Bitcoin and associated blockchain technology has been a growing topic of interest for several years. This year it has become more in focus as the price of a Bitcoin (BTC) in US dollars has both risen and fallen dramatically this year stirring up conversations of a Bitcoin bubble and whether Bitcoin can be viewed as an investable asset. (For the record we do not currently believe Bitcoin is something to invest in for prudent investors.)
Saying that, I do want to focus on how it solves a more long-term issue for households: the reduction of financial fraud.
It seems a bit ironic that my topic was formed by the security breach of Equifax, the credit monitoring firm, which is supposed to help families protect themselves from fraud. Rather Equifax was responsible for the exposure of approximately 143 million consumer’s sensitive personal information (mine included) that can now potentially be used for fraudulent activity. (Nor has it been lost that allegedly the hackers are requesting ransom payment in the form of Bitcoin). Clearly over the past several years there has been a growing problem of businesses and other institutions inability to keep their data sources secure – the Equifax problem.
But what if Equifax wasn’t needed nor the need of many businesses to store sensitive personal or credit card information? That would significantly reduce the number of sources that house families’ sensitive personal information including credit card information. And what sources still might be targets by hackers wouldn’t be as useful anymore given the payment system didn’t rely as much on the remaining stored information.
I don’t consider myself a technology futurist, but that’s what seems to be on offer with digital cryptocurrencies like Bitcoin. It offers a payment system that is peer-to-peer (i.e. decentralized) and does not require an (expensive) intermediary nor central repositories of sensitive personal information. And the technology behind Bitcoin provides a secure, verifiable, and private way to conduct business. And because Bitcoin uses a ledger for recording all transactions – it is not the anonymous currency that it is made out to be. It’s more like you use are using a pseudonym (your digital wallet) for transactions.
While it might be some time before we know if Bitcoin and digital cryptocurrencies will have the same level of impact that the PC did in the 1970s or the internet in the 1990s as surmised by Marc Andreesen (of Netscape/Mozilla fame) back in 2014, clearly it has some very attractive features that solve many problems we seem to be facing more and more of in this growing digital age. One way or another, the Equifax problem will have to be solved.