Updated: Oct 16, 2020
Blockchain is arguably one of the most talked-about topics of the past decade, with the new
digital currency market expanding rapidly. However, if I were to ask the general public what
blockchain actually is or does, most would probably not know the exact answer. The whole
concept is very abstract for someone not in the know – a survey from HSBC in 2017 found
59% of consumers who had actually heard of blockchain, didn’t know what it was.
This anonymous crypto system is essentially just accounting simplified. Instead of having
multiple human parties check tirelessly through data, each transaction checks the previous
via a specific code programmed by the company using it. This leads to a significant reduction
in errors, therefore simplifying the whole money transaction process. One of the greatest
assets of using blockchain is the transparency it brings to large corporations, which
potentially otherwise would have covered up their growth and figures within the business
behind closed doors. The original blockchain code unable to be altered once formed, this is
the main reason why it is thought to be extremely safe. Sound too good to be true?
The main recurring issue with blockchain / cryptocurrency systems is lack of regulation. Each
country in the world seems to have a different viewpoint on this, from blockchain trading
increasing dramatically in Malaysia in May to Russia banning any use of cryptocurrencies.
President Trump also gave his unfavourable opinion of cryptocurrencies stating they are
‘highly volatile and based on thin air’.
In January 2018, Coincheck Japan, a blockchain network, was attacked by hackers stealing
$530 million worth of ‘tokens’. This is not the first time this sort of attack has taken place
though - large scale hacks of this kind have happened frequently in recent years. The
interesting part of these hacks are the targets themselves – most of these heists involved
the hacker hacking the user exchanges, not the actual blockchains. In contrast to the
negative press and opinions, Chainalysis and Elliptic both published studies stating that less
than 1% of exchange transactions on ‘Bitcoin’ are linked to illegal activity.
Bitcoin is the most popular blockchain in the world, claiming to be ‘the first decentralised
peer-to-peer payment network that is powered with no central authority’. Bitcoin doesn’t
need a normal banking system, which is why people are so wary of it. The currency is
created online when computer programmers solve fiendish algorithms to verify a
transaction and are then subsequently ‘paid’ via this virtual money which can then be exchanged, with the cycle repeating. The ‘normal’ banking system is becoming outdated, with many people actually wanting an alternative like Bitcoin due to the convenience it gives the user.
The price of bitcoin and the parity of exchange rates has been one to watch, especially since
the coronavirus pandemic. Bitcoin’s price has fallen below $9,000 as of 25th May, with the
price slashing almost in half as soon as the worst of the pandemic hit.
More recently, Google Cloud as of the 28 th May, has formed a game-changing partnership
with Theta Labs. Theta Labs is a blockchain company founded in 2017 in the US.
This is a revolutionary turnaround since Google’s stance on blockchain in the past hasn’t
been all that favourable. Earlier in May, Google produced a new algorithm update which
essentially banned all the big bitcoin YouTubers’ content according to the content creator
Christopher Jaszczynski, speaking to Forbes. Following this lead, in June, the large
technology company IBM have confirmed that they are going to start using AI and
blockchain to try and improve their transactional process and make things easier for the
customer. They have managed to create a secure blockchain which extends trust to the
customer as well as those within the company since everyone is on the same page about
the transactions. This will ‘remove blind spots’ and create easily sharable data.
The divide in opinion from large tech giants to whole countries themselves seems to make
the topic of blockchain even more appealing and intriguing. With more users turning to this
online money transfer system, only time will tell if the pandemic will dictate our new
accounting habits, and whether blockchain will reign supreme.
About the author
Hey, I'm Lauren and I am guest writer this week for the journal! I have just graduated from The University of Manchester with a BSc (Hons) in Chemistry and will be starting the GDL at The University of Law in September. Before my Vacation Scheme with Pinsent Masons this summer, I founded the LinkedIn Group and Page, GlobalTechLoop - a platform which aims to give people an insight into the tech sphere by providing unfiltered interviews with those in the sector from all over the world. Feel free to contact me or my co-founders about the platform via LinkedIn!