It was 2013 that Bitcoin really came in to its own. On the 29th of November that year, a single bitcoin was worth $1124.76 - around a 1000% growth on just two months earlier. It was all over the news, from the huge amounts of money that people had made from early investments, through to the nefarious and illegal transactions being made with the digital currency.
The hype has somewhat abated now, with the volatility in its value comparatively stable, but the number of transactions taking place using Bitcoin are still increasing. Today, there are even cash machines where you can exchange Bitcoins for cash in several shops in large cities. While it may not have the same kind of hype that it once did, it looks like we are going to see Bitcoin having a huge impact in other ways.
This is not necessarily by becoming a fully fledged new currency revolution, but in the underlying architecture that helped create it: Blockchain.
Blockchain is a complicated concept, but likely to dominate data conversations for years to come, and understanding it is vital. Transactions that take place within a set amount of time (normally around 10 minutes) create a block. Once this block is complete at the end of that 10 minutes, it is added to the chain. However, it can only be added to chain if it matches every other block that is previously in the chain, as the block not only include the new transactions, but every single transaction in the history of that chain. If a change is made to this block, that means it does not match every other block in the chain, then it will be rejected and not added to the chain so no transactions will take place.
Every participant within the new block must agree on the state of the block in order for it to be added. There is no centralized server that holds the information, instead it is a system built on consensus and the chains held by the individual parties. The only way a transaction can be added to a block is through both parties agreeing, so no fraudulent transactions or questionable intent.
Blockchain has the potential to change the way we interact with each other and third parties (think banks, ecommerce sites etc) forever, simply because we do not need them with this system. Traditionally, a third party has been used to connect two things, a bank connects people to money in the same way an auction site connects buyers with sellers. The data of this transaction is then logged by the card provider from the customer, the bank account of the seller and server from the third party. With blockchain transactions this is not the case and the third party isn't needed.
This could create an issue with the collection of data though.
Think about the ways in which companies collect data to help personalize their offerings - none of this would be possible if transactions did not happen within their ecosystem, which is what blockchains offer.
The transactions don't even need to be financial in nature. It can be anything from data shared, through to messages sent - anything that requires two people transacting. It then creates a permanent and unalterable record of the transaction forever. However, without it being on a centralized server makes using the data created by this transaction very difficult if it is approached in a traditional way. New ways need to be found to use data stored in this way and with the use of the technology increasing on a daily basis, it won't be long until we see it.