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It seems like cryptocurrencies are everywhere. Even the President of the United States has launched his own $TRUMP coin. Although this unpredictable currency isn’t for everyone, its impact on technology and payments is undeniable.
From the transparency of blockchain to the speed of Ripple XRP transactions, crypto has been pulling us into its modern world.
Although the crypto chatter is endless and loud these days, with plenty of jargon that gets thrown around, you’d be forgiven for not actually knowing what it is.
Cryptocurrency is a virtual form of decentralised currency. In simple terms, it’s not a tangible currency like pound sterling, instead it’s entirely online. Decentralisation means that it’s not attached to a central institution like the Bank of England.
This removes the control these institutions have over value, placing control in the hands of crypto owners and traders. It also means cryptocurrency is less impacted by economic changes like inflation, which is the increase in price of basic goods set by the Bank of England.
The origins of cryptocurrency lay in a white paper published by the pseudonymous Satoshi Nakamoto in 2008. It proposed a ‘peer to peer electronic cash system’ with a currency that held the same value as the likes of gold bullion, only virtually.
It would allow users to make transactions directly, avoiding the need for a third-party, leading to faster, cheaper payments.
Nakamoto’s proposition went on to become the very first and most famous cryptocurrency; Bitcoin.
He capped the number of possible coins at 21 million, helping to maintain the value of the currency. Today, Bitcoin is accepted at retailers throughout the UK, including software companies, cafés and even pubs. You can even pay for your weekly shop at Asda using Bitcoin.
You might have heard talk of blockchain, the revolutionary technology behind cryptocurrency, but what is it?
In a basic sense, blockchain technology is a virtual ledger where all the transactions using a cryptocurrency are recorded. They’re made publicly available so everyone can see the relevant transactions at any given time.
Not only does this make the currency more transparent, but it also helps to reduce the number of human errors as traders are able to double-check each transaction. Blockchain also helps to prevent market manipulation by allowing all business to be conducted out in the open.
Blockchain actually predates cryptocurrency by more than a decade. It was first proposed in 1991 by Stuart Haber and W. Scott Stornetta. They wanted to create a system where documents and data couldn’t be tampered with and blockchain was their solution.
The technology behind blockchain also has wide potential uses across industries. When data is recorded using blockchain, it’s set in stone and can’t be manipulated or changed. So, anytime it is important that data is recorded transparently is a potential use case for the technology.
This reduces the need for auditors and heightens transparency. As a result, blockchain has become popular in industries such as healthcare, accounting and data analysis.
Smart contracts, which automate the actions associated with a cryptocurrency transaction, have also been supported by the growth of crypto. Once a contract is recorded on the blockchain, smart contracts immediately carry out the terms that were agreed in it.
It also puts transparency first by making sure all actions are irreversible and traceable.
Similarly to blockchain, this technology also predates cryptocurrency, first being proposed back in 1994 by Nick Szabo. However, it’s important to recognise the role crypto played in bringing these technologies together and promoting their further use.
Now, smart contracts are used in other industries, including real estate and trade deals.
Alongside being more transparent and efficient, smart contract technology eliminates the need for a third-party. When signing a contract, there’s usually a good deal of admin involved in checking it for both parties. Smart contracts eliminate this by directly enforcing the terms.
You may have heard cryptocurrency referred to as a safer way to pay and invest. This is because of the enhanced levels of security associated with it. Users are given a unique and unguessable key formed with a string of random characters.
They need to enter this key to gain access to their crypto wallet, making it nearly impenetrable to hackers. However, if the user loses or forgets the key themselves, they’ll also be locked out!
Rather than holding crumpled notes and hundreds of expired cards, a crypto wallet stores the passkey a user needs to sign for their crypto transactions. It also grants them access to their cryptocurrency. It’s a solution to remembering the long, unique keys which mean that traders are less likely to lose access.
The first crypto wallets were created for the first transaction that took place in January 2009 between Bitcoin’s founder Satoshi Nakamoto and software developer Hal Finney.
Apple’s Wallet function didn’t arrive on the scene until 2012, so it’s fair to say that crypto could have had an influence on the technology.
It certainly wouldn’t be the only example of the two influencing each other. In February 2022, Apple announced a new Apple Pay feature to allow merchants to accept payments using their phones called Tap to Pay. MetaMask, one of the most used crypto wallets with over 30 million monthly users, expressed their interest in the technology the following month.
They intend to incorporate it to allow users to buy cryptocurrency directly using their Apple Wallets and have already added Apple Pay to their website.
Cryptocurrencies have been pushing fintech forwards, forcing banking and investment establishments to reexamine how they do business. They’re not only a faster and cheaper way to pay, but crypto also makes global payments much easier.
One example of this is Ripple XRP, a unique currency which relies on the Ripple Protocol Consensus Algorithm (RPCA) to validate transactions.
This requires a group of trusted validators to check and approve authentic transactions, which is why payments using this form of cryptocurrency often take seconds, compared to the average transaction time of 10 minutes for Bitcoin.
As a result, Ripple XRP has become the go-to method for financial institutions looking to send money overseas. It’s used by some of the world’s biggest banks, including American Express and Santander.
It also forced them to examine how they could incorporate the technology behind XRP into their payment systems.
Ripple XRP is also popular in the online casino world where players frequently make overseas payments. Bitedge.com as well as other leading crypto gambling information sites, can help to make finding Ripple XRP options easy.
They examine six key factors, including payments, bonuses, games and customer feedback, to bring users the top crypto casinos to choose from.
PayPal is one of the clearest examples. The e-wallet platform took inspiration from the way crypto wallets hold information and keys. It now allows users to store, buy and sell crypto on the platform.
Robinhood, an electronic trading platform, was also influenced by crypto. It now offers crypto on its site, making it possible for European traders to easily invest in American stocks. It even has its own form of blockchain for enhanced security. Robinhood aims to incorporate blockchain technology into the traditional world of finance.
The rise of cryptocurrency has paved the way for the development of technologies such as blockchain and smart contracts. While much of the technology behind crypto was around long before 2009, cryptocurrency has helped it to reach new opportunities and use cases.
At the moment, growth seems to be on the horizon for cryptocurrencies. They’re thriving in Trump’s America and have been bolstered by supportive legislation and his promotion of his own cryptocurrency. As a result, the crypto market is currently worth an eye-watering £3.91tn globally. However, it is important not to get carried away as it is highly volatile in nature, frequently experiencing sharp fluctuations in value.
Regardless of what the future holds for cryptocurrency, its influence on technology is undeniable. It has brought the likes of blockchain, smart contracts, unique keys and Ripple Protocol Consensus Algorithm to the forefront of the tech conversation, changing the way we pay, bank and sign contracts.
