ConfluentTechnologies.com