Building the blocks around the smartest cryptocurrency on the market

We’re talking Blockchain – but it began with Bitcoin.

So what is Bitcoin?
Bitcoin is a cryptocurrency and a digital payment system.  Invented by an unknown programmer (or a group of programmers), it was released as open-source software in 2009. There is a market cap with Bitcoin.  The value of an individual Bitcoin has increased substantially during this time, every year more and more merchants and vendors accept bitcoin as payments for goods and services, and millions more unique users are using a cryptocurrency (digital) wallet.

Why is there a worry about Bitcoin?
There are many concerns related to Bitcoin, price volatility, doubts around legal status, tax and (lack of any) regulation, Bitcoin has been notorious in criminal activity, and is well renowned for the role it has in cyber-attacks like Ransomware.  But for believers, Bitcoin has huge upsides, de-centralised thus outside the control of a central authority, privacy, deflationary, low cost to transfer funds across borders, but most it is an attractive “store of value”.

Why is Bitcoin important?
Bitcoin is important because it requires a blockchain.  A blockchain is an undeniably ingenious invention, but since Bitcoin, blockchain has evolved into something greater.  And the main question every person is asking is – what is a blockchain?

So what is a blockchain?
The simplest explanation “Blockchain is to Bitcoin, what the internet is to email. A big electronic system, on top of which you can build applications. Currency is just one.”  Sally Davies, FT Technology Reporter.

How does blockchain work?
A blockchain is a distributed database that is used to maintain a continuously growing list of records, called ‘blocks’.   Each block contains a timestamp and a link to a previous block. A blockchain is typically managed by a peer-to-peer network collectively adhering to a protocol for validating new blocks. By design, blockchains are inherently resistant to modification of the data. Once recorded, the data in any given block cannot be altered retrospectively without the alteration of all subsequent blocks and a collusion of the network majority.   Functionally, a Blockchain can serve as “an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way”.

“The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.” Don & Alex Tapscott, authors Blockchain Revolution (2016).

Blockchains are secure by design and are an example of a distributed computing system with high Byzantine fault tolerance.  Decentralised consensus has therefore been achieved with a Blockchain.  This makes Blockchains potentially suitable for the recording of events, medical records and other records management activities, such as Identity Management, transaction processing and documenting provenance.

The entire financial, legal, and record-keeping industries are being disrupted using this decentralised, secure, and inexpensive method. It has therefore caught the eye of the Bank of England plus other large organisations including Microsoft, IBM and Cisco have consequently started to take note of it.

In summary the opportunities are infinite.

People need to understand that “blockchain” is NOT the same thing as “Bitcoin”.

Bitcoin was the first blockchain system designed, but there have been a number of others since then which are very different, designed by different people, often for different purposes. These people are in the business of designing things for use by corporations to operate their businesses to drive a competitive edge. This is no different to what Amicus ITS has been doing for 30 years, problem solving and designing solutions that deliver business value as we look constantly to the horizon at future technologies.

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Bank of England seeks to challenge Bitcoin with its own RSCoin

The Bank of England (BoE) is seeking to take on Bitcoin, the non-regulated peer-to-peer digital currency in use for the last few years (and popular with the underworld in laundering proceeds of crime and a route for ransomware payments to cyber criminals).  Bitcoin, which has made an estimated $5bn (£3.5bn) of Bitcoin transactions operates a “distributed ledger” similar to how central banks operate.  Bitcoin’s limitation however lies in the restriction of its code to 21m Bitcoins and that it can only handle sever transactions per second.

The new digital crypto currency, RSCoin, crafted by a team at University College London for BoE, seeks to create a State controlled digital ledger held by those trusted to be in charge of the nation’s currency but without the limitations of Bitcoin or the add-on charges and middlemen elsewhere in the industry.  Potentially and most controversially, RSCoin has the potential to offer a system whereby ordinary people could hold accounts directly with the Bank of England, thus competing directly with commercial banks.  Ben Broadbent, the BoE’s deputy governor believes that an RSCoin currency would greatly widen the balance sheet of the central bank and allow it to keep better control of the money supply and be better able to respond to crises.

Led by Dr George Danezis, UCL presented their findings at the Network and Distributed System Security Symposium (NDSS) in San Diego recently and suggested that a national pilot could be up and running within 18 months.  “Whoever reacts too slowly to these developments is going to take it on the chin.  They will lose their businesses”

Central banks originally viewed Bitcoin as a rogue currency and a threat to monetary order.  However with heavyweight financial organisations carving big profits from their payment systems Visa, Master and PayPal) and commercial banks and financial institutions making money from the complex manipulation of the money markets (through stocks and shares, foreign exchange dealings, derivatives and hedge funds etc.), this proposal has the potential to cut out gross fat and privileges of the competition.  It could simplify the trading of money and one would hope, offer greater transparency and accountability, much lacking for many years in banking. 

It would be highly disruptive if adopted and create a wholly new era in finance.  One would have to trust that the State’s banker would keep the interests of the nation it serves at the forefront of its modus operandi – and that corporate greed did not play a part.  That, has yet to be seen and proven to an unsurprisingly distrustful public.