Blockchain, the technology on which Bitcoin is based, has gone mainstream. Until recently a subject confined to tech blogs and Reddit pages, it is earning huge amounts of column inches and airtime. Stories abound of Bitcoin millionaires and multimillion-dollar ICOs (Initial Coin Offerings). New cryptocurrencies are launched every week. People who don’t entirely understand what they’re buying are rushing to purchase Bitcoin for fear of missing out. And then there are the Bitcoin Cassandras, who say they’ve seen this sort of frenzy many times before and warn of impending bust even as new investors stampede towards this digital gold rush.
But what is blockchain anyway? Think of it as a digital ledger that records transactions in an immutable way for all to see. Or, as the Bank of England puts it: ‘A technology that allows people who don’t know each other to trust a shared record of events.’ That’s a phraseology that underplays just how exciting and transformational many think blockchain technology is.
Blockchain evangelists say cryptocurrencies are just the start of its usefulness and that the fate of Bitcoin is beside the point. They urge us to think of blockchain today in similar terms to the internet in 1995 – a thrilling and versatile technology that will revolutionise everything, sweeping away centralised authorities and finally delivering on the anti-establishment ideals of the early web. Startups have emerged in every sector – from finance to food sourcing to corruption-proof voting systems – aiming to displace incumbents with new blockchain-based models.
So is blockchain the revolutionary new paradigm its adherents claim, or just an elegant solution in search of a problem? With the movement’s grand claims for the future, overheated rhetoric and tendency to inspire major leaps of faith, is it assuming aspects of a cultish religion? Does blockchain really have the potential to do away with the system of centralised governments and corporations its biggest fans so distrust, or will it just be co-opted by them? And with the cryptocurrency network now consuming more power than some countries, is blockchain headed for a showdown with environmentalists?