Image source: FamZoo.
Bitcoin is a currency, and as such, it has some pretty obvious uses. You can buy stuff with it. You can get paid in it for things you sell or services you provide. You can securely transfer money instantly to anyone in the world.
But the future of Bitcoin is not limited to finance. The technological innovations that make Bitcoin possible as a currency can also be applied to other fundamental aspects of modern society. The future of Bitcoin is less about its utility as a currency and much more about its infrastructure. With Bitcoin, the world now has as an open means to securely transact, well, anything.
Here are three applications you probably haven't thought about, and these barely scratch the surface of what's possible.
1. Elections
Its easy to take for granted the political stability of the American democratic system. Take the hotly contested election in 2000 between George Bush and Al Gore for example. In many other countries, the "hanging chad" fiasco could have easily ended up in armed conflict, a coup de tat, and potentially the loss of many, many lives. In America, the dispute was handled peacefully in the court system.
It's in these countries, where electoral corruption runs rampant and political stability is measured by the hour, that Bitcoin can have an incredible impact on elections. Bitcoin's infrastructure is exceptional at validating and verifying monetary transactions from any counterparties. That technology can be applied to voting and could revolutionize democracies across the world.
Source: SecretLondon.
The technology is mobile, so any eligible citizen with a smartphone can vote. There is no need to visit a polling location, no need to register by mail weeks in advance. The software verifies who you are by a key, just like it verifies currency transactions, and you can vote instantly, securely, and from anywhere.
With the computing power of the Bitcoin network behind voting, corruption, fake votes, and counting fraud can all be eliminated. Voting records are automatically logged, verified, and stored forever in the global public record. Election fraud could be dramatically reduced, if not eliminated in many cases. This could be revolutionary for young democracies still fighting to establish a political tradition with the strength to survive.
2. Contracts
A contract is a legal document between two or more parties agreeing to exchange something. It could be money, it could be services, it could be resources, or any other thing. A contract is essentially just a record used to define the transaction.
And the Bitcoin network is very good at transactions.
In the future, two parties could be able to draft an agreement and use the Bitcoin network to execute the contract. Using software and computer programs, the Bitcoin network would monitor the conditions of the contract, and once met, it would automatically execute the contract. Any digital form of ownership could be done on the network -- a digital title to a vehicle, a mortgage, a stock certificate, the assets that make up a company.
Concerned you can't fully trust the person on the other end of the contract? The Bitcoin network allows you to easily add in a third party who must validate the contract before it executes. It's all digital, it's redundant, and you can build in automatic arbitration.
Gone are the days of companies paying fees to use escrow accounts at big Wall Street banks; the Bitcoin network can do that for free. Gone are the days of paying a hefty fee for a lawyer to manage your assets when you die; the Bitcoin network can disperse your funds exactly to your will, without error, and for free. The possibilities are truly limitless.
3. Fraud prevention
Bitcoin has a few notable qualities that make the system highly resilient to attempted fraud. Let's start with the most obvious: transaction fraud.
Bitcoin can bring scammers and gangsters out of the shadows.
Target (TGT +0.50%) has been a fixture in the news of late as a result of hackers stealing 70 million credit card numbers from the retailers point-of-sale system. With the credit card numbers, the hackers also stole names, addresses, social security numbers, and a bevy of other personal information.
Unlike Target's point of sale system, Bitcoin does not transfer any personal information at all in the transaction. In this way, it's like cash. But unlike cash, Bitcoin is not anonymous; its pseudonymous. This means every transaction in the history and future of Bitcoin is tracked, logged, and saved forever for anyone and everyone to see.
So, had these transactions been done with Bitcoins instead of credit or debit cards, Target would have received the payments securely and any hackers watching the network wouldn't have been able to steal any money, any personal information, or anything else of value whatsoever.
Another example is email fraud (think Nigerian princes asking for wire transfers). Bitcoin is unique among currencies in that it can be divided essentially limitlessly. Today Bitcoins can be divided down to eight digits behind the decimal (that is, 0.00000001 BTC).
If email companies began requiring all emails to be sent along with some tiny amount of Bitcoin attached as payment for delivery -- say 1/1000 of a penny -- the impact to you and I would be minimal. I can afford to spend $0.00001 per email. But if you're a spammer sending a million emails a day, the costs would effectively put you out of business.
Bitcoin is still really, really young
Bitcoin was invented in 2008. It's barely five years old. We've barely scratched the surface of what it could be.
In 20 years, we could look back at Bitcoin as a flash in the pan. But I think that's unlikely. Bitcoin may never surpass the dollar as the world's currency. As a currency, it may survive and thrive in a small niche. Or it may go extinct altogether.
But as a technology, as an infrastructure, as an open platform for digital transactions, the upside for Bitcoin is truly limitless. These are just three examples of possible uses for Bitcoin's infrastructure. There are certainly hundreds of others. I, for one, am very excited to see this technology mature and expand. The impact for the world could be as great as the PC, or even the Internet itself.
