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On Thursday 22 February, we held our second #IGCryptoChat with Derin Cag, co-founder of Blockchain Age, and Brett Scott, author of The Heretic’s Guide to Global Finance: Hacking the Future of Money.
Derin Cag: In terms of blockchain technology, anything is possible. The underlying technology of Ethereum is revolutionary because it is what the internet was supposed to be.
Within the next year we will see a lot of practical use cases popping up, and this is when Ethereum will get interesting. Ethereum’s value is not to do with its price, but the actual practical uses and scalability of the blockchain – this is where we could see growth like Facebook.
Brett Scott: It’s complicated, saying it could be the next Facebook is potentially overstating the case. Ethereum isn’t necessarily designed to do what Facebook does – Facebook processes huge amounts of intense media, but Ethereum’s blockchain can’t do that. It could be combined with other technologies to create something similar.
BS: To grapple with what Ethereum does we need to understand the ‘smart contract’ concept. Bitcoin was a way for a network of strangers to move tokens between themselves, without there being a central party involved. But with Ethereum, there is a new player on the network referred to a smart contract.
Essentially, they are an ‘automated agent’, like a vending machine. As you interact with the network it will automatically do certain things. The biggest use of Ethereum right now is initial coin offerings (ICOs), a kind of share vending machine – you set up a robot node on the website and if you give it a certain amount of money it will give you a share token, or a membership token.
DC: To an extent I agree with them, because some ICOs are very similar to initial public offering (IPOs). But there are utility tokens, currency tokens and commodity tokens, which all present different eco-systems and blockchain protocols. Governments would have to treat each one individually, rather than as a whole collective. They should create new rules, rather than bringing in old rules and sticking them on new technologies.
BS: Central banks aren’t adopting cryptocurrencies like bitcoin. They might be using elements of blockchain to launch their own digital currencies, which would essentially be digital pounds or digital dollars.
If you want to understand the state digital currency debate, you also have to realise they don’t have to use blockchain to do that. They could implement a system without the technology, just like banks have digital currency systems without a blockchain.
DC: It is highly likely we’ll see a wider spread adoption of blockchain technology over time, especially as it becomes more secure and more transactions are available per second.
DC: Quantum computing is a risk, albeit a long-term risk. Over time it could be able to decrypt digital wallets, especially some of the larger wallets that have lots of money inside them – even billions. We’re still a long way away from this. Perhaps the larger concern is that if it could decrypt your crypto wallet, then it could easily decrypt your bank account.
Both Derin and Brett also discussed the increasing potential for blockchain technology to be hacked, as well as addressing the growing concerns around scalability and processing capacities. Watch the video above to find out what is being done to increase the security of blockchain technology, and how you can invest in the blockchain itself.
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