Bitcoin and blockchain have become powerful buzzwords, but you’d be hard-pressed to find someone who could clearly explain them.
The Bitcoin market itself has the power to move the stock market and the word "blockchain" is so enticing to investors that a company named Long Island Iced Tea Corp. recently changed its name to Long Blockchain, and immediately saw its stock price soar 200%.
As the buzz continues to grow, communicators need to be prepared to discuss these terms with clients or the C-suite. So, we thought it would be useful to provide a short overview of each term for the uninitiated.
Let’s Start With Bitcoin
Bitcoin, in the most basic explanation, is virtual currency that can be exchanged from one person to another without needing to go through a financial institution. It was first announced in 2008 by Satoshi Nakamoto, a pseudonym for the person or group of people who designed Bitcoin.
So, you can send money to a friend in the same way you send an attachment in an email. But what's stopping you from sending the same attachment to 15 other people, spending the same money multiple times? While the technology is independent of financial institutions, you'd think that a third party would need to be brought in to keep everyone honest.
Yet, according to Nakamoto, that third-party's presence would defeat Bitcoin's purpose.
“Digital signatures provide part of the solution, but the main benefits are lost if a trusted third party is still required to prevent double-spending,” Nakamoto stated. “We propose a solution to the double-spending problem using a peer-to-peer network.”
That’s Where Blockchain Comes In
To make Bitcoin work and keep everyone accountable for the transactions, Nakamoto suggested a ledger that is open to the entire world. The ledger keeps a timestamp and record of every transaction. If anyone found a discrepancy, everyone could see it.
So, blockchain technology was invented to prevent Bitcoin from being duplicated and copied. Every group of cryptocurrency transactions is saved as a “block,” which cannot be edited or corrupted after the system has verified it.
Although it was developed to regulate cryptocurrency, blockchain technology is starting to be used for other applications, including identity management, voting, crowdfunding and more. For a more comprehensive look into possible applications, check out this blockchain breakdown by Blockgeeks.
“Blockchain, bitcoin and cryptoassets are dominating conversations across nearly every industry, as the value and promise reach astronomical levels,” says Patrick Sutton, executive vice president at Paragon Public Relations. “What’s challenging for communicators now is that the hyperbole that helped fuel its rise makes nearly every project seem like a pie in the sky, even when companies have a live, viable product. There’s an overwhelming amount of information available, but in the beginning you’ll need to embrace the exhausted motto of ‘there's no such thing as a dumb question’ to understand how your client or firm fits into the picture.”
If you’re ready to take a deeper dive into the cryptocurrency world, Sutton suggests taking a look at Jameson Lopp’s Bitcoin Resources.
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