Avi Salzman July 1, 2: Yet cryptocurrencies—the most famous of which is Bitcoin—are shooting out the lights. Unlucky ones have lost small fortunes simply by misplacing a password, much like leaving a suitcase full of cash at the train station. Bitcoin, which has nearly tripled in price this year alone, is blamed for fueling drug sales and for helping hackers wreak havoc on businesses and governments. A blockchain is a digital ledger that is kept and validated simultaneously by a network of computers, almost like a shared Excel document that no one person can change without the agreement of the others.
Companies are already using blockchain technology to send payments and redesign how trades are settled.
Financial giants like JPMorgan Chase ticker: JPM and Bank of America BAC could save billions by standardizing their record-keeping for all sorts of financial processes—at a time when they have come under increasing pressure to raise margins and cut costs.
And it shows promise in other areas, from insurance to medical record-keeping to energy trading. Even traditionally conservative financial companies are speaking of the technology in world-changing terms.
Unlike traditional currencies, the supply of which is controlled by central banks, new Bitcoins are mined about every 10 minutes by a global network of computers that maintain a constantly updated list of Bitcoin transactions. The network itself is also called Bitcoin. Illustration Jay Zehngebot Illustration: The mining business is dominated by Chinese operations that use specialized equipment to quickly complete the complicated mathematical tasks of verifying transactions.
The keys that each party enters allow the system to verify the transaction and memorialize it in a block. Only 21 million Bitcoins will ever be created For at least a decade before it was created, libertarian-minded tech enthusiasts had dreamed of inventing a digital token that would allow them to trade directly with each other and avoid interference from central banks and regulators.
Yet early efforts failed to catch on. Inin the heat of the financial crisis, a programmer or programmers using the name Satoshi Nakamoto shared an idea for a currency called Bitcoin on an online message board.