A guide to Bitcoin and what it means for the digital customer experience

Bitcoin – we’ve heard so much of the term from news outlets, various blogs, and social media regarding how great (and risk-fraught) of an investment vehicle it’s become. From humble beginnings as a simple depiction of a virtual currency with the usage characteristics of real cash and the potential to become the de facto currency for worldwide transactions, to a storage of wealth that’s grown over 1000% to date. As someone who participated as one of the first Bitcoin miners in 2009, I’ve been following its evolution and know firsthand what an incredible rollercoaster ride it has been!

What is Bitcoin?

Let’s start with what Bitcoin is NOT: an investment vehicle with inherent value, a currency based on fiat currency, a depiction of global wealth based on the current Banking system. Bitcoin was originally meant as a way to store value and allow for penalty-less transfer of funds and global commerce through a fully integrated records platform. The technology that backs Bitcoin is fundamentally based upon the eternal storage of records, data, and transactions – essentially every transaction, record change, ownership modification, everything from the beginning of the first Bitcoin ledger, is collectively maintained through a decentralized system of computers and millions of hard drives. Think of Bitcoin as a very mutated cousin to the current BitTorrent platform, which dissects source data from multiple computers, such as a movie video file, and transmits them to a centralized location, such as my friend’s computer, and then reassembles it for viewing. But in a Bitcoin record system, this process is reversed, where a single transaction that originates from a single user, has its records dissembled and sent out to multiple computers and stored and assembled as a single continuous record – thereby ensuring record consistency and data reliability, because if one computer goes down, the other computers within the platform move to fill in the missing data! But what is a coin? Why did this suddenly become an investment vehicle? A Bitcoin is a form of reward for miners, or those who dedicate their computers and hard drives to the platform to continue maintaining the collection of records that is the Bitcoin algorithm. Each set of data is formed into blocks. In the early days, there were very little data to be recorded, and so few miners, that it took very little time and effort to obtain one Coin. However, as time moves on, and as more data is collected and transferred to the ledger, and as more miners come online to take advantage of the increasing valuations, the difficulty to obtain even a piece of a Coin has increased immensely. This results in smaller returns for longer periods of activity. Initially, Bitcoins were sold for blocks of 100s for dollars (and even pennies) at a time. But during 2010 – 2012, when the Bitcoin fundamentalists wanted to make the coins into a method for transaction and fiat-money substitution, many people bought the coins to store value away from tumultuous currencies in countries such as Greece, Cyprus, and Syria. As world discontent and conflicts increase, we will only see additional currency flights into Bitcoin as a vehicle for value and investment, increasing its market value and perpetuating the hype cycle based on a S-Curve technological adoption curve. Many “investors” today speculate on the future price of Bitcoin, and invest into it –increasing interest. However, because it is not backed by any physical asset, or really any asset at all, the inherent value can tumble and become nothing in an instant!

Why does it matter?

Bitcoin matters not because of the speculative nature of the investment markets, but as a decentralized record technology that could exponentially build upon many of today’s technology platforms that utilize cloud computing, as well as move many of our remaining physical assets into a digital framework. The technology behind Bitcoin has evolved into many alternatives (Alt-Coins) that have helped establish many processes to store and archive data, from Etherium to Litecoins. Bitcoin infrastructure has the basis to become the foundation for storage of loss-less records and profiles with \multiple points of access control, storage, and disaster recovery. This method of decentralized storage could provide solutions to many of the security and archiving concerns of industries such as banking, healthcare, and commerce, which struggle with protecting growing amounts of personal customer data. Coins that further innovation within data management and digital infrastructure technology – whether that be the many forks that Bitcoin has undertaken (ie. Bitcoin Cash/BCH), to Ether and the other alternatives that represent industry oriented innovation–will represent the greatest digital value and future growth.

What can we expect in the future?

Industries will change – and customer experience expectations will evolve to a point where we demand consistent interactions because data will always be available. We will expect companies to know who we are, what we’ve bought, and how we’ve interacted with them before – all from a centralized data source that won’t depend on how individual sites are collecting our data. Meaning our data, and actions, will be consistent whether we’re on Amazon, Nordstrom, or visiting our healthcare provider’s site. Further investment into not only keeping and accessing data will be required, but managing and interpreting the data into meaningful insights. Imagine a world where consumers are identified and known by their every purchase decision, every action on any website or touchpoint. A world where banks and doctor’s offices no longer keep paper records, and can immediately identify every visit, transaction, or diagnoses at the touch of a button. Where industries with sensitive information or companies that require an always-on service will never experience outages, where information doesn’t need to be backed up, and can be restored anywhere, any time, and any place. The technology that lays underneath most Alt-Coin architectures represent the future of digital ecosystems, where cloud-enabled, distributed storage and archiving is combined with distributed computing. It’s where the entire world is a computing device which ushers in new possibilities of interaction, efficiency, and innovation. Perhaps I’m waxing a bit too poetically here, but the technology, not the Coins, are where the paradigm shifts – and I can’t wait to see what comes after.